New Delhi: The Indian hospitality sector is set to continue its robust growth, with a projected 7-8 per cent increase in Revenue per Available Room (RevPAR) for FY26, according to a report by CareEdge Ratings.
As per the report the growth will be driven by sustained demand and a rise in Average Room Rates (ARR) strong domestic travel, rebound in foreign tourist arrivals (FTAs), and growing demand from Meetings, Incentives, Conferences, and Exhibitions (MICE) tourism.
"A further 7-8 per cent growth is projected for FY26, in the range of Rs 5,600-5,700, with ARR climbing to
Rs 8,400 - 8,600 driven by sustained demand outpacing new supply," the report added.
In FY25, the branded hotel inventory is anticipated to see an 8-10 per cent RevPAR growth, reaching Rs 5,300-5,400, supported by an ARR of Rs 8,000-8,200 and an occupancy rate of 67-68 per cent.
As of March 2024, India had approximately 180,000 branded hotel rooms, with an estimated more than 80,000 keys in the pipeline over the next five years.
Notably, 15-20 per cent of this pipeline is concentrated in key leisure destinations, aligning with the rising demand for tourism and infrastructure expansion.
More than 50 per cent of this upcoming supply is currently under development, reflecting strong investor confidence and a positive market outlook, the report added.
The CareEdge further added that the Indian hospitality sector is experiencing an upward cycle, driven by favourable demographics, strong domestic demand surpassing supply growth, rising investments, policy support and continuous improvements in infrastructure and connectivity.
It added that the medium-term demand outlook for the Indian hospitality industry remains positive, as the underlying drivers are projected to remain healthy.
According to the report, international tourism in the country experienced a remarkable recovery in 2024, reaching 99 per cent of its 2019 levels --a significant milestone four years after the onset of the COVID-19 pandemic.
The domestic tourism industry witnessed surging domestic air passenger traffic, which increased from 167 million in FY22 to 270 million in FY23 (62 per cent growth) and further to 307 million in FY24 (13 per cent growth), surpassing pre-COVID benchmarks.
In 9MFY25, domestic air traffic expanded by over 8 per cent Y-o-Y, reaching 247 million passengers, up from 228 million in the same period last year, as per the report.
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