The Indian hospitality industry is poised for significant growth, with CRISIL Ratings forecasting a robust revenue increase of 11 to 13 per cent in the fiscal year 2024-25. The survey indicates a positive trajectory fueled by sustained domestic travel demand and a gradual influx of foreign tourists.
Key Findings and Trends:
- Strong Momentum in Current Fiscal: CRISIL estimates a revenue growth of 15 to 17 per cent in the ongoing fiscal year, supported by robust demand dynamics and enhanced supply lines.
- Domestic Travel Momentum: The report highlights that domestic travel demand, a key driver in the current fiscal, is expected to sustain its momentum into the next year. Healthy economic activity, driving business demand, and a resurgence in leisure travel post-pandemic contribute to this sustained demand.
- Room Rates and Occupancy: Average room rates (ARRs) are projected to rise by 5 to 7 per cent in FY25, compared to the growth of 10 to 12 per cent in the current fiscal. The industry’s occupancy rate is expected to remain healthy at 73-74 per cent.
- Foreign Tourist Footfall: Foreign tourist footfall is anticipated to remain 10 per cent below pre-pandemic levels, with a potential pickup expected to boost hotel demand in the coming year.
- MICE Segment Resilience: The Meetings, Incentives, Conventions, and Events (MICE) segment is predicted to maintain healthy demand as corporate activities resume post-pandemic disruptions.
Expert Insights: Anand Kulkarni, Director, CRISIL Ratings, notes, “The demand will remain strong, but the growth rate is expected to taper off next fiscal due to high base.”
Nitin Kansal, Director, CRISIL Ratings, emphasizes the cautious approach to new capital expenditure in the sector, citing high land costs, rising construction expenses, and sector cyclicality.
Cost-Efficiency Measures and Operating Profitability: The report acknowledges the industry’s adoption of cost-efficiency measures, such as manpower planning optimization and streamlined food and beverage expenses over the past two fiscal years. While these costs may see a gradual uptick, operating leverage is expected to maintain robust operating profitability at 32 to 33 per cent in FY24 and FY25.
