As the economy rebounds, India's hotel industry may have its best year ever

After posting a hike of 13 per cent in FY22 the ARR of premium hotels is estimated to have increased by 24 to 26 per cent in FY23, a decadal high of Rs 7,500 to 10,000, according to a Crisil report

BS Web Team New Delhi
Indian Hotels Company

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The Indian hotel industry is likely to witness one of its best years this fiscal on the back of a rebounding economy, The Financial Express (FE) reported.

The industry margins are expected to improve sharply as the average room rates (ARRs) are likely to see a 10 to 15 per cent hike from an already high base of the previous fiscal year and a sustained high occupancy of 68 to 73 per cent in FY24.

After posting a hike of 13 per cent in FY22, the ARR of premium hotels is estimated to have increased by 24 to 26 per cent in FY23, a decadal high of Rs 7,500 to 10,000, according to a Crisil report.
According to the report, the occupancy rate, which was already 50 per cent in FY22, is estimated to have increased to 67 to 72 per cent in FY23.

Due to the pandemic, the ARR in FY21 had fallen to 20-25 per cent on the year, with occupancy at 31 per cent.
Quoting Pushan Sharma, director–research at Crisil Market Intelligence and Analytics, the FE report said that the demand from business and leisure would continue to be stronger, and foreign tourist arrivals are expected to recover to pre-pandemic levels.

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Indian Premier League, G20 summit, ICC World Cup and continued demand from corporates, leisure travel, meetings, incentives, conferences and exhibitions (MICE) and weddings will boost ARRs and occupancies, he added.
Param Kannampilly, chairman and MD of Concept Hospitality and The Fern Hotels & Resorts, told FE the hospitality industry did reasonably well during the last financial year even as the business was not very good in the metros, especially for business hotels.

Describing the overall situation as good, Kannampilly expressed optimism that the new financial year will bring cheers to the industry and the growth will expand beyond the luxury segment.
Rajiv Kapoor, general manager at luxury hotel Fairmont Jaipur attributed this growth to more accessible travel. He said that as travel has become more accessible. The connectivity by roads and air has improved in the last two years, and the hospitality market has observed a shift from budget to luxury over the past two years, and this trend is likely to persist in the coming years also.

Vinutaa S, vice president & sector head (Corporate Ratings) at Icra, was also quoted in the report that the pan-India premium hotel occupancy is expected to be about 70-72 per cent in FY24 after recovering to 68-70 per cent in FY23. 

First Published: Apr 19 2023 | 11:15 AM IST

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