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Research and rating agency ICRA has maintained the subdued revenue growth outlook for the hotel industry over the next 12 months with an expectation of 5-8% growth in revenues by end of this financial year.
However, growth is expected to strengthen to 9-11% next year driven by a modest increase in occupancy and small traction in rates.
"Over the next 12 months, ICRA expects RevPAR (Revenue per Available Room) to improve by 7-8% driven by up to 5% pickup in occupancies and 2-3% growth in Average Room Rates (ARR). Further, margins are expected to remain largely flat for 2014-15 while a moderate albeit sub-par expansion is expected in 2015-16", added the report.
Mumbai outperformed its peers reporting a whopping 15% growth in occupancies by end of December driven by traffic for large conferences and weddings. This traction comes after almost two years of negligible supply addition.
Bengaluru also exhibited some stabilisation with incremental supply being slowly absorbed, however the newer properties launched during 2012-14 continue to struggle with weak RevPARs.
The National Capital Region (NCR) is exhibiting wide variation in performance across the troika of Delhi, Noida and Gurgaon, with Delhi exhibiting 1-2% growth in ARR and Occupancies during Q3, 2014-15 while rates in the Delhi Aerocity area and Gurgaon remained weak.
India has around 29,000 premium rooms under development- to be launched over the next six years. The next supply bump will hit the market in 2016 across Bengaluru, Mumbai, Kolkata, and Noida with over 6,500 rooms.
"Markets like Pune and Gurgaon will also see sizable room additions. Unless demand keeps pace, the widening supply-demand gap in these cities will impact rate integrity over the next two years", added the report.
