1) The travel and tourism industry represents 6.8% of India's GDP and employs around 39.8 million people, making it an important sector of the Indian economy. Domestic tourism accounts for the majority of travel, with over 1.86 billion domestic visits in 2018.
2) The hotel industry in India has a total estimated room inventory of 2.72 million rooms, with branded/traditional hotel chains making up only around 5% of rooms. Additional room capacity is expected to increase the number of branded hotel rooms.
3) The COVID-19 pandemic has severely impacted both the demand and supply sides of the Indian hotel industry. On the demand side, there have been steep declines in key metrics like occupancy
2. Indian Hotel Industry by Sam Ghosh 20th June 2020
Travel and Tourism in India
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
3. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
T&T in India Domestic
Source: Hotelivate
Global Perspective
● WTTC: Travel and Tourism industry represents 10.3% (~ $8.81 trillion USD) of global GDP.
● Hotelivate: Created ~10% of global employment which is around 319 million jobs worldwide.
ForeignGlobal Perspective
4. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
T&T in India Domestic
Source: Hotelivate
Global Perspective
● India ranks 3rd on the WTTC’s Travel and Tourism Power Ranking.
ForeignGlobal Perspective
5. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
T&T in India Domestic
Travel and Tourism in India
● WTTC: The Travel & Tourism industry represents 6.8% (~ $194.3 billion USD) of Indian GDP.
● WTTC: The Travel & Tourism industry created ~8% of Indian employment which is around 39.8 million jobs.
● WTTC: Foreign visitors to India spend $30.3 billion which is 5.6% of total exports.
● Indian Travel and Tourism is primarily dependent on Domestic Leisure spending.
ForeignGlobal Perspective
Source: WTTC
6. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
T&T in India Domestic
Travel and Tourism in India
● Total tourist visits in India were 1.88 billions in the year 2018.
ForeignGlobal Perspective
Source: Ministry of Tourism
7. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
T&T in India Domestic
Domestic Tourism
● Total domestic tourist visits in India in the year 2018 was 1.86 billions.
● Domestic visits are growing at CAGR 13% for last three decades.
ForeignGlobal Perspective
Source: Ministry of Tourism
8. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
T&T in India Domestic
Domestic Tourism...
● Tamil Nadu, Uttar Pradesh, and Karnataka received more than 50% of domestic tourist visits.
ForeignGlobal Perspective
Source: Ministry of Tourism
9. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
T&T in India Domestic
Foreign Tourism - Tourist Arrivals (FTA)
● Total International Tourist Arrivals (ITA) to India in the year 2018 was 17.4 million out of which 6.87 million
were NRIs and rest foreign tourists.
● ~30% of visitors were from South Asian Countries.
ForeignGlobal Perspective
Source: Ministry of Tourism
10. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
T&T in India Domestic
Foreign Tourism - Foreign Tourist Arrivals (FTA)
● Bangladesh, U.S.A., U.K., Sri Lanka, and Canada represent ~50% of FTAs.
ForeignGlobal Perspective
Source: Ministry of Tourism
11. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
T&T in India Domestic
Foreign Tourism….
● Total foreign tourist visits (to different states and UTs) in the year India 2018 was 29 million. CAGR
(2000-18) : 9.2%
ForeignGlobal Perspective
Source: Ministry of Tourism
12. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
T&T in India Domestic
Foreign Tourism...
● Tamil Nadu, Uttar Pradesh, and Maharashtra represented more than 50% foreign tourist visits.
ForeignGlobal Perspective
Source: Ministry of Tourism
13. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
T&T in India Domestic
Foreign Tourism: Tourist Arrivals: Seasonality
ForeignGlobal Perspective
Source: Ministry of Tourism
14. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
Indian Hotel Industry
15. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
Capacity Economics
Capacity - Total Room Inventory
● Hotelivate : The estimated number of lodging/accommodation rooms in the country in 2018 was 2.72 million
and was expected to reach 3.33 million by 2023.
Source: Hotelivate
Regulations
16. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
Capacity Economics
Capacity - Room Inventory by Type of Hotels
● Hotelivate : Only ~5% rooms (~133.36 thousand rooms ) belonged to branded/traditional hotel chains.
