Major global hotel chains including Marriott, IHG and Hilton are aggressively expanding in India, betting that a domestic tourism boom can withstand a broader consumer spending slowdown and stock market slump.
There has been a flurry of recent hotel deals. IHG Hotels & Resorts in May said it would work with the airports arm of billionaire Gautam Adani’s namesake conglomerate to develop five hotels in key aviation hubs and debut its ultra-luxury Kimpton brand in India. Accor SA plans to bring its premium eco-luxury Mantis brand to a tiger reserve in Karnataka, while Hilton Worldwide Holdings Inc. and Wyndham Hotels and Resorts Inc. signed agreements in April for properties in some fast-growing smaller Indian cities.
The rush by hotel operators to add rooms reflects a surge in demand from India’s growing middle class, which is traveling more frequently and venturing beyond major cities. That’s in spite of signs of increasing pressure on consumption growth due to higher inflation and recent fuel price hikes. An urban consumer confidence survey released June 5 by the Reserve Bank of India showed that households’ sentiment on spending “significantly weakened” in May as did spending sentiment expectations for the coming 12 months.
A report last week from market research company Kantar said that while Indians are becoming more selective in spending, “travel and meaningful experiences” remain important to many. It said 60% of the roughly 1,700 individuals it surveyed in May indicated they intend to take a domestic holiday in the next 12 months, while 52% were looking to travel internationally.
Major local travel platform EaseMyTrip is recording double-digit growth in domestic leisure bookings, and one of the biggest drivers has been religious and spiritual journeys.
Demand for premium destinations, from the beaches of Goa and the mountains of Kashmir to wildlife reserves and pilgrimage centers, has climbed as much as 20% for the summer season, according to the Indian Association of Tour Operators. Hotel room rates have risen as much as 25% in popular destinations across the country, while airfares and prices for local transportation and restaurants have also gone up, according to Ravi Gosain, the group’s president.
