MUMBAI: Demand for hotel rooms will remain buoyant with strong pick up in foreign tourist arrivals which will lead to a 2 percent rise in occupancies and up to 2.5 percent growth in average room rates this fiscal year, says a report.
"Increasing foreign tourist arrivals and higher MICE (meetings, incentives, conferences & events) activities will boost growth. Going forward we expect 2 percent growth in occupancies and 2-2.5 percent growth in average room rates, leading to 4-4.5 percent growth in revenue per available rooms this year," Icra said in a report.
He said the growth of revenue per available rooms is estimated to accelerate to 5-7 percent in FY19 and FY20, driven largely by traction in average room rates.
Demand for rooms continues to remain buoyant as foreign tourist arrivals picked up strongly to 15.6 percent in the first 10 months of the year up from 9.8 percent a year ago, the report said.
Foreign tourist arrivals into the country during the first 10 months were higher than 5.6 percent and 10.3 percent that the Asia-Pacific and South Asia regions witnessed, respectively.
The domestic revenue passenger kilometer, which is a proxy for domestic travel, also exhibited over 15 percent growth every month, barring just two months, it added.
On the supply side, the report said, on the premium room inventory database (12 key cities) indicates an annual growth of just over 5 percent till FY20, which is much lower than the over 12 percent annual addition witnessed in the past six-seven years.