Good Tidings For The Mid And Economy Segments

As occupancy rates grow, the hotels in these two key segments experience the highest ADR growth in the Indian hospitality industry.

- STR

The Indian hospitality segment reported growth in all Key Performance Indicators (KPIs) in year-to-date (YTD) October 2018, according to recent data from STR, a source for all premium global data benchmarking, analytics and marketplace insight for the hospitality industry. Occupancy has risen to 64.9% (+1.4%), ADR has reached Rs 5,698.10 (+1.5%), and RevPAR growth has seen it hit Rs 3,698.05. While supply has remained stable at 3.0% for this period, demand has outpaced supply growth by 4.4%.

Despite this seeming positive on the surface, growth rates have remained generally slow for the Indian hotel industry as it struggles to reach pre-global financial crisis levels. ADR growth rate declined in consecutive years between 2009 and 2015, with a CAGR of -6.5%. Slight improvements have been noted since 2016, but we are still far from the 2008 rates.

STR analysts cite 2009 to 2017 supply growth as a likely reason for India’s sluggish ADR growth, as hotel supply saw a Compound Annual Growth Rate (CAGR) of 3.7%. Increased competition has seen hotels struggle to manage their occupancy, resulting in marginal ADR growth.