Skift Take
Tourism in India is growing, especially from domestic travelers. This is leading to a robust demand for accommodation across the country. But the India hotel industry needs to provide enough supply.
The hotel industry in India is estimated to reach around $247 billion in 2024, and projected to hit $475 billion by 2029, according to market research firm Mordor Intelligence. That’s an annual growth rate of nearly 14%.Â
Now, a new report from the India Brand Equity Foundation (IBEF) highlights the factors that will drive this growth:
- Rising Disposable Income: With the Indian middle class growing and having more spending power, domestic tourism is increasing, leading to a growing demand for hotel accommodations.
- Development of Infrastructure: India is getting airports, highways, and other transportation infrastructure expansion. This is improving connectivity to various tourist destinations.
- MICE Tourism: International conferences such as the G20 Summit last year, corporate events, and trade shows are being organized in the country. Several dedicated spaces for MICE events, such as the Bharat Mandapam, Yashobhoomi, and Jio Convention Center have been established in the past few years. This is being supplemented by demand for hotel facilities in the country.
- Cultural and Heritage Tourism: India has a strong cultural and heritage tourism offering. According to a recent report by consultancy firm KPMG India, the global heritage tourism market size is estimated to reach $813.5 billion by 2032.
In 2023, ticketed monuments protected by the Archaeological Survey of India generated a revenue of INR 2.53 billion ($30.22 million), a sharp increase from INR 1.02 billion ($12.13 million) generated in the previous year.
The interest by international and domestic tourists in this market segment is also driving demand for hotel accommodations.
- Rise of Budget Hotels and Homestays: Budget hotels have made accommodation available to lower income groups in the country when they travel, while homestays and alternative accommodations have led to competition among the hospitality industry.
Branded and unbranded hotels aside, there are guesthouses, bed and breakfast accommodations, lodges, boutique hotels, and homestays across India, offering travelers a variety of options.
The Gaps in the Indian Hotel Industry: According to real estate company JLL, the Indian hospitality industry witnessed investments to the tune of $401 million in 2023. This figure was nearly four times the transaction volume in 2022. In 2023, 22 hotel transactions took place: the largest number of assets traded in the 10 years.Â
Apart from this, the number of hotel signings have also increased significantly over a span of two years, JLL data shows. Between January and March 2022, about 3,750 keys across branded hotels were signed, and branded hotels having just over 2,300 keys were opened.
However, between October and December 2023, the number of signed branded keys increased to about 8,750, while the number of keys opened across branded hotels stood at close to 4,200.
Despite this, India is currently underpenetrated by the branded hotel brands. India’s domestic aviation market is now the third-largest in the world. In the 2023-24 fiscal, about 154 million domestic passengers traveled in India, according to credit ratings agency ICRA. This indicates a surge in domestic travel that needs to be catered to by the Indian hotel industry. While the hotel chains are expanding their presence, especially in smaller cities, it is not in line with the demand.
During his visit to India earlier this year, Accor CEO Sebastien Bazin said that India currently has less than 200,000 branded hotel rooms as compared to 3 million unbranded keys for a population roughly the same as China’s. The top five hotel operators in India collectively have less than 1,000 hotels, while this figure in China is 25,000.
“There is a demand and there is the emerging middle class that needs affordable accommodation and wants to discover the country,â he had said.
India Launches Dedicated Portal for International Medical Tourists
The Indian health ministry has launched a dedicated portal for international patients coming to India to seek medical treatment. The portal, named Heal in India, provides medical tourists with information about the types of treatments, hospitals, and doctors available in India, along with the relevant travel information. India has extended the e-medical visa facility to 165 nations, according to the portal.
The country is attempting to increase its medical tourism. The segment has seen a steady growth in visitors over the past few years, from 183,000 medical tourists in 2020 to 475,000 in 2022. The tourism ministry also projected that between January and October 2023, over 504,000 medical tourists visited India.
Earlier this month, a report by market research firm Report Ocean said that the medical tourism market in India would hit $25 billion by 2029, up from $7.42 billion in 2022. The market size, it said, is growing at an annual rate of 19%.
Air India Express Announces Operations to Bangladesh
Low-cost carrier Air India Express has announced its operations in Bangladeshâs Dhaka. Starting September 3, the airline will operate six weekly direct flights each from Kolkata and Chennai to Dhaka.
This marks the airlineâs 15th international destination. With this, the airline will now operate on 32 domestic and 15 international routes.
The Tata Group-owned budget airline is in the process of being merged with AIX Connect (formerly known as AirAsia India). In preparation for its merger and subsequent expansion, the airline has added more than 75 aircraft to its fleet.
Jordan Tourism Board MD Shares Vision 2025 in India
During his visit to India, Jordan Tourism Board managing director Dr Abed Al Razzaq Arabiyat unveiled the countryâs tourism vision for 2025. He said that India is an important source market for Jordan and consistently ranks among its top five markets.
As part of its vision, Jordan is focusing on five pillars to grow it into a global destination: MICE tourism, destination weddings, luxury tourism, adventure tourism, and film tourism. He shared that the country has streamlined the visa process for Indian travelers, who can obtain their visas either online or on arrival.
Jordanâs flag carrier Royal Jordanian Airlines is also set to commence direct flights to India in 2025, as currently there is no direct connectivity between the two nations.
AirAsia Enhances India-Thailand Flights Amid Tourism Surge
AirAsia Thailand has announced its plans to introduce direct flights between Phuket and Indiaâs Chennai and Kolkata cities starting October. The move comes amid a surge in travel from India to Thailand due to the visa waiver for Indian travelers.
The airline will operate three weekly flights between Phuket and Chennai, while Kolkata-Phuket flights will be operated on a daily basis.
âAirAsia has long awaited the opportunity to expand its network to the major metro cities of India. Following the Thai government successfully negotiating aviation rights with India, AirAsia is adding connections between both countries,â said Thai AirAsia CEO Santisuk Klongchaiya.
