India's Branded Hotel Boom: Demand Skyrockets Amid Limited Supply

A report by YES Securities predicts a faster rise in demand for branded hotel rooms in India compared to supply over the next five years. Demand is anticipated to grow at a 10.4% CAGR during FY25-30, with mid-premium and economy segments leading the expansion. Metros face slower growth.

In a burgeoning development for the hospitality sector, a report by YES Securities reveals that the demand for branded hotel rooms in India will outstrip supply over the next five years. Historically, branded room demand has increased at a compounded annual growth rate (CAGR) of 7.6% over the past decade, surging to 21.4% between FY22 and FY25.

The report forecasts a sustained momentum with demand surging at a 10.4% CAGR from FY25 to FY30, while supply lags with a projected growth of 8% to 9%. Mid-premium and economy hotels are expected to drive this trend, particularly in cities like Amritsar, Chandigarh, and Navi Mumbai. The report, however, cautioned about a potential temporary oversupply in certain markets, which may pressure revenue per available room (RevPAR).

YES Securities also highlighted that ongoing developments comprise 78% of the proposed supply as of FY25, suggesting some inventories might not be realized soon. Despite an estimated 9.6% CAGR growth for overall supply in FY25-30, top 20 markets will witness limited expansion at just 6.9%, with luxury segments even more restricted at 5.6%. This disparity between demand and supply is expected to result in improved average room rates and occupancy levels over the medium term.