“Hotels in India went for a significant rate increase in the quarter beginning October 2022 and rates have hardened further in the current quarter,” said Vikramjit Singh, president of Lemon Tree Hotels. “Delhi-NCR (National Capital Region), Mumbai, Hyderabad and Bengaluru have especially witnessed unprecedented demand, and rates are at an all-time high.”
Industry executives expect the rally in room rates to sustain.
“It’s a dream run. But we are not back to pre-2007-08 levels. (New) supply rates are in the 2-3% range. This is just the start of a bull run,” Singh said. “I think the coming peak season, post-October 2023, will see a further rate hike.”
Business opportunities created by India’s G20 presidency have added to demand, with increased advance bookings in cities that will host meetings, said Nikhil Sharma, Eurasia regional director at Wyndham Hotels & Resorts. “Recently, one of the key markets, Bengaluru, was sold out; others are witnessing a surge in tariff rates,” he said.
Other Events Also Spurring Demand
“The Uttar Pradesh Investment Summit (Lucknow, February 10-12) was a huge success and is paving the way for hospitality in that state. Wyndham was one of the host hotels for the summit and we were sold out during the event,” said Sharma.
The Karnataka capital was the venue for the February 24-25 meeting of G20 finance ministers and central bank governors. The meeting of G20 foreign ministers will be held in New Delhi next week. Other meetings are planned in various cities until the leaders’ summit in September.
Room rates for five-star hotels in key business cities have gone up by about 20% since the last quarter of 2022, said Jaideep Dang, managing director, hotels and hospitality group, India, JLL.
“This is on the back of increased business demand, in general,” he said. “Also, G20 delegations and meetings in business cities are contributing to rate and occupancy growth. We believe rates will continue to remain upwardly stable in the next couple of months, supported by the upcoming IPL (Indian Premier League) season and other events before summer sets in.”
The men’s IPL will be held during March 31-May 28, while the women’s IPL runs from March 4 to March 26.
Multiple events in Mumbai last week resulted in a demand squeeze, and room tariffs surged to Rs 25,000-35,000 at premium hotels, said Rajeev Kale, president and country head for holidays, MICE (meetings, incentives, conferences and exhibitions) and visas at Thomas Cook India.
The hospitality industry is sensitive to the demand-supply equation.
“The fluctuation in room rates is a reflection of the highly dynamic city environment, buzzing with global and corporate events, exhibitions and weddings,” said Atul Bhalla, area manager for east and west at ITC Hotels.
Sabina Chopra, cofounder, chief operating officer for corporate travel, and head of industry relations at Yatra.com, said the platform has observed a “significant” increase in rates in the past two months, along with an uptick in travel bookings for destinations such as Mumbai and Delhi-NCR, besides Udaipur, Rishikesh, Varanasi and Jammu and Kashmir.
Chopra said prices have escalated in Mumbai, Delhi-NCR and Bengaluru owing to various government events, trade fairs and weddings.
The Grand Mercure in Bengaluru saw “high occupancy” for the India Energy Week (February 6-8) and as well as the Aero Show (February 13-17), said Sachin Maheshwary, general manager of the Gopalan Mall hotel.
Indiver Rastogi, president and group head for global business travel at Thomas Cook India and SOTC Travel, said the companies have seen an on-year surge in travel demand of over 60% for destinations including Indore, Udaipur, Agra, Lucknow and Jodhpur in the last two months.
“There is a 3x surge in tariffs compared to pre-pandemic levels. We expect this to continue, with the upcoming G20 meets and events such as Convergence India (March 27-29) and Global Tourism Investors’ Summit (April 10-12), besides roadshows by various state governments,” he said.
Mandeep S Lamba, president (South Asia) at HVS ANAROCK said hotels are witnessing increased demand from a spurt in MICE related activities ranging from G20 meetings, weddings, exhibitions, conferences, concerts, and sporting events which coupled with the routine demand from business and leisure travel is driving up average hotel rates in key destinations in India. “This pattern is anticipated to continue as different cities in the country host G20 meetings and a host of other events like the ICC Men’s World Cup,” he added.
Nikhil Shah, director, capital markets and investment services for hospitality at Colliers India, said hotel companies will report strong numbers for the next two quarters. “Most hotels across cities have reached pre-Covid numbers. Markets like Mumbai, Udaipur and Goa have crossed pre-Covid numbers,” he said. “The Indian hotel sector has sailed (past) survival mode and entered revival mode.”