Mid-scale boom: Comeback story

Greesh Bindra shares insight into the overall trends driving the hotel industry, role of brand positioning and market expansion.

HT Bureau

Q: Tell us about the performance of  the hotel industry in India in 2024.

A: The Indian hotel industry in the year 2024 displayed high occupancy rates, higher average room rates (ARR), and a significant increase in RevPAR, showing a strong recovery from the pandemic slump. This positive trend was driven by increased domestic and international travel, with occupancy levels approaching pre-pandemic highs, especially in tier II and tier III cities.

The room demand per day was about 30 per cent more than in 2019 and the number of airline passengers surpassed 400 million, contributing to the growth in occupancy levels in India. Significantly lower debt levels across the main ownership groups indicate higher investment and acquisition potential with lower risk. Amongst the highest ADRs, Udaipur had a significant advantage with an ADR of ₹15946 followed by Mumbai at ₹11500, Goa at ₹10900, and Delhi at ₹10300. Overall, the hotel sector in India in 2024 demonstrated a dynamic environment, striking a balance between significant expansion and emerging challenges.

Q: Is there a need to rethink strategy with foreign leisure arrival at the national level?

A: Domestic tourism together with inbound tourism has emerged as a key driver of economic growth. In 2024, India recorded foreign tourist arrivals of 9.66 million which accounted for foreign exchange earnings of ₹2,77,842 crores with a growth of 19.8 per cent. As per the data furnished by state/UT governments and other information available with the Ministry of Tourism, there were 2509 million domestic tourist visits all over the country during the year. However, while domestic travel has flourished, foreign leisure arrivals have yet to reach pre-pandemic levels. The diverse cultural and historical attractions of India remain a draw, but factors such as global economic conditions, visa policies, and geopolitical stability impacted inbound travel.

Q: How is the growth of MICE segment important for hotels?

A: Meetings, incentives, conferences, and trade shows make up the MICE industry, which is fuelled by growing corporate event planning and business travel. According to Coherent Market Insights, the Indian MICE market is expected to reach US$10.52 billion by 2030, with a compound annual growth rate of 18 per cent. This expansion has helped maintain the ARRs of the leading hospitality companies. With the growth of the MICE market, this contribution is anticipated to increase significantly and is extremely important for the hotel business.

Q: Is luxury the way forward or betting on mid-scale hotels in tier I and tier II cities?

A: In 2025, the Indian hospitality sector is expected to generate US$281.83 billion. Increased international investment and a robust domestic travel sector are driving this expansion. My bet would be for both the segments, the mid-scale and luxury hotel markets are expected to expand this year. Luxury hospitality will always have its place, particularly in urban centres and leisure destinations. However, the mid-scale segment is witnessing rapid expansion in tier II and tier III cities, driven by increasing corporate travel and aspirational consumers. The future lies in a diversified approach—hotels must cater to both luxury and mid-market travellers with distinct brand positioning.

Q: What is your take on the Union Budget 2025? Is it a hit or a miss this time?

A: The Union Budget 2025 brings promising reforms to boost India’s hospitality and tourism sectors. With initiatives like expanding the UDAN scheme and promoting regional cuisines, the budget aims to enhance connectivity and encourage growth. Public-private partnerships will play a crucial role in creating world-class tourist destinations that can compete on a global scale.

The focus on spiritual tourism, particularly the promotion of Buddhist tourism, is another significant step. The ‘Heal in India’ initiative aims to strengthen India’s position as a global medical tourism hub. The finance minister’s promise to streamline e-visa facilities for certain foreign tourist groups to bolster foreign tourist arrivals (FTAs) in the country also paints a brighter future for the inbound segment.

Q: What are the benefits and challenges associated with staying with your own brand?

A: Staying with our own brand in this fast-moving environment means making strategic choices that focus on brand authenticity, personalised experiences, effective use of technology, and clear market differentiation. The main advantage we have is that we can focus on niche markets that larger hotel chains often overlook. Whether it is inbound travellers, wellness tourists, or luxury seekers, we can tailor our offerings to cater to the segments as per the requirements. However, the major challenges sometimes are brand recognition, loyalty programmes, and large-scale marketing budgets that favour global players.

“The Union Budget 2025 brings promising reforms to boost India’s hospitality and tourism sectors.”

“In 2025, the Indian hospitality sector to generate US$281.83 billion.”

Greesh Bindra, Executive Vice President, The Suryaa New Delhi

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