Indian Hospitality expected investment of USD 2.8 billion by 2022: Report

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By Accommodation Times Bureau

The Indian Hospitality Sector is likely to expect an investment of USD 2.8 billion by 2022 and is set to witness the addition of 30,000 rooms by 2022 to the existing inventory of 128,000 rooms, according to Meraqi report.

Indian Hospitality Sector has been witnessing considerable signs of recovery since 2016, primarily boosted by a strong economy, increased inflow of business travellers and rising demand for experiential services.

According to the report, a total room requirement of 32,400 additional rooms is projected across the Top Seven Cities by 2022. Of which 44% will be added in the midscale segment and is expected to grow at a CAGR of 12% by 2022. With increased urbanisation and rising affluence, tier II & III cities are expected to witness 19,500 total room additions by 2022, thereby increasing inventory market share from the current 44% to 48%.

During 2016-2017, investments in to the sector revived and was recorded at USD 0.68 billion. “With increased interest from PE/VC players, the sector is likely to witness USD 0.5-0.6 billion annual investment during 2018-2022. The sector is likely to expect an investment of USD 2.8 billion by 2022. Most of the investments are likely to be in midscale chains with multiple properties which can eventually be eligible for REIT listings, acquisitions and buy-outs of operational properties as well as follow-up investments in hotel room aggregators. Major investment likely to be in Bangalore, Chennai & Hyderabad as these cities constitute for almost 65% of the total demand for additional rooms,” says Gorakh Jhunjhunwala, Managing Director, Meraqi.

Key highlights:

  • Indian Hospitality Sector is set to witness the addition of 30,000 rooms by 2022 to the existing inventory of 128,000 rooms.
  • 65%of the upcoming supply at 19,500 rooms is expected in Tier II and III cities. Players like Marriott, Intercontinental, Radisson, Lemon Tree, Ginger are looking into expanding their operations in tourism driven tier II & III cities.
  • Midscale segment to record the highest growth in ARR at a rate of 5% CAGR by 2022.
  • Bangalore and Hyderabad to witness high ARR at 7.3% and 14.1% respectively in 2017.
  • Mergers, acquisitions and buy-outs will increase as major hospitality developments are up for sale.
  • Post 2016, the disruptive concepts have changed the face of the hospitality industry in the country. New concepts like ‘vacation homes’ and ‘capsule hotels’ are being explored by players like Airbnb, VRBO and Urban Pod.
  • International operators are exploring ‘Millennial Focused Concepts’ with open lounges and social spaces to cater to the tech savvy, budget conscious customers.

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