After 17 years, hotel revenues are set to reach the same high levels as it was in 2008. Domestic travel for leisure and spiritual purposes has boosted occupancy rates. As room rates continue to rise post-pandemic, the hospitality industry is on track to regain its former success. In 2007-08, hotels experienced their highest revenue per available room (RevPAR) at 68.8% before the global financial crisis impacted travel and tourism. The following year, RevPAR dropped below 60% and stayed there until 2015-16.
The global crisis had lasting effects on tourism and hospitality, as revenue remained low due to a decrease in foreign tourist arrivals until 2015-16, noted Jaison Chacko, secretary general of the Federation of Hotel & Restaurant Associations of India. Many hotel brands that entered the market during the peak in 2008 affected the RevPAR of existing hotels.
By 2016-17, revenues began to rise again, hitting 66.1% by FY20. However, the pandemic caused a sharp decline in RevPAR to 34.5%. Afterward, domestic tourists seeking to travel again helped boost occupancy and revenue, bringing RevPAR back to 66.1% in FY23.
In FY23, the organized hotel sector achieved a nationwide occupancy rate of 66.1%, the second highest in ten years. The average daily rate (ADR) reached Rs 6,869, resulting in the highest RevPAR of Rs 4,537 in a decade. Compared to FY22, occupancy increased by 34%, ADR by 39%, and RevPAR by 82%.
ICRA predicts that the occupancy rate for premium hotels across India will reach 70-72% in FY2025, while average room rates are expected to rise to Rs. 7,800-8,000. RevPAR, which was slightly below the 2008 level in FY24, is expected to peak in FY25. Pradeep Shetty, president of FHRAI, stated that domestic leisure travel, demand for meetings, weddings, and business travel, along with improved road connections, are driving occupancy rates, room prices, and RevPAR.