Hospitality sector to grow by 4.7 to 5.4 pc: HVS-Anarock

The Indian hospitality industry is expected to perform at similar levels of growth as witnessed in 2019 with overall revenue per available room (RevPAR) growing within a range of 4.7 to 5.4 per cent over last year, according to a new report by HVS Anarock Hotel Advisory Services.

The first half of the year will be relatively muted, led by coronavirus impact on global markets and ongoing economic headwinds that are expected to last till the financial year ends.

Demand is likely to pick up after that as economic reforms start showing their positive results. The successful closure of big-ticket deals has improved market sentiments and paved the way for more mergers and acquisitions in 2020, which are likely to exceed 800 million dollars, said the report.

2019 was a mixed bag for the hospitality sector. The year started on a positive note with the first quarter performing in line with market expectations.

In later part of the year, the sector benefited from easing of Goods and Services Tax (GST) rate on hotel room tariffs across the board. But successive negative impacts on the sector drained much of the enthuse.

The closure of Jet Airways, India's largest airline by market share, lead to a severe crunch in the availability of airline seats which combined with the impact of general elections in the country led to a temporary softening in demand growth.

As the year drew to a close, the industry witnessed a record-breaking performance in November with several hotels in major markets proclaiming it to be their 'best-ever to date.'

However, the hardening economic headwinds and protests related to the Citizenship Amendment Act (CAA) and National Register of Citizens (NRC) dampened the spirits towards the end of the year.

The hotel industry witnessed a pan-India RevPAR growth of just over 4 per cent in 2019, a year in which the sector underwent several ups and downs. The industry's performance even after 12 years is 28 per cent lower in RevPAR from the last peak of 2007.

The sector witnessed over 31 per cent growth in brand signings during the year with about 171 new hotels entering the branded hotel market and an additional 53 being re-branded.

Tier 3 and 4 cities continue to show aggressive growth as brands try to spread their distribution based on a steadily improving demand from these cities.

The report said 2019 was a remarkable year for hotel transactions which witnessed transactions worth Rs 4,937 crore compared to just over Rs 535 crore in the previous year.

Rising disposable incomes combined with the introduction of low-cost carriers and the improvement of air connectivity through the UDAN scheme has resulted in significant growth of airline passenger traffic in India, it said.