Home Hotel Connect Indian Hotel Industry revenues to grow by 9 per cent- 10 per...

Indian Hotel Industry revenues to grow by 9 per cent- 10 per cent during 2016-17

ICRA estimates pan India Average Room Rates (ARR) to remain flat for 2015-16, nevertheless occupancy improvements of 6per cent-7per cent supports Revenue per available room (RevPAR) growth of 7per cent. Room inventory in the premium category is estimated to increase by 8per cent for 2015-16 as compared to 4per cent during 2014-15. With deferment in construction, supply addition would be lower than earlier estimates at ~7.7per cent-8per cent for 2016-17. Foreign Tourist Arrivals (FTAs) slowed down to 4.4per cent during Calendar year 2015 (7.1per cent during 2014); the FTA segment continues to remain far below its true potential. Further, per capita dollar spend by tourists declined sharply in 2015 after remaining stagnant for three years. Given the muted global economic outlook, FTA growth for CY2016 is also expected to be subdued.
Domestic travel, going by domestic airline Revenue Passenger Kilometre (RPKM) trends exhibited strong growth during the past 12 months indicating improving consumer confidence. ICRA estimates the top line growth for the industry to be ~8per cent during 2015-16, with operating margins expanding by 100 – 150 bps. Growth would improve in 2016-17 to 9 per cent-10 per cent aided by pickup in occupancies and ARR traction in a few markets like Mumbai. While improving consumer confidence has supported growth in occupancies, ARRs also appear to have bottomed out and was marginally down during YTD Dec-2015.
Revenues for the industry sample grew by 7per cent during Q2, 2015-16 majorly due to occupancy driven RevPAR growth, while cost control measures bumped up operating margin by 250 bps to 8.8 per cent.