Summary:
- Luxury hotel demand exceeds supply in India due to entry barriers, JM Financial reported.
- Land, regulation, zoning, costs and long gestation hinder expansion.
- Luxury room demand is projected to grow 10.6 percent CAGR from fiscal 2024–2028.
THE LUXURY HOTEL sector in India faces strong demand, but supply is constrained by high entry barriers, according to a JM Financial study. Land availability, regulations, zoning laws, capital costs and long gestation periods hinder expansion.
Demand for luxury hotel rooms is rising, driven by higher incomes and a shift toward premium experiences, boosting ADR and occupancy, Economic Times reported, citing the study. Luxury rooms demand is projected to grow at a CAGR of 10.6 percent between fiscal 2024 and fiscal 2028, while supply is expected to rise 5.9 percent over the same period.
Upscale and upper-upscale segments accounted for 34 percent of properties signed in 2024, up from 26 percent in 2023, HVS Anarock reported, according to ET. The luxury segment rose to 9 percent, nearly doubling its share from 5 percent last year.
Higher incomes, a demand-supply gap, shifting consumer preferences and limited luxury hotel inventory drove ARR growth and occupancy in the luxury segment from fiscal 2014 to fiscal 2024, the report said.
India’s hospitality industry had about 3.4 million keys as of March 31, 2024, the study said.
The organized sector—branded hotels, aggregators and quality independent hotels—accounted for 11 percent or about 375,000 keys. Of this, branded hotels made up 45 percent or about 170,000 keys, while the luxury segment comprised 17 percent of the branded market or about 29,000 keys.
ICRA reported that India’s hospitality sector is expected to grow 6–8 percent in the current fiscal year.
