STR Suggests Cautious Optimism For India Hotels Recovery

STR Suggests Cautious Optimism For India Hotels Recovery

The health of India’s hotel industry is returning, as data from STR Global shows a concerted upward trend and recent positive year-on-year growth in revPAR.

India had previously experienced 14 months of RevPAR declines. After years of double-digit growth, the worldwide economic downturn and the tragic terrorist attacks in Mumbai led to performance declines and double-digit misery.

But December and January saw a return to significant year-on-year increases, in large part due to favourable comparisons to the weak performance posted in the previous year. The recent results also were boosted by a 21% rise in international tourist arrivals, which highlights an overall quarterly increase of 6.9% after four consecutive quarters of year-on-year declines.

Such improvement in international tourism arrivals has come as fears about the spread of the H1N1 flu epidemic have begun to fade. The impact of terrorism also is lessening despite the recent bombing in Pune in mid-February in which at least nine people died. However, several countries, including the UK, the United States and Australia still have issued strong warnings to their citizens, urging them to observe high vigilance and to keep a low profile if visiting India.

Factors working in favour of India’s hotel market include forecasted economic growth of 8.5% (plus or minus 0.25%) for 2010-2011, the Commonwealth Games hosted by Delhi during October, and the trial-run of a “visa on arrival” scheme for visitors from Singapore, Finland, New Zealand, Luxembourg and Japan who plan trips on short notice.

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“Whilst the prospects for India appear promising, make no mistake the last year has been a difficult one”, says Elizabeth Randall, managing director at STR Global.