India’s organized hotel industry has reached pre-pandemic levels: Report

New Delhi: India’s hospitality industry not only recovered from the pandemic slump, but also remained on a growth trajectory this fiscal, according to a new report. The demand outlook for the industry is positive, indicating a promising future, according to the report by credit rating agency CareEdge titled ‘Back on hospitable grounds, hotels set to grow in FY24 amid uncertainties’. The area’s RevPAR, or revenue per available room, is projected to reach 4,000 onwards 4,100 per room by the end of FY23, showing a marginal increase over FY19 levels driven by a strong improvement in occupancy and average rates. RevPAR is a metric to measure the performance of a hotel. This recovery was primarily driven by average daily room rate (ARR), with weddings and domestic holiday travel being key contributors to the ARR jump in FY23. The ARR has already crossed the pre-pandemic level index at 105-107, despite inflation likely to weigh on growth rates in FY24. Domestic hotel players are now in a favorable position to resume pending projects and take up new assignments. Realignment of cost structure by players has led to better revenues and enhanced earnings. This, in turn, will boost supply. With demand at pre-pandemic levels, FY23 is expected to end on a promising note. It had earlier predicted that hotel occupancy in FY23 would be between 67% and 69%. Festivals, wedding season, and a possible pick-up in overseas inbound travel and MICE (meetings, incentives, conferences and exhibitions) activity have supported demand in FY23. , However, outbound travel from India has been limited due to longer wait times for travel approval/visa amid rising international airfares and rising inflation, thus boosting domestic demand in the current financial year. The region’s ARR should continue to inch higher in FY24, coupled with strong overseas inbound travel, boosting RevPAR. The report estimates that the RevPAR should increase by 3-5% over FY23 levels.