Travellers might have to spend more money on hotel stays as average room rates (ARR) are likely to see an increase of 3-4 per cent. Analysts project a rise in demand of up to 10 per cent whereas the hotel keys are likely to grow at only about four per cent.

Experts’ views

ICRA projects a supply growth of up to four, per cent in the premium segment and the demand to grow up to 10 per cent.

Rahul Prithiani, Director, CRISIL Research, projects a supply growth of nearly seven per cent and demand growth of eight per cent on a year-on-year basis.

According to Pavethra Ponniah, Vice-President, Sector Head, ICRA: “The hospitality industry has reached a slow pace due to the robust addition of keys in the past decade. Between 2007 and 2017, the industry grew its supply by up to 12 per cent, and the highest addition of keys happened between 2008 and 2012 at about 20 per cent.”

Taljinder Singh, General Manager, Taj Mahal Palace, Mumbai, and Indrajeet Banerjee, Associate Vice-President, Sales and Marketing, The Leela Group, believes that the industry ARRs might see a hike anywhere between 10 and 15 per cent. With 125 airports in India as per Airport Authority of India, inter-connectivity has increased. Domestic travellers with disposable income too prefer luxury hotels in India, according to Singh.

Taj Mahal Palace, Mumbai, the flagship hotel of the Indian Hotels Company Limited, sees a 30:70 Indian versus foreign tourists and Whereas The Leela Group sees a ratio of 65:35 Indian versus foreign tourists. The Leela Group has an occupancy between 65 to 70 per cent.

Both the groups believe that the FTAs will give a boost to the industry. Between January and November in 2018, India registered a growth of 5.6 per cent of Foreign Tourist Arrivals (FTAs) as compared to same period the previous year, however, the room inventories have seen a marginal growth.

According to Rajat Wahi, Partner, Consulting, Deloitte India, “The industry and the supply growth hit a bump after 2017 after the demonetization and the GST policy along with floods and medical issues in India.”

Political scenario

But ahead of Lok Sabha elections expected in April and May, analysts predict that the hospitality industry might see the positive impact.

Wahi said, “Elections are a good time for the hospitality industry because there is a lot of spending that happens in India, that leads to disposable income which goes up which benefits to the economy. The demand in prominent areas where rallies are to happen, will grow and thus impact ARR.”

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