Branded hotel revenues expected to grow by 9% in FY18: CARE

The tourism & hospitality sector contributed $47 bn to the GDP in 2016

Limited room inventory and increase in travel and Meeting, Incentives, Conferences, Exhibitions (MICE) activities is likely to push the revenues of branded hotels between 7 per cent to 9 per cent in 2017-18, a report by rating agency CARE said. The report expects room inventory of branded hotels to be limited to 57,000 across 11 major cities in the next five years while MICE and tourism activities will increase at a steady pace.

According to the report, in the last five years, domestic travel in India has seen an increase due to medical tourism and willingness among millennials to travel. However, the supply of rooms across major travel destinations is likely to suffer slow increase leading to a push in demand. The Average Room Rates (ARR) of branded hotels is expected to increase at 3.5 per cent per annum while occupancy rate will witness a surge of 66 per cent by the end of 2021, 2.6 per cent higher compared to increase in the last five years till 2016. Pertaining to compound growth, in coming five years till 2021, compound annual growth rate (CAGR) for the hotel industry is expected to stabilise between 11 per cent to 13 per cent.

Foreign Tourist Arrivals (FTAs) in India by 2020 is expected to reach a high of 13 million backed by an increase in international trade and setting up of operation base by MNCs in India. However, following terrorist attacks on some of the international destinations like Paris, Brussels, and Orlando, FY17 suffered a significant decline in demand. In FY17, net sales for the industry marginally inched up by 2.5 per cent as compared to 8.9 per cent in FY16. In last five years till 2016, CAGR growth of industry was 6 per cent. The tourism & hospitality sector contributed $47 billion to the GDP in 2016 accounting to 7.5 per cent of the total GDP.