Premium Hotels' Revenue Per Available Room Can Touch Rs 5,800 In FY25: ICRA
By FY26, the RevPAR is expected to increase further to Rs 5,800-6,200.
Credit rating agency ICRA expects India's premium hotel industry to end the current financial year with a 10-year high revenue per available room of Rs 5,500-5,800, up from the previous fiscal's Rs 5,000-5,300.
According to the agency, by FY26, the RevPAR is expected to increase further to Rs 5,800-6,200. RevPAR is a measure calculated by multiplying the occupancy with the average daily room rate. ICRA's sample set comprises 13 large hotel companies.
The rating agency also expects the revenues of the Indian hospitality industry to grow by 7-9% year-on-year in FY25 and 6-8% YoY in FY26, over the high base of FY24.
According to ICRA, the pan-India premium hotel occupancy will improve to about 72-74% in FY26 from 70-72% that was seen in FY25
It projects that the average room rates for premium hotels will witness a rise of 8% YoY to Rs 7,800-8,000 for FY25. It forecast that subsequently, it will improve further to Rs 8,000-8,400 in FY26.
The pan-India premium hotel sector’s ARRs stood at Rs 7,200-7,400 in FY2024, growing by over 15% over FY23. It was at Rs 7,800-8,000 for the April-December period in FY25.
The rating agency attributed the growth in the revenue to domestic tourism, which included a rise in demand from the meetings, incentives, conferences and exhibitions segment.
Weddings and business travel have driven demand year to date in FY25. This in turn has led to higher RevPAR, revenue, occupancy, and average room rates.
In the hotel industry, YTD refers to the period from the beginning of the current year to the current date. It is a metric that can be used to analyse performance, compare data, and establish trends over time.
ICRA anticipates this trend to continue over the next 9-12 months. Spiritual tourism and tier-II cities are expected to contribute meaningfully in FY26 as well.
Notably, domestic tourism has been the prime demand driver in YTD FY25 and is likely to remain so in the near term.
However, it noted that foreign tourist arrivals were yet to recover to pre-Covid levels. It said that the improvement would depend on the global macroeconomic environment.
According to Vinutaa S, vice president and sector head of corporate ratings at ICRA Ltd., demand is expected to remain strong across markets in the fourth quarter of FY25 and the whole of FY2026 because the underlying drivers remain healthy.
"The ARRs are likely to witness healthy YoY increase in FY25 and FY26 across markets. This sharp rise in ARRs of premium hotels will result in spillover of demand to mid-scale hotels," Vinutaa said.
(With Inputs From PTI)