Source: Hotelivate
Regulation
17. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
Capacity Economics
Capacity - Room Inventory by City
● Hotelivate : Branded hotel rooms grew at CAGR 9%. New Delhi, Bengaluru, and Mumbai had more than
10% rooms each.
Source: Hotelivate
Regulation
18. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
Capacity Economics
Capacity - Room Inventory by Positioning
● Hotelivate : As of 2017/18, 59% of traditional chain affiliated room inventory positioned between the ‘Upper
Mid Market’ and the ‘Budget’ segment.
Source: Hotelivate
Regulation
19. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
Capacity Economics
Capacity - Proposed Room Additions
● Hotelivate : Additional 50.2 thousand branded rooms were proposed to be added till 2023/24. This would
increase the branded hotel rooms to 183.5 thousand.
Source: Hotelivate
Regulation
20. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
Capacity Economics
Source: CARE Ratings
Economics - Revenue Sources
Other RevenuesF&B RevenuesRoom RevenuesRevenue of Hotels
Room revenue =
Room nights sold X Average
room rate
Where, Room nights sold = No.
of rooms X Occupancy rate X
No. of days (Time period)
It includes revenues from
restaurants and banquets.
Factors influencing F&B Rev.:
● occupancy rates of the
property
● size of banquets and
conferences
● Connectivity
● technology in the banquet
area
● hotel location
Revenues from:
● telecom services
● spa services
● dry cleaning and
laundry services
● Transport facilities
offered by the hotel.
Regulation
21. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
Capacity Economics
Source: CARE Ratings
Economics - Revenue Sources
Regulation
22. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
Capacity Economics
Source: CARE Ratings
Economics - Cost Structure
Regulation
23. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
Capacity Economics Regulation
Regulatory Authorities
● The Department of Tourism: The department of tourism acts as a nodal agency in the operations of the hotel industry.
Some important functions are:
○ Approval of Hotels at Project Stage and Classification & Reclassification of Hotels.
○ Guidelines for Classification of Heritage Hotels etc.
○ Guidelines for apartment hotels.
○ Guidelines for approval of Guest Houses.
○ Hospitality Development and Promotion Board.
○ Implementing a transparent system for the effective monitoring of hotel projects.
○ Ensuring timely accrual of approvals/clearances/NOCs by the multiple agencies and facilitate the implementation of hotel projects.
○ Expeditious clearances will enable completion of hotel projects in time leading to enhancement of room availability for the tourists.
● The Hotel and Restaurant Approval and Classification Committee (HRACC):
○ It inspects and assesses establishments based on the facilities and services offered.
○ The Department of Tourism grants star status based on how well the establishment scores in the HRACC report.
24. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
Capacity Economics Regulation
Important Regulations
● Food Safety and Standards Act:
○ Establishment of the Food Safety and Standards Authority of India, which lays down scientific standards relating to articles of food.
○ Regulates the manufacture, storage, distribution, sale, and import of food articles.
○ Ensuring the availability of safe and wholesome food for human consumption and for matters connected therewith or incidental thereto.
● The Legal Metrology Act:
○ This Act was enacted to establish and enforce standards of weights and measures, regulate trade and commerce in weights, measures and
other goods which are sold or distributed on weight, measure or number.
● The Air (Prevention and Control of Pollution) Act, 1981:
○ This Act has been enacted to provide for the prevention, control and abatement of air pollution.
● The Water (Prevention and Control of Pollution) Act, 1974:
○ This Act has been enacted to provide for the prevention and control of water pollution and the maintaining or restoring of wholesomeness of
water, for the establishment, with a view to carrying out the purposes aforesaid, of Boards for the prevention and control of water pollution.
25. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
Capacity Economics Regulation
Other
● Foreign Direct Investment:
○ FDI up to 100% is permitted on the automatic route in the hotel and tourism sector.
● Goods and Services Tax:
Segment GST Rate
Services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging purposes, having declared
tariff of a unit of accommodation below Rs.1000 per day or equivalent.
