Hotel Volatility Index 2024 highlights India’s hospitality growth and resilience, revealing the impact of new hotel openings on market stability and performance trends
The Hotel Volatility Index (HVI), now in its seventh year, is part of Hotelivate’s 2024 Indian Hospitality Trends and Opportunities. Often, new hotel openings can impact a market’s performance numbers, bringing down occupancy and average rates temporarily until they stabilize. This is especially true in fast-growing hotel markets like India. To provide a clearer picture of established hotels, we used a stable set of 100 hotels operating since 2012 as a benchmark to measure performance year-over-year across India. The HVI helps gauge the true performance of India’s hotel industry.
Key Highlights:
- Between 2014/15 and 2023/24, these 100 hotels consistently performed better than the nationwide average (Figure 1). In particular, they recorded a 65% higher RevPAR (revenue per available room).
- HVI hotels achieved a 73.3% occupancy rate, compared to the national average of 67.5%, and an average room rate of ₹12,230, compared to the national average of ₹8,055 (Figure 2).
Urban vs. Leisure Hotel Performance: When comparing urban hotels to leisure hotels, some trends stand out. Although urban hotels had a 16% higher occupancy rate, leisure hotels still outperformed them in RevPAR by 60%. This difference is due to average rate increases, which boosted RevPAR growth between 2022/23 and 2023/24, widening the performance gap.
City Tiers and Regional Trends: Looking at trends by city tiers and regions:
- South India led in growth at 26%, followed by North India (24%) and West India (20%).
- North India saw the sharpest RevPAR increase (28%), followed by South (26%) and West (23%).
- Tier 1 cities showed the highest growth (26%), while Tier 2 and Tier 3 cities grew similarly at around 22%, with Tier 2 and Tier 3 performance now starting to level out.
The HVI provides a reliable overview of India’s hotel industry trends. Established hotels, which showed resilience and efficiency during the pandemic, are now reaching record-high performance. Hotel owners can achieve better returns by giving their properties time to stabilize and investing in upgrades. The HVI hotels are expected to see moderate rate growth and stable occupancy. Effective management, marketing strategies, and talent development will be key to sustaining growth and maximizing returns.
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