NEW DELHI: The Indian hotel industry is expected to report a strong topline growth of 10-11 per cent during the financial year 2018-19, aided by 5-6 per cent growth in Revenue per Available Room (RevPAR) and increasing food and beverage (and Meetings, Incentives, Conferences and Exhibitions, or MICE) income, rating agency ICRA said.
Last fiscal, the industry had reported a growth of 2.5 per cent (and 4 per cent adjusted growth for renovation/closures).
As per the report, demand for room is expected to continue to grow by about 8-9 per cent year-on-year over the medium term, led by increasing domestic travel, buoyant MICE activity and higher FTAs, despite immediate term headwinds from global geopolitical concerns and increasing local airfare.
“The industry’s operating margin is expected to improve by ~150 bps to 21-21.5% during FY2019E. Margins are expected to continue the growth trajectory during the next few years to hit a high of ~26% during FY2023P,” said Pavethra Ponniah, vice-president and sector head, Corporate Sector Ratings, ICRA.
The Average Room Rate (ARR) grew by 2-3 per cent to Rs 5,900 in the first nine months of FY19.
ICRA said that strong demand in Mumbai will drive ARRs. Healthy demand and limited supply in Delhi (which has about 75 per cent of the NCR inventory) is expected to drive ARRs in the region, while Gurugram would continue to struggle in the immediate term because of the DIAL Aerocity supply.
Hyderabad and Pune are expected to be strong growth markets over the next two years, while healthy demand will support Bengaluru, despite heavy supply addition, it said.