Nil
Accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes
having room tariff Rs.1000 and above but less than Rs.2500 per room per day
12%
Accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes
where room tariff of Rs 2500/- and above but less than Rs 7500/- per room per day
18%
Bundled service by way of supply of food or any other article of human consumption or any drink, in a premises (including hotel,
convention center, club, pandal, shamiana or any other place, specially arranged for organizing a function) together with renting of such
premises.
18%
Accommodation in hotels including 5 star and above rated hotels, inns, guest houses, clubs, campsites or other commercial places meant
for residential or lodging purposes, where room rent is Rs 7500/- and above per day per room.
28%
26. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
Demand Side
27. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
Demand Side - Segments
Market DriversSegments
Business travellers
Corporate travellers both domestic
and foreign.
Types:
● Short duration travelers
○ Time-conscious and
less price-sensitive.
● Mid to long-duration travelers.
○ Can be price
sensitive.
○ Prefer service
apartments.
Leisure travellers
Can be both domestic and foreign
travelers.
They are generally price-sensitive and
prefer inexpensive rooms.
This is a growing sector in India.
Airline Cabin Crew
Repetitive and guaranteed demand
for hotels.
Generally, airlines companies enter
into an annual contract with the hotels
and get discounted prices.
Source: CARE Ratings
28. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
Demand Side - Room Occupancy
Source: Hotelivate
Market DriversSegments
Note: Room Occupancy is measured by Occupancy Ratio which is measured by dividing rooms sold by available rooms.
29. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
Demand Side - Revenue Per Available Room (RevPAR)
Source: Hotelivate
Market DriversSegments
Note: RevPAR or Revenue Per Available Room is calculated by multiplying average daily room rate with occupancy rate.
30. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
Travel Spending
Source: IBEF
Market DriversSegments
31. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
Demand Driver: Rapid Urbanisation
● India is experiencing rapid urbanisation.
● Share of urban population is expected to rise from 31% in 2010 to 35% in 2020, 40% in 2030 and 53%
in 2050.
● The urban population is expected to be ~480 million in 2020, ~600 million by 2030, ~740 million by
2040, and ~860 million by 2050.
Data: The World Bank
Market DriversSegments
32. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
Demand Driver: Rising Incomes
● PWC - India will remain one of the fastest-growing economies until 2050.
● Growing per capita income means growing affordability.
● McKinsey - roughly 60 million households could enter the consuming class (defined as households with
incomes greater than $8,000 per annum) by 2025.
Projection: PWC
Market DriversSegments
33. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
Demand Driver: Disposable Income Growth
Data: RBI
GDP: Gross Domestic Product
GNI: Gross National Income
NNI: Net National Income
GNDI: Gross National Disposable Income
Market DriversSegments
34. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
Demand Driver: Rising Household Consumption
Data: World Bank
Market DriversSegments
35. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
Demand Driver: Internal Migration
Data: Economic Survey 2016-17
Market DriversSegments
36. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
Demand Drivers: Favorable Demography
Data: The World Bank
Market DriversSegments
37. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
Demand Drivers: Rising Tourism: Domestic
Data: Ministry of Tourism
Market DriversSegments
38. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
Demand Drivers: Rising Tourism: Foreign
Data: Ministry of TourismData: Ministry of Tourism
Market DriversSegments
39. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
Supply Side
40. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
Supply Side: Traditional Operating Models
Owned Hotels
An equity mode of
entering in the hotel
business. In this case, the
hotel operator owns the
assets and bears all the
risks.
Joint Venture
Another equity mode in
which two or more
businesses collaborate
sharing key resources.
A joint venture is not a
merger i.e. the parties do
not merge all their
operations but take
responsibility of certain
components for the new
business.
Franchise
A franchise has the right to
use the brand and the
distribution channels, and
other proprietary
knowledge of the
franchiser. The owner
retains all the risks and
liabilities of the business
and unlike a management
contract also retains
control over the property.
Management
Contract
In this model, a brand or a
management company
takes over the operations
of property for a
management fee. The
owner bears all the risks
(including employment
contracts), while the
operator deals with the
management issues.
