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March 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 at the back of slow 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, and grew 4% on-year in fiscal 2016 because of limited supply addition and improving economic conditions. Demand for premium hotels is expected to grow at CAGR of 6% during fiscal 2018 to fiscal 2023. 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 71% by fiscal 2023 from 65% in 2018. ARR is expected to grow at CAGR of 3%.

 

Room demand (5% CAGR) in leisure destinations - Goa, Agra, Jaipur and Kerala (Kochi, Kovalam and Thiruvananthapuram) - is expected marginally outpace room supply (expected to increase 4% CAGR) during fiscal 2018- fiscal 2023. While OR in leisure destinations is expected to grow to 72%, 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 2023.

 

In the short term, the leisure destination of Kerala is expected to witness a fall in occupancy marginally because of the travel advisory during Nipah virus outbreak and largely because of the unprecedented floods the state witnessed in the month of August. The dull sentiment will get negated in the medium term and occupancy is expected to ramp up with supply consolidation.

 

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 2018 and fiscal 2023, 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 71% in fiscal 2023 and ARR expected to grow moderately at a CAGR of 3% till fiscal 2023.