Excerpt from STR
The world regions that have experienced the most significant hotel performance recovery to date are now faced with similar challenges. Most of those challenges stem from economic uncertainty. In India, there are certainly challenges, but there are also unique factors driving optimism and opportunity. Specifically, overall societal change is presenting India’s travel and tourism industry with temptations not seen for some time.
Can government stability be key to long-term growth?
Government alignment with the travel industry is never straightforward, but the imminent release of an official, updated tourism policy will focus on how domestic tourism and travel will become a larger part of India’s GDP. At the recent Hotel Association of India (HAI) Hoteliers’ Conclave, Shri G. Kishan Reddy, Honorable Minister of Tourism, laid out a view assembled from recommendations within the industry. That view showed there is an expectation of a modernized but also broad policy with focus on medical, religious and pure leisure travel—while trying to attract foreign direct investments. Additional political clout for hotels can be found in India’s G20 host responsibility in 2023. With 55 locations selected across the nation based on quality of hotels and airlift, the global publicity lens will be focused on the country along with providing increased demand. In a historic first, the G20 is in the hands of a trio of developing nations, as Indonesia passes responsibility to India, which in turn will pass onto Brazil.
Inbound tourism remains comparatively low and requires work
On the topic of promoting India abroad, Shri Arvind Singh, Secretary at the Ministry of Tourism, acknowledged during the HAI Conclave that overseas consulates and embassies, which today are the main channels for the promotion of tourism to India, are not ideally informed, equipped or ready to promote India to travelers at an efficient rate to move the needle. How upcoming changes materialize remains to be seen as a battle for priorities and infrastructure updates around the nation tops the agenda.
Lack of new hotel supply can create unwanted long-term concern
Many agree that India needs more new hotel supply, particularly in the mid-range segment and located in growing second- and third-tier cities. Major barriers to new supply continue to be legacy-driven regulations and licenses, even if post-pandemic funding of new constructions adds to constraints. This lack of visible volumes of new product brings an uncertainty of how the industry can cope with and satisfy demand growth 3-5 years down the line.
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