According to a report by HVS Anarock, the hotel industry in India experienced a strong month in Jun'23, with the Revenue per Available Room (RevPAR) 27% above Jun'19 (pre-Covid) levels and 13% above Jun'22 levels. For the overall Q1FY24 (Apr-Jun'23), the industry RevPAR increased by 14% YoY, with Average Room Rates (ARRs) up by 17% YoY, but occupancies were slightly lower by 200 basis points YoY.

While the Jul-Sep'23 period is traditionally the weakest quarter due to the monsoon impact, hotels are maintaining rates 8-10% higher than the previous year. The focus now shifts to H2FY24 (Oct'23-Mar'24), where demand drivers like the G20 Summit, Men's Cricket ODI World Cup, wedding season, and international tourist arrivals recovering to pre-Covid levels are expected to lead to double-digit RevPAR growth for hotels.

The report predicts that industry-level occupancies, which recovered to 60% in CY22, are estimated to reach 66% in CY23, 68% in CY24, and 70% in CY25. Industry ARR is expected to increase from INR 6,100 in CY22 to INR 7,106 in CY23, INR 7,639 in CY24, and INR 7,983 in CY25. This translates to an estimated industry RevPAR of INR 4,690 in CY23, INR 5,194 in CY24, and INR 5,588 in CY25, reflecting a 15.8% CAGR in industry RevPAR over CY22-25. The demand-supply dynamics remain healthy for the Indian hotel sector, with incremental room supply expected to grow at a CAGR of 5-6% over CY22-26.

The report also highlights that brand signings increased by 33% YoY in CY22, with management contracts accounting for approximately 80% of the total signings by keys during the year. The medium-term outlook remains positive as both domestic and international hotel operators expand their presence in Tier 2, 3 & 4 cities by signing smaller properties.