Domestic travel, fueled by revenge tourism, contributes to the growth of the hospitality sector
inner journeyis expected to be a growth engine for the Indian hospitality and tourism industry.
the travel industrymay still have to wait a little longer for travel to increase at the same rate.
- The rating agency pointed out that the slow recovery in international travel could be a bright spot for the domestic industry.
The cost of everything has gone up – including the cost of travel – but that’s not stopping lockdown-hit Indians as they head towards’
While the most lucrative international travel has yet to resume, domestic travel is expected to be a growth driver for India’s hospitality and tourism industry, according to rating agency CARE Ratings.
The sector that has been in retrenchment mode for the past two years has seen a “realignment of cost structures” by industry players. This forms a solid basis for the profitability of the hotel sector in the months to come.
“Fiscal 22 was a promising year for the sector, where the revival of occupancy and RevPAR led to green shoots for industry players. The drop in Covid cases, the resumption of international flights from March 2022 and strong leisure and wedding demand are the positive factors that are expected to drive occupancy and ARR growth in FY23,” the CARE report states.
International travel is expected to resume in the next two years
Care Ratings is betting on a gradual recovery in international travel demand throughout FY23 through the end of FY24. Notably, 25 million tourists travel annually from India to international destinations.
The credit rating agency – in a report published in September 2022 – pointed out that the slow recovery in international travel could be a silver lining for the domestic industry.
“For FY23, CareEdge believes the majority of its portfolio of hospitality companies will show improved performance, largely restored to pre-Covid levels. Domestic tourism is expected to be the main driver of growth, with international travel slowly gaining momentum, especially after the resumption of international flights,” the report added.
The tourism and hospitality segment in India has seen a slight increase after the easing of the lockdown since June 2021 and the drop in Covid-19 infections. The industry saw a sudden surge in bookings in May 2021 as customers explored the option to stay and work.
A recent World Economic Forum (WEF) Travel and Tourism Development Index noted that despite the positive trends, the travel and tourism sector still faces many obstacles with its recovery.
“As the world emerges from the pandemic, economies must invest in building a strong and resilient environment to deliver the travel and tourism experience and services for many decades to come,” Lauren Uppink, Head of aviation, travel and tourism at the World Economic Forum.
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