Indian Hospitality Industry foresees robust growth

October 26, 2007

According to analysts the overall outlook for the hospitality industry for the second quarter looks robust. Analysts say that average room rates (ARRs) for July-September have seen an increase of around 22-25 percent. However, the occupancy rates in business destinations are expected to fall by around 2 percent this quarter, reported The Business Standard.

The ARRs in Bangalore have fallen to Rs 12,322 this August compared with Rs 12,993 in August last year. Bangalore has seen an addition of around 500 rooms this year to its overall inventory.

"Occupancy rates are expected to fall in business destinations as more room supply would come in. Also, an increase in the ARRs will lead to a fall in the occupancy levels," said Sudhir Nair, a research head at Crisil Research.

However, Pune is expected to continue with the highest occupancy levels. In August 2007, Pune recorded an occupancy level of 77 percent compared with 80 percent during the same period last year. ARRs in Pune stood at Rs 10,051 during August'07 as compared with Rs 6,354 during August'06.

On the other hand, average occupancy levels in leisure destinations have shown an increase of around 53 percent this quarter compared with 51 percent in the corresponding previous quarter.

The average increase in RevPar stood at 23 percent for August 2007 compared with 21 percent in August 2006. "Increase in RevPars was higher in the April-August'07 as compared with April-August'06 because at many destinations, the room rates had already hit their peak," said an analyst.

With September being the peak season for the hospitality sector, hotels have also revised their room rates upwards by 15-25 percent across most locations.

Rates in tourist destinations such as Goa and Kerala have seen a revision of up to 30 percent. Since the peak season has just begun for the industry, analysts say the next quarter is going to be equally rewarding for the sector. (SiliconIndia News Bureau)

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