Skift Take
The Indian hotel industry is expected to grow over the next three years for several reasons: limited room supply, growing demand, better infrastructure. The demand-supply gap is a positive aspect, but could also cause issues if not carefully dealt with.
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The Indian hospitality sector is set to grow at an annual rate of 10.5% over the next three years, according to the latest projections by trading services firm Axis Securities. The growth is expected to be driven by domestic travelers, foreign visitors, and the MICE (meetings, incentives, conferences and exhibitions) segment.
The report estimates that the hotel industry in India consists of about 212,000 rooms, with a market size of INR 820 billion ($9.76 billion).
Axis Securities highlights several factors that will contribute to the growth of the sector:
Limited supply of rooms is expected to drive strong demand and expansion in the industry. A report by real estate services firm JLL released last month showed that the supply of operational inventory in the six markets increased by less than 1%, while demand was up 2.7%. Domestic travelers are likely to contribute about 50% of the growth of the industry. Meanwhile foreign tourists will account for 30% of the growth, and 20% of the growth would be driven by MICE. Enhanced road connectivity and growing railways network are also lifting demand.“These factors are expected to remain sustainable over the next three years and will significantly drive sector growth,” the report said. Tier-2 and Tier-3 cities are also bo