Indian hotel industry to post double-digit revenue growth, 25-28% operating margin growth in FY24, says ICRA

financialexpress.com:

The Indian hotel industry is expected to report double-digit revenue growth in FY24, supported by the sustenance of domestic leisure travel, demand from meetings, incentives, conferences, and exhibitions (MICE), and business travel, along with an increase in foreign tourist arrivals (FTAs), said a report by ICRA. The industry has also benefited from the G20 summit and the ongoing ICC World Cup 2023, it added. 

ICRA has estimated pan-India premiumhotel occupancy at ~70-72 per cent in FY2024, after recovering to 68-70 per cent in FY2023. Pan-India premium hotel average room rates (ARRs) are expected to be at ~Rs 6,000-6,200 in FY2024. “While the occupancy is expected to be at decadal highs, the RevPAR is expected to remain at a 20-25 per cent discount to the FY2008 peak. The medium-term demand outlook also remains healthy, supported by a confluence of factors including improvement in infrastructure and air connectivity, favourable demographics, and anticipated growth in large-scale MICE events with the opening of multiple new convention centres in the last few years, among others,” it said in a statement. 

The healthy demand amid relatively lower supply would lead to higher ARRs. Further, larger players would also benefit from revenues/share of profits generated from hotel expansions through management contracts and operating leases.

Vinutaa S, Vice President and Sector Head – Corporate Ratings, ICRA Limited, said, “Demand is expected to remain strong across markets in FY2024 as consumer sentiments continue to be healthy and corporate performance is stable. Hotel-specific demand, would, however, depend on location, competition, and other property-related dynamics. Further, domestic tourism would be the prime driver,