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Positive Consumer Sentiment Fuels Hotel Demand

Torbit - May 24, 2024 - - 0 |
Positive Consumer Sentiment Fuels Hotel Demand

With the prevailing strong demand for hotel rooms in both business and leisure destinations, positive consumer sentiment is set to drive the growth of the hospitality sector in the months to come, largely driven by Tier 2 and Tier 3 cities.

The Indian hospitality sector continued to witness Year-on-Year (Y-o-Y) growth in performance in Q1 2024 (January-March), primarily driven by a significant rise in Average Daily Rate (ADR) of 8.5% over Q1 2023, resulting in Revenue per available room (RevPAR) of 11.4%. Chennai emerged as the RevPAR growth  leader in Q1 2024, registering  a growth of of 21.7 percent over Q12023, followed by Hyderabad & delhi, with YoY growth of 21.1 percent and 19 percent respectively. Major factors contributing to this growth included an increase in corporate travel, weddings, and Meetings, Incentives, Conferences and Exhibitions (MICE) demand at the end of the financial year (FY24). The sector also noted a RevPAR growth of 5.5% Quarter-on-Quarter (Q-O-Q) in Q1 2024, compared to Q4 2023. This can be attributed to higher levels of corporate travel in Q1 2024 as opposed to Q4 2023 (October-December), which typically sees a decrease during the holiday season, according to a recent JLL report.. During the quarter, there was a robust demand for hotel rooms in both business and leisure destinations. The occupancy levels in key business markets were strong, averaging around 70%, and supported by significant growth in Average Daily Occupancy levels.

Positive Consumer Sentiment Fuels Hotel Demand

Source: STR

The positive momentum from the first quarter is expected to continue into the second quarter, with business travel, MICE, and weddings driving the busy season. Additionally, the following quarter will also see a surge in leisure travel, particularly during the summer holidays.

In Q1 2024, there were 90 branded hotel signings comprising 9,710 rooms. Furthermore, 13 hotels signed were conversions of other hotels, accounting for 12% of the inventory signed in Q1 2024. Branded hotel openings comprised 36 hotels with 2,316 keys, of which 75% of the total number of keys were in *Tier II and III cities. These included Jaipur, Indore , Surat and Ayodhya.

According to Jaideep Dang, Managing Director, Hotels and Hospitality Group, India, JLL,the first quarter has set the ball rolling for the hotel sector’s strong performance throughout 2024 and healthy consumer sentiments and domestic corporate travel will continue to be the key drivers.  Broadly, the demand parameters are in line for the upwardly stable performance of the sector through 2024.

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