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India hospitality sector is on the mend, report finds
The hospitality industry in India is on the path to recovery following the Covid-19 pandemic, with investment key to ongoing growth, a new report has found.
The report cited the nearly two-year-long cyclical upswings and downswings of the Covid-19 pandemic and the resulting travel restrictions as having a tremendous impact on the travel and hospitality sector.
In 2019, the travel and tourism sector accounted for 10.3% of the global GDP, dropping to 5.3% in 2020, then up to 6.1% in 2021. In India, the industry’s total share of GDP dropped from nearly 5.2% in 2019-20 to just 1.1% in 2020-21.
But since then, a strong vaccination programme, reopening of borders, removal of travel restrictions and sustained economic growth have put the hospitality sector on a path to recovery, the report from real estate consulting and investment firm CBRE South Asia has shown.
A renewed interest from investors has been one of the major drivers of growth for the Indian hospitality sector in the past couple of years, the report, titled Indian Hospitality Sector: On a Comeback Trail, stated. Total investment in the industry post-Covid-19 could reach beyond US$400 million (2020-23), the report said. And by 2028 the Indian government expects the country’s tourism and hospitality sector to earn US$50.9 billion in visitor exports, compared with $28.9 billion in 2018.
India’s government has also been a major benefactor of the segment, the report claims, with tourism and hospitality figuring high on the government agenda. The draft Tourism Policy aims to generate $400 billion in foreign exchange earnings from tourism by 2047, compared to $30 billion projected for 2023.
A renewed focus on domestic tourism and focus on sustainability will also help drive growth in the hospitality sector in India, according to CBRE South Asia. As many as 12,000 hotel rooms are expected to be added in 2023 and the number of rooms is expected to grow at a compound annual growth rate (CAGR) of 3.3% by 2025, in preparation for continued visitor growth in the coming years.