Global uncertainty strains travel; India’s growth story remains strong: Puneet Chhatwal

Global headwinds, domestic resilience and long-term growth ambitions define the latest hospitality outlook, as shared by Puneet Chhatwal, Managing Director & CEO, IHCL, at a recent public forum, where he outlined the sector’s current state and future trajectory.

What is the impact of geopolitical disruptions on hotels industry?

Chhatwal noted that travel demand, particularly in markets such as Dubai, has seen a decline. “The situation in Dubai from 80 has declined to somewhere between 20 and 30. The world has become, unfortunately, a difficult place,” he said, pointing to ongoing geopolitical tensions.

While Dubai and the Middle East may take longer to return to previous occupancy and rate levels due to seasonal factors and Ramadan, he expects gradual stabilisation in the coming months. “September, October things will start becoming okay. But to go back to those rates and occupancies, it will take longer,” he added.

However, he emphasised that recovery cycles have become shorter over time. Drawing parallels with past crises such as 9/11 and subsequent terror attacks in Madrid, London and Paris, he explained that recovery timelines have reduced significantly. “If we scroll back 25 years, planes were empty for almost 18 months. Then it became a month, 15 days, seven days. My guess is by September or October, we should be in a fine place,” he added.

What is India’s long-term growth outlook for tourism?

Positioning India as a long-term growth story, Chhatwal aligned his outlook with the broader vision of Viksit Bharat 2047. “India’s story is not a short-term story. There will always be headwinds, but India is in a better position to adjust than anybody else,” he said.

He underscored the need for higher economic growth to unlock the sector’s full potential. “7% GDP is not enough. We need to get to 8.5 or 9%. If we could reach 7 when the world is at 3, we can also go to 10%,” he stated, while acknowledging that policy execution takes time.

Should the industry prepare for strains?

According to Chhatwal, rising airfares have significantly altered travel behaviour. “Tickets doubled, doesn’t matter whether it is economy, premium economy or business class. Because of that, long-haul travel became more regional and domestic,” he said.

He highlighted that India has remained resilient despite multiple disruptions. Over the past year alone, the industry has navigated a series of challenges including regional conflicts, airline incidents, extreme weather conditions and more. “It’s not that this is a one-off. There has been a series of crises,” he noted, adding that even large-scale disruptions such as the closure of 50 airports in India had a significant impact on the industry.

However, he stressed the sector’s improved cost discipline post-pandemic. “Even if we miss a bit on revenue, we have learnt how to control costs because of zero revenue during COVID. That’s not rocket science,” he said.

He also highlighted that this sector is critical for a country like India with a young population, shared, “Tourism and hospitality is the highest multiplicator of jobs. And one in four new jobs globally, as per WTTC, is created in this sector.”

He reiterated that macroeconomic growth would continue to support hospitality demand. “If you become the fourth-largest economy, it will have positive side effects for hospitality, tourism and aviation,” he added.

What are the key demand drivers shaping the sector?

Chhatwal identified multiple structural drivers supporting long-term growth. Infrastructure development, including highways, airports, railways and regional connectivity schemes, is unlocking demand. “The government’s push on infrastructure is tapping demand that was there but not fully realised,” he said.

He also pointed to the rising importance of spiritual tourism. “As people get richer, the need for spiritual travel increases. Spiritual tourism is booming like never before,” he noted, citing examples such as the Maha Kumbh in Uttar Pradesh, which significantly boosted the state’s GDP contribution from tourism.

Additionally, the expansion of the middle and affluent classes is expected to sustain demand. “People are living in the now. They want to spend, travel and experience, rather than just save,” he said.

Looking ahead, Chhatwal concluded that while short-term disruptions may continue, the long-term trajectory remains firmly positive. “Headwinds may come, but over the next 25 years, the growth story of tourism and hospitality in India is not going to change.”

What is the growth mantra for IHCL?

Detailing the company’s expansion plans, Chhatwal shared that the group currently operates 373 hotels, with a pipeline of 255, taking the total portfolio to approximately 628 properties. “If we are opening 30 hotels per year, we have a very good chance of compensating and doing well,” he said.

He highlighted a balanced approach between asset-heavy and asset-light models. “I don’t subscribe to a 100% asset-light strategy. Some key iconic assets have to be owned,” he noted, adding that ownership allows greater control over asset management and value creation.

The diversification of brands has also been central to growth. “We have gone from one or two active brands to almost 12. Today, our brandscape is one of our biggest assets after Taj,” he said, attributing resilience to diversification across brands, revenue streams and business models.