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Travel & Tourism

Published on: Dec. 29, 2022, 9:02 a.m.
Will travel back on track in 2023?
  • Beach beckons: India is one of the top market for the Maldives

By Suman Tarafdar

That 2022 has been a year of recovery for the travel sector – best indicated by the fact that 24 per cent Indians took at least one vacation a month on an average, compared to the global average of 11 per cent. This rather revealing statistic was put up by a survey by the Travel Lifestyle Network, which also said that about 18 per cent Indians travelled for work during the year.

The travel-tourism-hospitality troika is reasonably confident that this trend will only grow in 2023. The confidence in numbers is telling. The 25th Edition of Hotelivate’s Trends & Opportunities Report, forecasts the Indian hospitality to achieve 68 per cent plus occupancy with an average rate of Rs5,700 in 2022-23 and reach close to 70 per cent at an average rate of about Rs6,000.

“The year 2023 will see record levels of growth in RevPAR, which will be strongly driven by ADR growth, therefore resulting in higher margins,” says Dilip Puri, founder & CEO, Indian School of Hospitality. “With continued upsurge in demand and positive consumer sentiment, travel is rebounding strongly and we are optimistic about the tourism & hospitality sector in India and the wider region, adds Sudeep Jain, MD, SWA, IHG Hotels & Resorts. “In 2023, leisure travel will play a significant role and domestic tourism will continue to be dominant.”

KB Kachru, vice-president, Hotel Association of India & chairman emeritus & principal advisor, South Asia Radisson Hotel Group, says that, post pandemic, “We notice a hike in the number of people wanting to travel. This trend is likely to continue in 2023.”  

 Pack your bags

“The travel industry is in the process of revival and we are optimistic of significant travel demand to continue in 2023, as our customers resume their long-awaited travel plans,” predicts Rajeev Kale, president & country head, holidays, MICE, visa, Thomas Cook (India). “Popular international destinations like Europe, South east Asia, Dubai-Abu Dhabi; mid-long hauls like Australia, New Zealand, Turkey, South Africa; and emerging destinations like Baku and Almaty will continue to witness strong demand from India. And there will be a high interest for destinations offering experiential activities for a once-in-a-lifetime experience. The pandemic altered the way customers plan their trips and their expectations and priorities have significantly changed during the past two years, especially when it comes to the mode of travel and stay.”

  • Khanna: an optimistic picture

    Khanna: an optimistic picture

Inbound tourism, MICE and in-person meetings will see significant growth in the upcoming year and will further strengthen the healthy average daily room rate recovery, predicts Kachru. Leisure travel is also bound to rise, with better air & rail connectivity, points out Daniel D’Souza, president & country head, holidays, SOTC Travel.

Domestic tourism, which came to the rescue as international travel was sporadic at best even in 2022, is likely to continue to hold sway. “India continues to represent significant yet underleveraged potential and my sense is we will see a consistent growth of over 25 per cent year-on-year,” says D’Souza. “We are working closely with aviation, hospitality and tourism stakeholders to leverage domestic tourism to its maximum.” Agrees Puri, who says: “Inbound will begin to add a little more cream & icing to the cake in 2023, but the growth will remain strong on the back of the domestic market.”

Travellers will continue to explore, experience and value off-beat destinations and hidden gems, including in Tiers II and III cities, predicts Jain. “Staycations and weekend travel demand will continue to rise as well. With a hybrid working model, people are experimenting with their work settings and we will continue to offer a seamless and comfortable ‘workcation’ experience to our guests. Additionally, business travel and events are expected to make a significant recovery, which will further strengthen the path to a healthy recovery next year.”

  • D’Souza: 25 per cent growth year-on-year

    D’Souza: 25 per cent growth year-on-year

The outbound market is just as bullish. “The year is closing with India as the top market for the Maldives. In 2023 too, we are still foreseeing India to be in the top three countries to visit the Maldives,” says Maria Luisa Lalli, general manager, Ozen Reserve Bolifushi.

 Room-full

Stakeholders in hospitality, especially leisure hospitality, express renewed confidence about growth. “During the first half of 2022-23, most hotels have already crossed their pre-Covid performance,” affirms Achin Khanna, managing partner, strategic advisory, Hotelivate.

“And, in certain micro-markets, they have broken records in terms of both occupancy and average rate. Moreover, our conversations with various hotel brands paint an optimistic picture for the industry. Therefore, even with the uncertainty, the Indian hospitality industry is likely to witness strong performance in the short to medium term.”

The pipeline is robust too. Khanna points out that “About 15,000 keys (representing an increase of 10 per cent on the existing branded hotel inventory) are slated for development with over 70 per cent of the projects under active development in 2023. This represents a total of 152 hospitality projects spread across 97 different cities.”

