New Delhi: In the second quarter of FY24 (June-September), although revenue per available room for hotels saw a slight slowdown, the number of keys signed and opened increased.
According to a new report, 34 hotels opened in this period, adding about 2,400 keys or rooms to the organized hotel business of India. Interestingly, most of these hotels, over 80%, were in tier II and tier III cities.
JLL’s Hotel Momentum India (HMI) Consultancy report said a total of 59 hotels with around 4,700 keys were signed in this quarter. 12 hotels signed were conversions from other hotel brands, representing 23% of the total inventory signed in the quarter.
During the same quarter last year, 54 hotels were signed up, adding 4,300 similar keys to the organized sector.
At 59, hotel signings in Q2 rose 78% over the levels seen in the corresponding quarter in FY21 when the number stood at 33 hotels.
“Hotel development activity will continue to grow, both in terms of hotel openings and new hotel signings. However, we expect this ADR growth to pick up to a better level in a year or so due to the dynamic geo-political scenario which may impact demand to some extent,” said Jaideep Dang, managing director , Hotels and Hospitality Group, India, JLL. .
Despite the overall positive growth, the sector saw a slight decline of 4.5% in RevPAR from Q1 to Q2, indicating a slight decline in demand. RevPAR, or revenue per available room, is a key performance indicator used in the hospitality industry to measure a hotel’s financial performance. This could be attributed to the seasonal change in travel patterns, with the summer holidays and the onset of the monsoon season affecting occupancy rates.
But the hospitality sector continued its recovery path in the third quarter of 2023, with year-on-year growth of 15.1% in revenue per available room (RevPAR). The main reason for this positive performance was a significant increase in the Average Daily Rate (ADR), which rose by 15.6% compared to the same period last year due to numerous international events held in capital cities such as the G20 summit.
The top six markets, Bengaluru, Chennai, Delhi, Goa, Hyderabad, and Mumbai continued to show strong growth driven by ADR due to continued demand from corporate travel.
International events helped markets like Delhi lead the way with ADR growth of 36%, mainly due to purchases of many hotels by diplomatic missions. It was followed by Hyderabad at 22.2% and Mumbai at 16.7%.
However, occupancy levels in Bengaluru and Goa were slightly down, the rest of the markets remained fairly stable in the quarter.
Likewise, the third quarter of the year is expected to remain strong due to international events such as the ICC Men’s Cricket World Cup and domestic travel amid the winter holidays and year-end festivities.
Weddings and meetings, incentives, conferences and exhibitions (MICE) will remain the main drivers of demand in the coming months. However, business travel is expected to register a sharp decline towards the end of the year.
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Updated: 09 November 2023, 01:21 PM IST
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