Indian hospitality sector review 2021: Back to business

The hotel industry has made steady progress as travellers are on road again with renewed confidence. India’s hotel industry has bounced back stronger with an increase in RevPAR and hotel occupancy levels across markets.

While the second year of the pandemic brought a more dire second wave, the rolling out of vaccinations as well as widespread familiarity with medical assistance systems and processes instilled new confidence among travellers; this time, expanding the radius of travel beyond nearby leisure destinations. This demand for travel in 2021 was further complemented by government initiatives which aimed at reviving the domestic travel and tourism industry via programmes that further boosted travel infrastructure and aided new tourism businesses.

As a result of the above, 2021 witnessed a slight increase in RevPAR as compared to the previous year and achieved higher occupancy levels which were almost at par with pre-COVID levels. The latter half of the year performed better than the first half with a significant increase in social events and Q4 also recording the maximum number of signings in the year. Overall, 2021 witnessed a 23% increase in hotel signings with a 13% increase in inventory as compared to 2020.

While new developments and greenfield projects were rationalised, 43% of the hotel signings were dominated by brownfield projects with greenfield inventory limited to 36%. Transaction activity gradually regained traction with consolidations emerging as the key theme for hotel investments in India.

As we bring this report to you, performance across markets has improved significantly with several measures surpassing pre-COVID levels. Should this environment of health and safety prevail, we foresee a window of steady performance as well as an uptick in transactions towards the latter half of the year.