Indian Economy News

Hotel industry growth is expected to strengthen to 9-11% in 2015-16: Icra

  • Livemint" target="_blank">Livemint
  • February 24, 2015

Mumbai: Rating agency Icra Ltd on Monday said Indian hotel industry revenue growth is expected to strengthen to 9-11% in 2015-16, driven by a modest increase in occupancy and small increase in rates.

“Industry wide revenues are expected to grow by 5-8% in 2014-15. Over the next 12 months, Icra expects RevPAR (revenue per available room) to improve by 7-8% driven by up to 5% pickup in occupancies and 2-3% growth in average room rates (ARR),” Icra said.

Further, margins are expected to remain largely flat for 2014-15 while a moderate albeit sub-par expansion is expected in 2015-16.

While occupancies pan India are showing signs of improvement during 2014-15, this appears to be driven by a few pockets such as Mumbai, where occupancies grew by 15% year-to-date in December 2014 supported by traffic for large conferences and weddings.

“This traction comes after almost two years of negligible supply addition. Bengaluru also exhibited some stabilisation with incremental supply being slowly absorbed; however, the newer properties launched during 2012-14 continue to struggle with weak RevPARs,” Icra said.

The National Capital Region (NCR) is exhibiting a wide variation in performance across Delhi, Noida and Gurgaon, with Delhi exhibiting 1-2% growth in ARR and occupancies during October-December while rates in the Delhi Aerocity area and Gurgaon remained weak, the rating firm said.

India has around 29,000 premium rooms under development, to be launched over the next six years.

“The next supply bump will hit the market in 2016 across Bengaluru, Mumbai, Kolkata, and Noida with over 6,500 rooms. Markets such as Pune and Gurgaon will also see sizable room additions. Unless demand keeps pace, the widening supply-demand gap in these cities will impact rate integrity over the next two years,” Icra said.

Some of publicly traded Indian hospitality companies include Indian Hotels Co. Ltd, Hotel Leelaventure Ltd, Asian Hotels (East) Ltd and Royal Orchid Hotels Ltd.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.