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September 01, 2019

Sector Report: Hotels

This report is available to users in India for ₹40,000 + applicable taxes

 

Table of Contents

 

  • Summary
  • Pan-India Hotels Performance
  • Profitability
  • Agra
  • Ahmedabad
  • Bengaluru
  • Chennai
  • Goa
  • Hyderabad
  • Jaipur
  • Kolkata
  • Mumbai
  • NCR
  • Pune
  • Kerala

Summary

 

Industry expected to witness better times with steady growth in demand even at the back of supply addition

 

Due to intense competition and economic slowdown from fiscal 2011 to 2017, RevPAR growth across India dipped by 2% CAGR. RevPAR dipped by 7% in fiscals 2013 and 2014, owing to huge supply addition, while growing at 4% (on-year) in fiscal 2016 because of improving economic conditions along with limited supply additions. Demand for premium hotels is expected to grow at CAGR of 6% during fiscal 2019 to fiscal 2024. Ease of travel achieved due to introduction of facilities, such e-visa, is also expected to have a positive impact on domestic tourism growth in the long run (although the impact is likely to be marginal in the short term). During the same period, supply is expected to increase at CAGR of 4%, resulting in OR increasing to 73% by fiscal 2024 from 65% in fiscal 2019. ARR is expected to grow at CAGR of 3%.

 

Room demand (7% CAGR) in leisure destinations - Goa, Agra, Jaipur and Kerala (Kochi, Kovalam and Thiruvananthapuram) - is expected to outpace room supply (expected to increase 4% CAGR) during fiscal 2019- fiscal 2024. While OR in leisure destinations is expected to grow to 70%, ARR is expected to grow at 3% CAGR. Consequently, RevPAR for leisure destinations is expected to grow at CAGR of 5% annually to ~Rs 6,000 till fiscal 2024.

 

During the last fiscal, Kerala had seen a fall in occupancy owing to travel advisory during Nipah virus outbreak and largely because of the unprecedented floods the state witnessed in the month of August, which was further aggravated by supply additions. However, the occupancy is expected to attain normalcy in the medium term, along with supply additions by international players.

 

Room demand in business destinations Mumbai, National Capital Region (NCR), Kolkata, Chennai, Pune, Ahmedabad, Bengaluru and Hyderabad is expected to grow at a CAGR of 6% during fiscal 2019 and fiscal 2024, outpacing supply growth of 4% during the same period. RevPAR for business destinations is expected to grow at CAGR of 5%, with OR growing to 74% in fiscal 2024 and ARR expected to grow moderately at a CAGR of 3% till fiscal 2024.