Tag Archives: RevPAR

Hospitality sector registers 10.8% YOY RevPAR growth in Q3 2024: JLL

 

The Indian hospitality sector maintained its upward trajectory in Q3 2024, with a 10.8% YoY growth in revenue per available room (RevPAR) and a 2% QoQ increase compared to Q2 2024, as reported in JLL’s Hotel Momentum India (HMI). This growth was largely driven by higher Average Daily Rates (ADR), fueled by a surge in corporate travel. Hyderabad led the pack with an impressive 23.6% YoY RevPAR growth, followed by Chennai at 17.7% and Mumbai at 16.8%. Occupancy levels remained stable across major markets, while ADR improvements contributed significantly to RevPAR growth.

The upcoming quarter is expected to benefit from a continued rise in corporate travel and the festive season, alongside an increase in MICE (Meetings, Incentives, Conferences, and Exhibitions) events. Robust domestic demand for business travel and social gatherings like weddings will further strengthen the sector’s performance. Industry experts project a busy season ahead, driven by the combination of festivals and corporate activities.

Q3 2024 witnessed 96 branded hotel signings totaling 10,686 rooms, with 11% comprising hotel conversions. A significant portion of these developments, approximately 80% of the 1,988 keys added from 30 branded hotel openings, were in Tier II and III cities such as Tirupati, Udaipur, Ranchi, and Mussoorie. This shift reflects growing investment interest in emerging markets.

According to Jaideep Dang, Managing Director of JLL India’s Hotels and Hospitality Group, strong investor confidence continues to fuel both greenfield developments and acquisitions in the hospitality sector. While the summer season impacted corporate room night demand, sustained growth in ADR and a promising festive quarter are set to propel the industry forward, supported by weddings, MICE events, and domestic travel.

Indian Hospitality to add 55,000 Keys

 

The hospitality sector is witnessing an upcycle, driven by robust domestic demand and favorable demographics, despite a decline in international tourist arrivals. Supply is lagging behind demand, leading to increased investments in infrastructure and connectivity. This trend is pushing average revenue per room (RevPAR) growth to 8-9% in this fiscal year, following a 14% increase last year.

The Industry currently boasts 1,66,000 branded hotel keys, with plans to add 55,000 more over the next five years, representing an annual growth rate of 4.5-5.5%. According to CareEdge estimates, the industry’s RevPAR grew by 14% in FY2024 and is expected to see further growth of 8-9% in FY2025.

The segment mix is increasingly favouring the upper midscale and midscale economy sectors, with over 60% of new supply expected in these categories. This growth is supported by an expanding middle class, a rise in business travel from SMEs, and increased business activity in smaller towns.

Currently, more than 70% of new supply is concentrated in Tier 2 and 3 cities, as hotel owners focus on addressing unmet demand in these emerging markets. Domestic travel and tourism have contributed around 5% to GDP over the past five years. With continued government support, the sector is projected to grow 8-9% annually, reaching USD 500-530 billion by FY34.

Hotel Industry witnesses 11% Rise In Revenue During March Quarter: JLL

The hotel industry of India saw strong demand at both business and leisure destinations during the Jan.- March period leading to an 11 per cent annual rise in revenue per available room, according to JLL. In a statement , real estate consultant JLL India said that the hospitality sector saw an increase in average daily rate (ADR) of 8.5 per cent year-on-year, resulting in a revenue per available room (RevPAR) growth of 11.4 per cent. Chennai recorded the strongest growth in RevPAR at 21.7 per cent in Jan.-March.

“Major factors contributing to this growth included an increase in corporate travel, weddings, and meetings, incentives, conferences and exhibitions demand,” the consultant said. During the first quarter of 2024, there was a robust demand for hotel rooms in both business and leisure destinations. The occupancy levels in key business markets were strong, averaging around 70 per cent, and supported by significant growth in average daily occupancy levels. “Branded hotel openings comprised 36 hotels with 2,316 keys, of which 75 per cent of the total number of keys were in Tier II, III cities,” JLL said.

