Indian Hospitality Sector Poised for Strong Growth in Q4FY25

The Indian hospitality industry is set for strong growth in Q4FY25, driven by increased demand from MICE events, weddings, and spiritual tourism. Key players are forecasted to see a 12-14% YoY RevPAR growth. Expansion in religious tourism, corporate demand, and strategic government initiatives will further boost the sector.

The Indian hospitality industry is poised for a robust performance in the fourth quarter of fiscal year 2025, fueled by strong demand from Meetings, Incentives, Conferences, and Exhibitions (MICE) activities, vibrant cultural events, and a bustling wedding season, as projected by a report from Motilal Oswal.

Industry sources indicate that significant players in the hospitality sector are expected to register a 12-14% year-on-year growth in Revenue Per Available Room (RevPAR), a growth trajectory similar to the preceding quarter. This rise is largely credited to an 11-13% increase in Average Room Rate (ARR) alongside higher occupancy rates.

The upward momentum observed in the third quarter of fiscal 2025 is anticipated to persist into early 2025, with top hospitality entities experiencing continued demand. Cities like Mumbai and Delhi NCR are projected to maintain strong performances, bolstered by numerous MICE and cultural events. This positive trend is mirrored in other major metros, including Bengaluru, Hyderabad, and Pune, which benefit from reduced holiday breaks and consistent corporate demand.

A significant driver of growth is spiritual tourism, highlighted by the Mahakumbh event in Prayagraj sparking a significant rise in bookings. Key hospitality players have noted a 300% increase, contributing approximately Rs28 billion to the industry. Major hotel chains have widened their footprint in 60 spiritual cities, with plans to erect over 2,800 new rooms across locations such as Ayodhya, Hampi, Vrindavan, Ujjain, and Prayagraj within three to five years.

As of early 2024, there were about 5,700 branded hotel rooms available in religious tourism hubs, with a further 4,700 rooms expected in the next four to five years. The overall industry prospects for Q4FY25 remain optimistic, supported by favorable supply-demand balances and corporate rate increases, driving ARR and occupancy enhancements.

Additional growth contributions come from recently introduced hotel inventory, stabilization of key properties, and the reopening of refurbished hotels with expanded capacities, poised to boost earnings for major hospitality entities.

The robust wedding season continues to be a pivotal factor in maintaining sector growth, alongside sizable events anticipated in Q4FY25. Industry analysts predict that RevPAR growth will align with Q3FY25, marked by high occupancy and double-digit ARR growth through January and February. Union Budget 2025 initiatives are expected to further catalyze the hospitality sector's growth. The central government aims to develop 50 principal tourist attractions, focusing on spiritual and medical tourism in collaboration with state authorities, generating new growth opportunities.

Enhancements to the e-visa process for select foreign tourists are anticipated to accelerate the recovery of Foreign Tourist Arrivals (FTAs). Moreover, the Indian rupee's depreciation against the US dollar (~2% YoY in Q3FY25) renders India a more cost-effective destination for international travelers. This, paired with an expanding inventory of world-class hotels, is likely to attract international visitors, potentially eclipsing pre-COVID numbers soon. Leisure hotspot Goa is witnessing stable occupancy rates, with ARR rising due to increased discretionary spending, helped by tax relief measures in the Union Budget. (ANI)

(With inputs from agencies.)