Recovery in Mumbai's hotel industry is finally underway. Read on to know more.
The hotel industry in Mumbai, India's financial hub, is, at last, experiencing a sustained recovery, fuelled primarily by a resurgence in corporate travel and large-ticket conferences and events. For instance, the city's occupancy surpassed 80% for the first time since the pandemic thanks to the IPL and some conferences that were held in the city in April and May 2022, and the city hasn’t looked back since.
Mumbai had the highest year-to-date (YTD) October 2022 occupancy of 71-73%, 18-20 percentage points (pp) higher than the same period in 2021 and just 4-5 pp behind the occupancy in 2019. Meanwhile, the YTD October 2022 average rates were only 3-5% lower than pre-pandemic levels and were 74–77% higher than the same period in 2021. Strong increases in occupancy and average rates have enabled RevPAR to surpass INR5,500, representing growth of almost 140% when compared to 2021.
Mumbai Hotel Industry: Month-on-month RevPAR Recovery Through the Pandemic
Source: HVS Research
According to the most recent industry data, room demand in the city has increased by more than 37% annually between January and October 2022, whereas room supply increased by less than 1%. This trend is anticipated to continue in the near future, since Mumbai is a major corporate hub, and the home to important financial institutions like the Reserve Bank of India, the National Stock Exchange of India, the Bombay Stock Exchange, leading public & private sector banks, global private equity firms, as well as the renowned entertainment industry, and as such attracts numerous business and leisure travelers all year long. Additionally, the city’s hotel industry is also expected to benefit from the gradual resumption of inbound tourism in the country, the Maharashtra government's strong focus on boosting state-wide tourism, and the city’s hotel supply growing at a slower rate of 1-3%. Only a little more than 4,000 keys are expected to be added to the city’s existing supply of approximately 25,000 keys over the next six to seven years. Luxury and upscale hotels account for nearly 60% of the total quality inventory in the city, creating a substantial development opportunity in the midscale and economy segments. Additionally, the Mumbai hospitality market also lacks differentiated hospitality assets such as boutique and extended-stay hotels, which are essential contributors to demand segmentation in mature international markets.
With a positive demand outlook, limited supply additions, and the anticipated boost from the convention and infrastructure initiatives planned for the city, the future of the Mumbai hospitality market is very promising. We expect the Mumbai hotel industry to end 2022 with occupancy of 73-75% and average rates in the range of INR 8,000-8,200.
Mumbai Hotel Industry: Quarterly Performance
Source: HVS Research; F = Forecast
Mandeep S. Lamba, President – South Asia, oversees the HVS practice in South Asia. Mandeep has spent over 30 years in the hospitality industry having worked with International Hotel Companies such as Choice Hotels, IHG and Radisson Hotels before becoming President for ITC Fortune Hotels in 2001. Having successfully built the Fortune brand in India’s mid-scale hospitality sector, Mandeep ventured into an entrepreneurial stint for over 8 years, setting up JV companies with Dawnay Day Group UK and Onyx Hospitality Thailand before joining JLL in 2014, as Managing Director, Hotels & Hospitality Group – South Asia. An established industry leader, Mandeep has won several awards and recognitions for his accomplishments. Recently, he was featured in the Hotelier India Power List of the most respected hoteliers in India for the second year in a row. Contact Mandeep at +91 981 1306 161 or mlamba@hvs.com.
Dipti Mohan, Senior Manager - Research with HVS South Asia, is a seasoned knowledge professional with extensive experience in research-based content creation. She has authored several ‘point of view’ documents such as thought leadership reports, expert opinion articles, white papers and research reports. Contact Dipti at dmohan@hvs.com.