Demand for hotel rooms will remain buoyant with strong pick up in foreign tourist arrivals which will lead to two per cent rise in occupancies and up to 2.5 per cent growth in average room rates this fiscal year, according to a report. “Increasing foreign tourist arrivals and higher MICE activities will boost growth. Going forward, we expect two per cent growth in occupancies and 2-2.5 per cent growth in average room rates, leading to 4-4.5 per cent growth in revenue per available rooms this year,” ICRA said in a report.
ICRA added that growth of revenue per available rooms is estimated to accelerate to five-seven per cent in FY19 and FY20, driven largely by traction in average room rates. Demand for rooms continues to remain buoyant as foreign tourist arrivals picked up strongly to 15.6 per cent in the first 10 months of the year up from 9.8 per cent a year ago, the report said. Foreign tourist arrivals into the country during the first 10 months were higher than 5.6 per cent and 10.3 per cent that the Asia-Pacific and South Asia regions witnessed, respectively.
The domestic revenue passenger kilometre, which is a proxy for domestic travel, also exhibited over 15 per cent growth every month, barring just two months, it added. On the supply side, the report said, on the premium room inventory database (12 key cities) indicates an annual growth of just over five per cent till FY20, which is much lower than the over 12 per cent annual addition witnessed in the past six-seven years.