The Indian hospitality sector continued to witness Year-on-Year (Y-o-Y) growth in performance in Q3 2023, primarily driven by the significant rise in Average Daily Rate (ADR) of 15.6% over Q3 2022 resulting in a RevPAR growth of 15.1%. The third quarter witnessed strong growth in ADR due to multiple international events being held in key cities. The sector witnessed a marginal decline of 4.5% in RevPAR in Q3 2023, as compared to Q2 2023, according to JLL’s Hotel Momentum India (HMI) Q3, 2023.
The six markets (Bengaluru, Chennai, Delhi, Goa, Hyderabad, and Mumbai) continue to display strong growth driven by ADR on the back of sustained demand from corporate travel. International events such as the G20 Summit also contributed to ADR growth in major cities. Delhi leads with a 36% growth in ADR, followed by Hyderabad (22.2%) and Mumbai (16.7%). Apart from the marginal drop in Bengaluru and Goa’s occupancy levels, the rest of the markets have remained fairly stable in Q3 2023 as compared to Q3 2022.
The last quarter of the year is expected to remain strong on the back of international events such as the Cricket World Cup and domestic travel amidst winter vacation and year end festivities. Weddings and Meetings, Incentives, Conferences, and Exhibitions (MICE) will remain the major demand drivers in the coming months. However, we expect business travel registering a dip towards the year end. Several hotel openings have been slotted for the quarter and development activity is expected to pick up in the last quarter. 59 hotels comprising 4,669 keys were signed in Q3 2023. There were 12 hotels signed that were conversions of other hotels. Conversions constituted 23% of the inventory signed in Q3 2023.
Delhi emerged as the RevPAR growth leader in Q3 2023 registering a growth of 36.6% over Q3 2022, followed by Hyderabad and Mumbai with y-o-y growth of 20.5% and 18.5% respectively.
“As witnessed in Q3 2023, the hotels sector continues to display strong growth in performance, which is majorly driven by growth in ADRs. This trend is expected to continue into the year end on the back of weddings and winter holidays. Hotel development activity will continue to grow, in terms of both hotel openings and new hotel signings. However, we anticipate that this growth in ADR will level out over the next year or so owing to the dynamic geo-political scenario that may impact demand to some extent”, said Jaideep Dang, Managing Director, Hotels and Hospitality Group, India, JLL.