IGI Logo

Rating agency ICRA in its latest report has said that the Indian hotel industry is likely to report a 13-15% revenue growth in FY24, notwithstanding the potential impact on demand with further Covid waves, if any. The demand recovery has been strong in the last one year, and ICRA anticipates it to continue in FY24 as well. It noted that sustenance of domestic leisure travel, higher bookings from meetings, incentives, conferences, and exhibitions (MICE), and business travel, along with an increase in foreign tourist arrivals (FTAs), would support revenues.

According to the report, the industry is also likely to benefit from specific events like the G20 summit and the ICC World Cup 2023. ICRA estimates pan India premium hotel occupancy at around 70-72% in FY24, after recovering to 68-70% in FY23. Pan-India premium hotel average room rates (ARRs) are expected to be at around Rs 6,000-6,200 in FY24. While the occupancy is expected to be at decadal highs, the RevPAR is expected to remain at a 20-25% discount to the FY2008 peak.

The report further stated that demand in leisure destinations has been strong since Q3 FY22, while markets like Chennai and Hyderabad have benefitted in FY23 from MICE (including weddings) and pick-up in business travel. However, FTAs are yet to reach pre-pandemic levels. Gateway cities like Mumbai and Delhi reported occupancy of over 75% in FY23. Pune and Bengaluru, which are business travel markets with a large part of the demand from the service sectors, have also picked up in the last few months, although they still lag behind other markets. The ARRs have also inched up sharply across markets, consequent to the demand improvement. However, despite this, the ARRs remain lower than the FY2008 peak. The sharp rise in ARRs of premium hotels also resulted in the spillover of demand to mid-scale hotels.