Mumbai: The Indian hotel industry Expected to report 7-9% increase in revenue In FY2025Credit rating agency said, growth is expected to be more than 14-16% in FY 2024 ICRA on Tuesday.
It said, “Continuity of domestic leisure travel, demand from meetings, incentives, conferences and exhibitions (MICE), including weddings and business travel (despite the temporary lull during the election period), is expected to boost demand in FY2025.” is likely to.” Tourism and second tier cities are also expected to contribute meaningfully in FY 2025. It said domestic tourism has been the key demand driver in FY24 and is likely to remain so in the near term. But foreign tourist arrivals (FTAs) have still not reached pre-Covid levels and the recovery will depend on the global macroeconomic environment.
ICRA said it estimates all-India premium hotel occupancy After recovering to 68-70% in FY2023, to decade high of around 70-72% in FY2024 and FY2025. All India premium hotel average room rates (ARR) are around Rs. Expected to reach. 7,200-7,400 and further rise to Rs.7,200 in FY2024. 7,800-8,000 in FY2025.
“The demand outlook in the medium term remains healthy, supported by a confluence of factors, including improvements in infrastructure and air connectivity, favorable demographics and the anticipated increase in large-scale MICE events with the opening of several new convention centers in the last few Increase is included. year, among other things,” it said, adding that healthy demand amid relatively tight supply will lead to an increase in ARR. Renovation, renovation and upgrading of several hotels is also underway and these are likely to support ARR going forward. Large players will also benefit from a share of the revenues/profits generated from hotel expansion through management contracts and operating leases,” it said.

Vinuta S, Vice President and Sector Head

– Corporate Rating

ICRA Limited,

Said: “Demand is expected to remain strong across all markets in FY2025 as consumer sentiments remain healthy and corporate performance remains stable. However, hotel-specific demand will depend on location, competition and other property-related dynamics. Furthermore, domestic tourism will be the key driver with improving FTAs ​​based on the global macroeconomic environment.” He said Mumbai and NCR, being gateway cities, will grow north of 75% in FY2024 and FY2025. Occupancy is likely to report positive growth, benefiting transient travelers, business travelers and MICE events. “FY2024 and FY2025 will see healthy growth in ARR across all markets. This sharp increase in ARR of premium hotels has also resulted in an increase in demand for mid-scale hotels,” she said.
The ICRA report said maintaining a large portion of the cost-rationalization measures taken during the Covid period, along with operating leverage benefits, has resulted in a sharp expansion in margins compared to pre-Covid levels. “Staff-to-room ratio is ~15-20% lower than pre-COVID levels. Companies have increased their use of renewable energy, while tighter controls on cost inflation and fixed cost increases have also supported margins.
Asset-light expansion has been margin-enhancing for large hotel chains,” it said, adding that its sample of 12 large hotel companies reported strong operating margins of 31-33% for FY2024 and FY2025. is expected to increase, while for FY 2023 it is 33%. 20-22% pre-Covid. “However, within the sample, it is likely to be a mixed bag, dependent to some extent on renewals and increased employee expenses amid rising demand. De-leveraging the balance sheet has reduced interest costs and will support net margins,” it said, adding that earnings and cash flow gains are expected to support the capital structure going forward.
Credit metrics are expected to improve from pre-Covid levels in FY2024 and are likely to improve further in FY2025. However, the extent of improvement in returns on capital employed (ROCE) will depend on the expansion strategy and may be constrained by higher capital costs of new properties due to increase in land and construction costs in case of asset-heavy expansion. It said credit profiles across many companies have improved due to healthy business accruals, resulting in significantly more upgrades than downgrades in FY2023 and Rs 10 million in FY2024.