San Francisco attracts 23.1mn visitors in 2023; India ranks among Top 5 for visitation & spend

San Francisco Travel Association, the official destination marketing organization for the City and County of San Francisco, released 2023 visitor impact results and an updated 2024 forecast at its annual Marketing Conference held yesterday at the San Francisco Museum of Modern Art.

The conference also featured presentations and panel discussions on AI and other pioneering technologies and initiatives shaping the visitor experience and destination sales and marketing.

2023 Results
San Francisco attracted 23.1 million visitors in 2023, a 5.2% year-over-year increase. Visitor spending grew by 18% to USD 8.8 billion. Total 2023 visitor-related spending, including USD 494.6 million in meeting planner and exhibitor spending, increased by 20% to USD 9.3 billion.

A strong convention year—marked by global events including Dreamforce and the Asia Pacific Economic Cooperation Leaders’ Summit—drove lodging gains. Hotel room nights attributed to delegates attending Moscone Center conventions totaled 618,298, an 82.6% increase from 2022. Moscone Center hosted 34 events in 2023, up from 33 the year prior.

Average hotel occupancy rose 3.2% to 64.2%. The average daily rate (ADR) was USD 243.80, up 7.2% year-over-year. Revenue per available room (RevPAR) rose 10.6% to USD 156.43.

Tourism generated USD 609.6 million in tax revenue for the city, an increase of more than USD 87 million compared to 2022. The visitor economy also helped support nearly 63,000 jobs in San Francisco, up 18%. According to the Bureau of Labor Statistics, the leisure & hospitality industry was the second-largest source of employment in San Francisco in Q3 2023.

“San Francisco’s tourism recovery efforts continue to make steady progress. While 2023 had us on the right trajectory with increased visitation and visitor spending, we still have ground to cover before the full impact of visitors reaches pre-pandemic levels,” said Scott Beck, President and CEO, San Francisco Travel. “Attracting more conventions and events to the city is a key focus for SF Travel given their citywide impact on San Francisco’s economy.”

“San Francisco is a thriving city full of vibrant neighborhoods, parks and open spaces, unmatched views, and some of the best food and hospitality in the world,” said Mayor London Breed. “We are proud to be welcoming more visitors back to our City and we are growing stronger every day, but there is more work ahead of us. We will continue to do everything we can to make San Francisco a welcoming, safe, and exciting city for visitors, workers, and our residents.”

International visitation continued to be a key driver in San Francisco’s tourism recovery, growing by 26% in 2023. Over two million international visitors contributed USD 4.64 billion in visitor spending.

According to the most recent 2023 data from Oxford Economics for San Francisco and San Mateo counties, visitation from Japan, South Korea, and China more than doubled. China regained its position as the top international market for visitor spend in San Francisco and San Mateo counties for the first time since 2019, contributing USD 633.4 million.

The top five international markets for visitor spending in 2023 were China, India, the U.K., Mexico, and Canada, and the top five for visitor volume were Mexico, the U.K., Canada, Germany, and India.

San Francisco International Airport (SFO)
In 2023, SFO served over 50 million passengers, up 18.7% from 2022. SFO added dozens of new and returning routes last year, including United Airlines launching its first nonstop service to Manila, Christchurch, and Rome; Starlux Airlines launching nonstop service from Taipei; and ITA Airways launching nonstop service from Rome. Additionally, SFO saw nonstop service from China resume with Air China, China Eastern Airlines, and China Southern Airlines flying from Beijing, Shanghai, and Wuhan, respectively.

Outlook for 2024
San Francisco Travel forecasts growth in visitation and overall visitor spending in 2024, driven primarily by increased leisure and business travel. Visitor volume is expected to reach 23.7 million, with 2.36 million international visitors forecast to contribute USD 5 billion of the anticipated USD 9.45 billion in 2024 visitor spending.

