Number of premium rooms across 12 key cities to go up to 98,900 by FY2023: ICRA

The number of premium rooms across 12 key cities is likely to go up from 82,800 in FY2018 to 98,900 as on FY2023, with ICRA research tracking about 16,100 premium rooms under construction and to be launched over the next five years. The Indian hotel industry witnessed its highest ever 10-year occupancy in FY2018 and its revenue per available room (RevPAR) was higher by 17 per cent compared to the 10-year low, witnessed in FY2014. Similarly, the pan-India average room rate (ARR) which stood at Rs 5,800 in FY2018, was also the highest since FY2014, according to a recent research by ICRA. Foreign Tourist Arrivals (FTAs) into India slowed down from April 2018 onwards due to the Nipah virus scare and diversion of traffic to other global events such as the soccer world cup in Russia. While the FTAs growth picked up in Aug 2018, the Kerala floods impacted it in Sep and Oct 2018. Kerala witnessed decline in FTAs in Q2 (-4.6 per cent) and Q3 CY2018 (-13.6 per cent). In addition, there was general weakness in the global ITAs during Q3 CY2018.
As for the domestic demand momentum, it has remained strong; the domestic revenue passenger kilometre (RPKM), a proxy for domestic travel grew by a robust 20.3 per cent year on year (YOY) in YTD October CY2018 at ~ 10.5 million passengers. Domestic demand in FY2019 will continue to be driven by increased air connectivity and higher appetite for domestic leisure travel.
On the supply side, the supply of room is likely to lag demand over the medium term and grow at a subdued CAGR of 3.6 per cent over the next five years (FY19-23).