Lease and
License
A hotel management
company takes a lease of
the properties from
original owners. The
owners do not get
involved in any aspect of
the business and only
receive periodic
payments.
PlayersOperating Models
41. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
Supply Side: Other Operating Models
Timesharing
A timeshare is a form of vacation ownership
of property. Units may be on a partial
ownership, lease, or a ‘right to use’ basis
where the sharer has no claim to the
ownership of the property.
Instead of booking a resort every year for a
week or two, or purchasing a property,
timeshare offers buyers the ability to buy
rights of occupancy in a property, usually in
multiples of a week, for a set period. After
purchasing their holiday time and using it,
they can pass it to their friends and relatives,
or rent it out.
Service Apartments
Service apartments are fully furnished apartments
available for short-term or long-term stay
providing all the luxuries of a premium hotel such
as room service, laundry service, fitness centre,
etc. and have larger rooms and more space at a
far more competitive rate. The apartments are
usually equipped with full kitchens, wi-fi, and other
in-house amenities.
Source: CARE Ratings +
Homestays
In this business model, individual homeowners can list
room(s) on online platforms such as Airbnb to rent it
out for the short-term.
In India, Homestays need to get registered as
Incredible India Bed & Breakfast/ Homestay
Establishments.
PlayersOperating Models
42. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
Supply Side: Major Players
● Marriott International
● IHCL (Taj Hotels)
● Radisson Hotel Group
● Accor
● Concept Hospitality
● ITC Hotels
● Hyatt Hotels Corporation
● InterContinental Hotels Group
● Lemon Tree Hotels
● Sarovar Hotels and Resorts
PlayersOperating Models
43. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
Supply Side: OYO
● OYO operates in the budget-midscale segment and aggregates unbranded hotels. OYO has inventory of
around 176 thousand rooms in India by early 2019 compared to total 133 thousand by branded players.
PlayersOperating Models
Source: Hotelivate
44. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
Supply Side: OYO : Business Model
PlayersOperating Models
Source: Hotelivate
45. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
Impact of COVID 19
46. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
Global Perspective Indian Perspective
Global Perspective - Arrivals
● WTTC 17th June 2020 - Global International Arrivals may see drop of up to 73% and Domestic Arrivals
drop of up to 64% in 2020.
47. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
Global Perspective Indian Perspective
Global Perspective - Travel and Tourism GDP
● WTTC 17th June 2020 - “Travel & Tourism GDP losses are projected at $2,686 billion for the upside,
$3,435 billion for the baseline and $5,543 billion for the downside”.
48. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
Global Perspective Indian Perspective
Global Perspective - Travel and Tourism Jobs
● WTTC 17th June 2020 - “Travel & Tourism job losses for 2020 projected to be 98.2 million for the
upside scenario, 121.1 million for the baseline and 197.5 million for the downside scenario.”
49. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
Global Perspective Indian Perspective
Indian Perspective - Timeline
Source: ICRA
50. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
Global Perspective Indian Perspective
Indian Perspective - Economic Impact
● ICRA - Industry-wide RevPAR is expected to drop ~50% in FY 2020-21.
● CRISIL - Hotel revenues are expected to drop by ~25-30% in FY 2020 - 21. “The industry is expected
to witness severe credit distress over the next 3-4 quarters.”
● HVS - “Domestic Travel Will Be Key to the Revival”
○ It is expected that international travel restrictions will be lifted after domestic ones (as already happening in India).
-
51. Indian Hotel Industry by Sam Ghosh 20th June 2020
Indian Travel-Tourism Indian Hotel Industry Demand Side Impact of COVID-19Supply Side
Global Perspective Indian Perspective
Indian Perspective - Consumer Behaviour
● Hygiene and safety (and perception of it) may start to take precedence over price. This has
wide-ranging implications on the market structure including to the hotel aggregators.
● This may be a window of opportunity for contact-less service in the industry. The social distancing
norms will encourage ‘low touch experience’. This may lead to the popularity of shelf check-in kiosks,
and online check-ins, etc.
● Going forward value of brand perception likely to increase. As consumers become more deliberate in
their travel decisions, they are likely to become more selective about the accommodations.