Hotel occupancy is forecast to reach 65%, and ADR is projected to grow by 3.3% to USD 251.91 in 2024. Hotel RevPAR is anticipated to increase by 4.7% to USD 163.82.

San Francisco Travel previously reported events at Moscone Center would be below their historical impact in 2024. The diminished impact of meetings and conventions is the direct impact of being unable to sell Moscone Center for two years during the pandemic.

Moscone Center is confirmed to host 25 events this year, accounting for more than 480,000 hotel room nights. San Francisco’s ethos of innovation continues to be a strong magnet for business and technology meetings, with events such as the Game Developers Conference, RSA Conference, Dreamforce, and Data + AI Summit taking place at Moscone Center this year.

Visitor spending is expected to surpass 2019’s levels by 2025, while visitor volume is expected to reach 2019’s 26 million in 2026. The impact of San Francisco’s visitor economy is expected to be back in volume and spending by early 2027.

SFO expects continued growth and projects it will service nearly 54 million passengers in 2024.

CareEdge Ratings report forecasts continued revenue growth for hotels in FY25

CareEdge Ratings estimates that in FY24, hotel industry will end at RevPAR growth of 12-14 per cent on the high base of FY23. The robust resurgence in demand, coupled with the gradual alignment of supply and demand of branded hotels room inventory, has been a noteworthy facet of the hospitality sector’s post-pandemic trajectory.

The growth momentum in the hotel industry is expected to be sustained in FY25, resulting in likely y-o-y revenue growth by 9-11% backed by healthy domestic leisure and business travel and complemented by increasing foreign tourist arrivals, contributing to an improved credit profile for industry players. This will make it the third straight year of an upcycle. Pan-India, average room rates (ARRs) are expected to be around Rs 7,200 to Rs 7,400 in the current fiscal, which is likely to rise further to Rs 7,700 to Rs 7,900 in FY25. The hospitality sector’s commendable recovery in occupancy rates and average rates has in turn cushioned its RevPAR, estimated to have climbed to an average range of Rs 4,800 to Rs 5,000 by the end of FY24 up from the 4,300-range registered in FY23 and is expected to grow by 9-11% in FY25 on the high base of FY24.

While supply of room inventory is expected to experience a delayed catch-up due to the protracted setup period for greenfield hotels, organized players are strategically expanding their footprint in an asset-light manner. Anticipated supply growth is estimated to range from 4% to 5% compounded annual growth rate over the next 4-5 years, adding over 50,000 rooms to the country’s current inventory of approximately 160,000 branded rooms.

Capacity additions on the rise; Midscale- economy segment gaining share

Presently, supply is more balanced across different segments, as compared to an earlier mix that was heavily weighted towards luxury and upper upscale hotels. Over the years the supply concentration in the luxury-upper upscale segment has reduced from 39% in FY15 to 32% in FY23 and is expected to reduce further to 26% by FY27 as the majority of new supply is coming in Upscale, Upper midscale and Midscale/Economy sections. This reduction in supply share is despite new rooms being added in all the segments; better balance has arisen due to material supply growth by rooms in upscale, upper midscale and midscale-economy segments. Several global/Indian hotel operators have also launched sub-brands with a clear focus on quality within key destinations which not only helps them in swiftly building a pool of quality inventory with presence across segments but also aids in better allocation of their capital.

“On the back of the surge in domestic demand and underlying GDP growth, the players in the industry are witnessing strong capacity utilization. With the sharp increase in capacity utilization combined with stable supply growth, hotels are seeing significant ability to yield the demand for branded hotels on an ongoing basis which shall support the strong ARR at current levels or drive some growth as well. While the material contribution from international travelers is yet to materialize, currently the domestic demand is the key driver. With the current travel momentum expected to continue and anticipated demand likely to outpace current supply, FY25 is likely to witness steady high occupancies in the range of 68-70% and continued RevPAR growth at 9-11% which shall aid in overall improvement of the credit profile of the players in the industry”, said Ravleen Sethi, Associate Director, CareEdge Ratings.