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Ratings agency ICRA in its latest report has said that premium hotel occupancy in India is estimated to be at a decadal-high of 70-72 per cent in FY2024 after recovering to 68-70 per cent in FY2023. It also said premium hotel average room rates (ARRs) are expected to be at Rs 6,000 to Rs 6,200 in FY2024. It noted that consistent improvement in consumer sentiments despite the inflationary environment, stable corporate performance, and domestic air passenger traffic inching above pre-Covid levels augur well for travel and hotel demand.

According to the report, while the occupancy is expected to be at decadal highs, the RevPAR (Revenue per available room) is expected to remain at a 20-25 per cent discount to the FY2008 peak. ICRA expects an improving trend in ARRs as well across markets in FY2024, driven by healthy occupancy. Further, mid-scale hotels have also witnessed traction across cities and are likely to continue reporting healthy ARRs and occupancy in FY2024. It stated that the hotel supply pipeline is expected to grow only at a three-year CAGR of 3.5-4 per cent, adding approximately 15,000-16,000 rooms to the pan-India premium inventory of about 95,000 rooms across 12 key cities in India. It said demand recovery has been strong in the last one year, and it anticipates the trend to continue in FY2024 as well.

The ratings agency further said that the revenue growth for the Indian hotel industry in FY24 is estimated to be 13-15 per cent notwithstanding the potential impact on demand from exogenous shocks, if any. It also said sustenance of a large part of the cost-rationalisation measures undertaken during the Covid period, along with operating leverage benefits, resulted in a sharp expansion in margins.