After The Beatles initiated the first wave of foreign tourists into India with their stay in Rishikesh in 1968, it took until after the market liberalizations of the early 1990s for the tourism and hospitality to gather pace.
During the last decade, the whole tourism sector accounted for a share of around seven percent to India’s GDP. The main driver of the sector was the hotel industry, accompanied by tour operations and the restaurant segment in tourist areas. In 2018, there were around 2.5 million hotel rooms in over 100,000 hotels across the country. Nevertheless, number vary at times, especially in the unranked category or in areas outside of tourist hotspots. In general, the market for domestic guests is nearly three times bigger than the market for international guests.
The key indicators for this industry are the average daily rate (ADR) by room, the revenue per available room (RevPAR) as well as the occupancy rate. Even before the coronavirus (COVID-19) pandemic, the average room rate had been unstable. For example, five-star hotels reached a peak in 2011 at 140 U.S. dollars, while the rate was93 U.S. dollars in 2019. Similarly, the RevPAR rate as well as the occupancy rate fluctuated in recent years.
2020 started at good rates for hoteliers in India. The shock came in late March 2020, when the government imposed a lockdown and strict travel restrictions due to the coronavirus (COVID-19) pandemic. Although the whole industry is still grappling with these consequences, there had been rays of hope: domestic demand revived businesses during the festive season towards the end of 2020, and short staycations established a new trend for stressed city-dwellers after the lockdown.
The pandemic accelerated the demand in the wellness industry across the country. This was especially the case for the urban middle class and their desire for a break from fast-paced city lives. Often, this involved travel to less crowded destinations with an indulgence for spa and wellness services.
To increase India’s competitiveness the government had reduced the goods and services tax (GST) for hotels in 2019. Other governmental measures during the pandemic included the webinar-series “Dekho apna desh” to boost domestic travel as well as initiating the assessment and awareness program SAATHI (System for Assessment, Awareness and Training for Hospitality Industry). With increasing digitalization and a prolonged work from home situation for most companies, business travel was expected to take a back seat from its traditionally strong position, paving way to leisure travelers in the near future.
