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CareEdge Research Report
The Indian hospitality sector is currently experiencing an upcycle, driven by favorable demographics, robust domestic demand (with supply clearly lagging behind demand growth), increased investments, and ongoing improvements in infrastructure and connectivity.
According to our estimates, the industry's revenue per available room registered a strong growth of 14% during fiscal year 2024. For FY25, RevPAR is expected to grow by approximately 8-9%, building on the high base set in FY24.
India currently has around 166,000 branded hotel rooms/keys. Over the next five years, the industry is expected to add approximately 55,000 rooms, with supply registering a compound annual growth rate of 4.5-5.5% during this period.
The segment mix is shifting towards Upper Midscale and Midscale Economy, with more than 60% of new supply expected to be added in these segments. This growth is driven by several factors, including a growing middle class, a significant uptick in business travel (especially from small and medium-sized enterprises), and an expanding scope of business activities into tier-II, tier-III, and tier-IV cities. More than 70% of the proposed new supply is concentrated in tier-II and tier-III cities, followed by tier-I, as hotel owners and operators explore opportunities to capture unmet demand in emerging and underserved markets.
The industry dynamics have significantly shifted, with more investors exploring asset-light options to increase revenue and margins without significant capital expenditure.
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