India’s Hospitality Industry to Grow Rapidly by 2027, Says Axis Securities
India’s hospitality industry is projected to grow at a Compound Annual Growth Rate (CAGR) of 10.5% over the next three years, according to a report by Axis Securities. This growth will generate an annual incremental demand of Rs 8,200 crore.
The growth will be driven by domestic travelers, foreign tourists, and the MICE (Meetings, Incentives, Conferences, and Exhibitions) segment. Currently, the industry comprises 212,000 rooms, translating to an industry size of Rs 82,000 crore.
Domestic travelers are expected to contribute around 50% to the industry’s growth, foreign tourists 30%, and the MICE segment 20%. The demand is expected to outpace supply, with demand growing at a 10.8% CAGR annually, while supply is anticipated to rise by 8%.
By 2027, the number of hotel rooms is projected to reach 241,000, up from the current 188,000. An estimated 18,000 rooms per year will be added from 2024 to 2027. The demand is not limited to metro or Tier 1 cities; Tier II and III cities are also witnessing robust demand, growing at 13% annually, while supply in these regions is growing at 10%.
Enhanced road connectivity and expanded railways are fueling growth from rural to urban areas, further boosting demand. The Indian hotel industry is strategically positioned to capitalize on these trends, contributing significantly to the tourism sector and overall economic growth.
Despite an average addition of roughly 18,000 rooms yearly, the six leading players in the listed space contribute to about 30% of the total annual room increment. This cautious and stable approach is due to the market size growing faster than the rate at which industry leaders are adding new rooms.
Doubts Revealed
Hospitality Industry -: The hospitality industry includes businesses like hotels, restaurants, and travel services that provide services to people who are traveling or need a place to stay.
Axis Securities -: Axis Securities is a company in India that provides financial services and advice, like helping people invest their money.
Annual rate -: An annual rate is how much something changes or grows in one year. In this case, it means how much the hospitality industry will grow each year.
Domestic travelers -: Domestic travelers are people who travel within their own country. For example, someone from Delhi traveling to Mumbai.
Foreign tourists -: Foreign tourists are people who visit a country from another country. For example, someone from the USA visiting India.
MICE segment -: MICE stands for Meetings, Incentives, Conferences, and Exhibitions. It’s a part of the hospitality industry that deals with organizing big events and gatherings.
Rs 82,000 crore -: Rs 82,000 crore is a way to say 820 billion rupees, which is a lot of money. It’s the current value of India’s hospitality industry.
Tier II and III cities -: Tier II and III cities are smaller cities in India, not as big as places like Mumbai or Delhi, but still important and growing.
Enhanced connectivity -: Enhanced connectivity means better ways to travel and communicate, like more flights, better roads, and faster internet.
Strategic positioning -: Strategic positioning means planning and placing things in a way that makes them more successful, like building hotels in popular tourist spots.
