Chart Beat: Soaring hotel room rates
The Indian hotel industry has seen a sharp recovery after FY21 and FY22, years marred by the impact of covid-19 as people mostly did not venture out to protect themselves from the virus. Now, occupancies are rising, and daily tariffs have strengthened.
For perspective, the average room rate for hotels in India rose by nearly 39% year-on-year in FY23. The outlook on rates remains upbeat.
Given the ongoing strong demand trends, Kotak Institutional Equities expects 15% year-on-year growth in FY24. True, foreign tourist arrivals have lagged pre-covid levels.
But over the past two years, domestic demand has shouldered the burden, with rising spending on leisure and weddings. To be sure, a lower-than-expected rise in room rates going aheadwould threaten hotel companies' earnings growth.
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