Premium hotel inventory may rise 3.5-4%, says ICRA report

10 Nov 2022 , 08:30 AM

In light of the demand recovery, premium hotel inventory is predicted to rise by 3.5% to 4.0% in the current fiscal year, with an increase of roughly 15,500 rooms.

In a report released on Wednesday, the rating agency ICRA stated that domestic leisure travel, pent-up demand from meetings, incentives, conferences, and events, including weddings, as well as a gradual recovery in business travel and foreign tourist arrivals, have all contributed to demand recovery being better than anticipated in recent months.

“Over the previous 4-5 months, there has been an increase in new supply announcements due to the solid demand rise. Additionally, recently, work has started on initiatives that were put on hold after Covid.

According to the survey, 68—70% of premium hotels throughout India are predicted to be fully booked this fiscal year, with an average room price of Rs5,600—5,800.

Until October 2022, occupancy was between 62% and 64%, and the average room rate for the first seven months of FY23 was just Rs5,200 to Rs5,400, an 8 to 10% decrease from pre-Covid levels.

According to the report, increased operating leverage and the continuation of cost-cutting measures will strengthen hotel operators’ margins and cash flows.

The incremental premium supply, according to the research, is focused in a few key areas, with Mumbai and Bangalore making up the majority of the future inventory. Furthermore, it continued, there have been sizable supply announcements in tier-II tourist and religious sites.

Rebranding has also been common, and the research predicted that management contracts and operating leases will account for a sizeable portion of the pipeline.

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