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Hotel industry to see modest 6pc growth in FY16: ICRA

The Indian hotel industry will witness a modest growth of 5 to 6 per cent in the current fiscal due to delays of under-construction projects, according to ratings agency ICRA.

The revenue growth for the industry is expected to remain weak in the first half of 2015 with a growth rate of just 3 to 4 per cent and operating margins are likely to be flat, it said.

Occupancies in the hotel for FY2015-16 is expected to improve by 2 to 4 per cent and revenue per room will go up by 3 to 5 per cent, said ICRA in its research on the Indian Hotel Industry.

“In view of continued weakness in the Indian Hotel industry, ICRA has marginally revised growth estimates for the industry down to a top-line growth of 5 to 6 per cent during 2015-16, with flat operating margins,” the report said.
It further added: “Room inventory in the country is expected to grow by 12 per cent during 2015-16, as compared to 4 per cent during 2014-15,” the report said.

Due to delays of under construction project, addition of new properties still continue to trickle in from projects announced during before 2009.

However, domestic travel has shown strong growth trends in last 12 months as per the domestic Revenue Passenger Kilometre (RPKM).

Meanwhile, the report also cautioned that a weak corporate results can impact discretionary travel.

“Travel for business can be curtailed in view of technological advancement which supports highly interactive meetings in virtual spaces,” it suggested.

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