Demand-supply imbalance will help ARR growth, says Vikram Oberoi

Even as the Indian hospitality sector continues to boom, the existing supply-demand imbalance will bode well, a top industry executive said on Thursday.

“While demand is growing at 8-10 per cent, supply is much slower. This imbalance will increase further, which is good for our average room rates (ARR),” Vikram Oberoi, chief executive officer and managing director, EIH Limited – parent of the Oberoi group of hotels, said in a post-earnings call with investors.

The Indian hospitality sector has seen a sustained growth on the back of strong domestic tourism and corporate travel.

Talking about expansion plans, he said, “We are on track to open 50 new hotels by 2030.”

The group plans to open two new hotels – The Oberoi Rajgarh with 65 keys and The Oberoi Vindyavilas wildlife resort in the Bandhavgarh region of Madhya Pradesh – in the ongoing financial year.

In the works are properties in Tirupati with 125 keys, Vizag among others to come up in the next two-and-a-half years, and a property in south Goa with 90 keys, which is currently in the planning stage.

Talking about the new coalition government set to come into power in a few days, Oberoi said, “As long as the economy continues to do good, we will see ARR increasing. We have no reason to doubt that the economy will remain strong,” said Oberoi, adding, that, “Average room rates in the luxury-premium segment will grow at a faster pace.”

Responding to a question on increasing competition in the Indian market, he said, “Our hotels rank exceptionally well in terms of service,” and the Group will compete with the likes of Marriott, Hilton and Four Seasons on the basis of revenue per available room (RevPAR).

EIH Limited saw an 11 per cent increase in RevPAR in the fourth quarter ended March 31, 2024 and a 15 per cent increase in the same on an annualised basis.

Among all its properties, the company saw the highest RevPAR growth of 41 per cent in Agra, on the back of "strong rebound of international tourism into India," Oberoi said.

The company reported its strongest financial year with a 106 per cent rise in net profit to Rs 677.7 crore, and a 25.3 per cent jump in revenues to Rs 2,626 crore.