Among the new brands expected to launch in India are Moxy (Marriott); Dusit D2 and Dusit Princess (Dusit); Mementos (ITC Hotels); Staybridge Suites (IHG); and Ascott (Ascott Limited), among others. IHG is eyeing the potential of debuting its global brands such as Regent, Kimpton, voco and the recently launched Vignette Collection. Mementos, which will bring together a collection of unique hotels, across varied destinations ranging from modern marvels, hidden retreats to historic treasures, is set to begin its journey with hotels in Udaipur and Jaipur in 2023.

Storii by ITC Hotels, which saw its first hotels launch in 2022, is slated to add another 116 keys across three locations in Himachal Pradesh by the end of 2023. Significantly, the group will also see its first overseas expansion, as it is set to open ITC Ratnadipa in Colombo, Sri Lanka.

  • Puri: record RevPAR growth

    Puri: record RevPAR growth

Individual hotels are confident too. “As the economy flourishes, meetings and conventions will increase in numbers and will have a domino effect on travel and trade,” stresses Shiv Bose, general manager, DoubleTree by Hilton Goa, Panaji. “Social engagements and weddings have been traditional revenue aggregators and continue to do so for scenic locations. We have taken a double digit increase in our projections from this sector for the year 2023. The ‘Udan’ initiative by the government for construction of airports in Tier II cities has greatly improved the tourism infrastructure and has made places more accessible.” Neeraj Maharshi, general manager, DoubleTree by Hilton Jaipur, Ajmer, concurs: “I believe that the picture for 2023 is looking positive, as both domestic and overseas arrivals are anticipated to increase even more in 2023. The demand will be fuelled by all types of market segments, including leisure, weddings, corporate, and MICE.”

The Indian hotel industry is witnessing renewed growth and the demand is outpacing the supply, points out Ronan Fearon, general manager, JW Marriott Bengaluru Prestige Golfshire Resort & Spa. “Owing to a resounding spike in booking during 2021-22, the outlook of the Indian tourism & hospitality industry for the next decade looks bright and seems to expand exponentially.”

Challenges remain

Some thorny issues remain though, from visa restrictions to health scares, high ticket prices, low room supply and looming recession, challenges abound. The headwinds from the volatility in the global economy are going to influence the larger Indian economy and hence, the hospitality industry, points out Khanna.  “The fear factor is imminent, especially if we look around the world,” says Bose. “Whilst India is positioned to handle the adversities better, the impact cannot be undermined.” Until visa processes aren’t refined there can be an ongoing lag in 2023, adds Kachru.

  • Kachru: seeing significant growth

    Kachru: seeing significant growth

The imminent economic crisis and heightened inflation rates in many regions of the world would have an effect on consumer spending and travel purchases, stalling the recovery of the world’s tourist industry, says Maharshi. “Holidays are at the bottom of many families’ priority lists as a result of the decline in financial activity that many industrialized economies are experiencing and the pressure this is putting on living standards. As a result of the global crisis and inflation at levels not seen in many years, people will be compelled to be extremely choosy with their travel spending. The threat of Covid cannot be ruled out just yet and the traveler, as well as the hotelier, has to be cautious about this."

Puri adds that the most critical challenge, which impacted the sector adversely in 2022, will be the lack of talent. “Attrition rates will improve, but the growth expected in the industry will continue to put pressure on the talent required to fuel this growth.”

“After recovering from the devastating impact of Covid-19 pandemic, the tourism & hospitality industry is now facing the impact of many global factors such as the Russia-Ukraine war, inflations, job cuts, increase in oil prices, global economic slow-down all posing towards a possible recession in the coming months,” elaborates Fearon.

“Additionally, the next wave of the pandemic is just looming round the corner. However, the resurgence in demand is likely to supersede the detrimental effect of short-term uncertainty, due to economic volatility, the potential next wave and manpower crisis. Having said that, India’s economy is fundamentally strong enough to handle such global crises, which will have minimal effect on the Indian economy, due to the investments being diverted to emerging markets like India.”

  • Lalli: Maldives is India’s favourite

    Lalli: Maldives is India’s favourite

Possibly, due to a multiplicity of factors, the lucrative inbound travel is a space the sector is watching eagerly. “While inbound international travel has picked up significantly, it still hasn’t reached pre-pandemic levels,” admits Jain. “The global headwinds due to the resurgence of the pandemic and the recessionary forces might slow down the inflow of foreign tourists,” agrees Khanna.

“The government’s efforts are focussed on growing this segment of the business. In particular, the G20 Summit provides an opportunity to showcase India, boost the country’s tourism profile and increase international visitations. Even then, it seems that the domestic markets will continue to be the main feeder for the tourism business.”

Overall though, the picture is rosy. “The strong domestic demand footprint and the desire for international companies to look for cost-effective investment and export destinations would allow India to deal with the global economic slowdown,” predicts Khanna. Of course, all this predicated on the assumption that BF.7 a.k.a. the newest version of Covid, will no longer create the havoc and resulting depression it has in the past few years. The sectors are certainly keeping their fingers crossed for zero travel disruption. Tightly!

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