Indian Hospitality Sector Sees 4.8% Growth In Q2 2024: JLL Report

The Indian hospitality sector registered a 4.8 pr cent Year-on-Year (YoY) growth in Revenue Per Available Room (RevPAR) for the second quarter of 2024, according to JLL's latest Hotel Momentum India (HMI) report. This growth was largely driven by an increase in Average Daily Rates (ADR) across key markets, even as occupancy levels saw a decline.

Hyderabad emerged as the top-performing city, posting an impressive 11.9 per cent YoY growth in RevPAR for Q2 2024 compared to the same period in 2023. Delhi and Bengaluru followed closely, with RevPAR growths of 11.8 per cent and 10.4 per cent, respectively. The report noted that all major markets, except Goa, experienced improvements in ADR, which contributed significantly to the overall growth in RevPAR.

Despite the positive trend in ADR, the sector experienced a drop in occupancy levels during the quarter. The decline was primarily attributed to the onset of summer vacations, which led to reduced corporate travel—a key driver of hotel bookings. This seasonality resulted in a 15.9 per cent quarter-on-quarter (Q-o-Q) decline in RevPAR growth compared to Q1 2024, as the second quarter is typically a lean period for the hospitality sector.

The JLL report anticipates a resurgence in corporate travel in the upcoming quarter, spurred by the festival season and the return of Meetings, Incentives, Conferences, and Exhibitions (MICE) events. Additionally, domestic demand for corporate and social events is expected to contribute to a busy season ahead.

In terms of expansion, the Indian hospitality sector witnessed significant growth in branded hotel signings and openings during Q2 2024. A total of 82 branded hotels were signed, accounting for 9,732 rooms. Notably, 15 of these were conversions, making up 11 per cent of the total signed inventory.

Furthermore, 50 new branded hotels opened during the quarter, adding 3,755 keys to the market. Approximately 90 per cent of these new properties were located in Tier II and Tier III cities, including emerging markets such as Tirupati, Udaipur, Thane, and Mysore. This shift towards smaller cities reflects the growing demand for hospitality infrastructure beyond traditional metro areas.

Jaideep Dang, Managing Director of JLL's Hotels and Hospitality Group, India, commented on the sector's positive outlook, stating, "Backed by strong performance of hotels across India, we continue to see investors moving money into this asset class. There is strong momentum in both greenfield developments and operating assets across business and leisure markets."

He further added, "Although the summer season has reduced corporate room night demand in Q2 2024, the sector has continued to demonstrate growth in ADR compared to Q2 2023. Looking ahead, the sector's performance in the upcoming quarters appears promising due to the upcoming festival season, a general rise in domestic corporate travel, the return of MICE events, weddings, and other social gatherings."

The report underscores a promising outlook for the Indian hospitality sector as it gears up for a potentially strong performance in the coming quarters.