Hospitality sector's contribution projected to reach $450–500 bn by FY30: CareEdge

Hospitality sector growth: India's hospitality industry is experiencing a notable rise in capacity ditions, particularly in midscale-economy segment, fueled by a resurgence in domestic tourism, resumption of international flights, and a grual recovery in foreign tourist arrivals (FTAs), reported credit rating agency CareEdge.

uptick in business travel demand, driven by an increase in meetings, incentives, conferences, and exhibitions (MICE) events, is also expected to contribute to growth in room capacity over next few years.

Over last five years, India's travel and tourism sectors have contributed approximately 5 per cent of country's total gross domestic product (GDP).

Projections suggest that sector's contribution to GDP could reach $450–500 billion by FY30. increasing urbanization in several tier-2 and tier-3 cities is expected to furr boost demand for hotels across different segments, leing to a robust dition of rooms in coming years.

In FY21, capacity ditions hit a low point as hospitality industry faced significant challenges due to COVID-19 pandemic. outbreak led to a drastic decline in revenue and losses, causing delays in project completion and a halt in capex plans.

However, industry has shown signs of recovery, with improving operational and financial parameters encouraging players to resume projects that were stalled in FY21.

India currently boasts approximately 160,000 branded hotel rooms and keys, with expectations to d approximately 50,000 rooms over next five years, representing a supply CAGR of 4-5 per cent.

While capacity dition in FY24 is expected to surpass levels of preceding two pandemic years, it is projected to remain below pre-pandemic levels of FY20. growth in chain-affiliated supply is expected to occur through conversions, with possibility of existing hotels being transacted for repositioning or rebranding.

sector's supply is now more balanced across different segments, with a reduction in share of luxury and upper-upscale hotels. focus has shifted towards upscale, upper midscale, and midscale/economy segments, with several operators launching sub-brands to cater to different segments efficiently.

This shift towards asset-light models such as management contracts, franchising, or revenue-sharing is helping major players increase revenue and EBITDA margins without significant capital expenditure. upcoming supply pipeline is expected to align with projected growth in tourism and infrastructure developments, indicating a positive outlook for industry.