As per the report, the three cities, which are the most mature markets in India, must combine their branded supply to match up to Singapore’s total branded hotel supply.
“It is, thus, an understatement to say that our Indian cities have a massive amount of untapped opportunity to grow. The closest competitor to our major markets is Jakarta. Our largest market, Delhi NCR, which is a composition of two sub-markets, will have to more than double up in supply to become larger than Jakarta,” HVS Anarock stated in the report.
The other Asian markets being compared include Tokyo, Beijing, Bangkok, Shanghai and Hong Kong besides Jakarta and Singapore.
Highlighting that Delhi/NCR had over 29,000 branded hotel rooms in 2019, the report stated that while the factor of growth to match Bangkok and Tokyo for India’s largest market is more than 3 times and 4.5 times, respectively, the stark contrast with Shanghai and Beijing, which are nearly 9 times in size ‘takes the cake.’ Delhi NCR in the report referred to Delhi and Gurugram only.
“Despite being the second-most populous country in the world, the inventory of hotel rooms in India is lowest not only in Asia, but also the world.”
According to the report, except for Bengaluru, the other two Indian markets- Delhi NCR and Mumbai – have witnessed the slowest growth in hotel supply during 2015-2019, compared to the other major Asian markets.
While a market such as Singapore witnessed development of nearly 14,300 new rooms during 2015-2019, Bengaluru saw development of nearly 4,100 rooms over the same period. Among the 10 cities, Tokyo witnessed the fastest growth in hotel room supply at 6.4% owing to the city preparing itself for the 2020 Olympics.
The report stated that despite being the second most populous country in the world, the absolute inventory of hotel rooms in India relative to market size (measured in this regard by the city’s population) remains one of the lowest not only in Asia, but also the world.
Delhi NCR and Mumbai offer less than 1,400 rooms per million people, while Bengaluru offers a little over 2,100 rooms per million people. In comparison, Tokyo, the nearest peer, offers 3,680 rooms per million people. Meanwhile, the room count per million people soars to more than 10,000 rooms in Hong Kong, Shanghai, Singapore, and Beijing.
“While population metrics of a city do not directly impact the performance of the hotels sector in the same city, it does indirectly represent the economic standing as well as the opportunity for the city,” HVS Anarock stated in the report.
The report stated that until 2019, Delhi NCR, Mumbai and Bengaluru witnessed the lowest hotel supply growth compared to airline passenger growth. Delhi, the busiest airport in the country handled over 68.5 million passengers in 2019, nearly the same amount handled by Singapore’s Changi Airport, and not too far off from that of Shanghai. But the penetration of hotel supply to passenger traffic was less than half of the closest international city in Asia.
According to the report, the three Indian markets, though still underpenetrated, have been performing at par with the other Asian cities, especially on the occupancy front. However, the revenue per available room (RevPAR) is still low on account of lower average daily rate (ADR) in these cities. Delhi NCR, Mumbai and Bengaluru are primarily corporate markets, but the ADR in these cities is lower than the other financial districts such as Singapore, Hong Kong and Tokyo. Bengaluru has RevPAR in the same range as Beijing and Shanghai, but the hotel supply in the Chinese cities is almost ten times more than that of Bengaluru. Jakarta has the lowest RevPAR amongst the ten cities, but its hotel supply is still two times more than that of the Indian cities, according to the report.