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Crisil Ratings in its latest report has said that the hospitality industry is expected to clock 11-13 per cent revenue growth in 2024-25 on steady domestic demand and a rise in foreign travellers. This revenue growth will follow a likely 15-17 per cent growth in the current financial year, backed by steady domestic demand and ramp-up in foreign travellers. The strong demand dynamics along with modest new supply will keep the operating performance of the industry healthy over the near term.

According to the report, the healthy operating performance will augur well for the industry profitability where the earnings before interest, taxes, depreciation, and amortization (EBITDA) will continue the strong momentum over the current and the next fiscal. This, along with limited capital expenditure, will keep the credit profiles strong.

The report further said the domestic travel demand, which remained a key driver this fiscal, will sustain next year as well. This momentum will be supported by healthy economic activity which drives business demand and continuing leisure travel demand, which reinvigorated post the pandemic. While the demand will remain strong, the growth rate is expected to taper off next fiscal due to high base. Consequently, the average room rates (ARRs) are expected to grow 5-7 per cent next fiscal as against 10-12 per cent this fiscal and the occupancy is expected to remain healthy at current levels of 73-74 per cent. On the other hand, the report said that the foreign tourist arrivals in India, despite a growth this fiscal, are estimated to remain 10 per cent below the pre-pandemic level and pick-up in the same will provide a fillip to the hotel demand next year.