Improving travel, wedding season likely to boost performance of hotel companies
The optimism is based on a sustained improvement in several factors. One of the key sources of demand for hotel rooms is the wedding season.
According to estimates of Confederation of All India Traders (CAIT), there will be around 38 lakh weddings during the present wedding season, which may generate Rs 4.7 lakh crore worth of business opportunity, a 25% increase from the year ago. Analysts foresee the wedding season to provide good demand for hotel rooms.
“Our channel checks for forward hotel rates for the November and January 2024 period indicate that quoted rates are at least 10% higher than the previous year,” domestic brokerage ICICI Securities said in a note on the hotels sector.
A stable growth in air travel within India and improving arrivals of foreign tourists Are some of the other major factors that augur well for hotel companies.
According to the data shared by the Directorate General of Civil Aviation (DGCA), the average number of passengers travelled by air in the first half of FY24 grew by 20% Year-on-year. Increasing flight connectivity to leisure destinations is a key factor which has boosted demand for rooms.
“At the current trend, we expect FY24 to likely see a 15% year-on-year growth in room rates on average,” said Kotak Institutional Equities in a report.
The domestic brokerage noted that room rates in India averaged Rs6,869 per day in FY23 with February 2023 hitting a new peak at Rs8,300 per day compared with the earlier peak of close to Rs8,000 a day in FY08.
In October 2023, passenger traffic grew by 10.5% when compared with last year’s October. The average number of foreign tourists who arrived in the first half of FY24 grew by 27% year-on-year.
