It has been a couple of years that you have not visited India. How has been the mood like at HICSA 2024? What has been your reading? How is it different from, let us say, a couple of years to now?
Mark Hoplamazian: I think the difference really is that a lot of the questions that were present two years ago with respect to Covid recovery, are now answered. Secondly, the performance has been so extraordinary that it is plain to see and obvious to everyone.
Do you think India really has that potential because a lot has been talked about it, but do you see that converting into numbers as well in terms of actual occupancy and do you really think India can be one of the top three markets?
Mark Hoplamazian: Yes, first of all, it can translate into actual numbers. Our RevPAR of last year was up 33% and year to date it is up in the mid-teens. So, the compounding effect of growth is obvious to see. It is very clear. Secondly, the growth has been led by leisure travel and mostly domestic leisure travel. And the difference between the amount of money spent on domestic leisure travel versus inbound leisure travel is something like seven to one.
You are saying it is not like a sudden bump up, like that revenge travel phase which was there post Covid or suddenly a new fad. You are saying that this is a structural boom, which is here to stay, at least for the medium term.
Mark Hoplamazian: There is no question. We have already seen several years of this kind of growth in the US and we are now just beginning to see it in India. The other thing is, when you go back to pre-Covid times till now and you look at the total aggregate increase in, say, ADRs or RevPAR, it is not extraordinary.
It is not like it is growing at some outrageously high level. If you compound it over time, it is still below 5% per year in terms of compounding. So, we are not talking about being something that seems out of whack. Secondly, supply growth has been pretty limited. Demand is increasing and supply growth has been limited. Demand will continue to increase and so that is an equation for a very good environment.
You say, of course, that demand is outpacing supply, but I have not read the kind of capex announcements or acquisitions as well as room additions in the last 12 months as perhaps in a lot of years earlier. Maybe not immediately, maybe two to three years from here on, do you think the supply will be a bit higher than the demand growth or not really?
Mark Hoplamazian: Even if it grows to be higher than demand growth, there is catching up to what the demand has been compounding at. But even just getting to the point where it matches demand growth would be a good thing. Right now, one of the things that has been an issue, and this is true in India over a long period of time, is capital formation, availability of debt and the cost of debt which still remains somewhat high.You talked about how domestic leisure is picking up and that category is doing very well. What about business and international tourism? In terms of the international tourists coming to India, is that back to pre-Covid levels?
Mark Hoplamazian: No, it is not. And it will be. People will come again. I also think that a lot of people who have not discovered India yet will be coming. But business travel within the country has grown enormously. Inbound international business travel is picking up. So, overall, the demand drivers in main areas, which is meetings, trips and conventions, is strong and growing. Leisure is leading it. Individual business travel is coming back.
