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Indian hotel industry registers highest growth in occupancy and rates since 2008: HVS Report

Thursday, October 5, 2017, 18:00 Hrs  [IST]
HBI Staff| New Delhi

The annual Trends & Opportunities Report for 2017 on Indian Hotel industry by HVS India has revealed nationwide and category-wide growth in terms of hotel occupancies and Average Room Rates (ARRs) for hotels in India during 2016/17. The performance of hotel industry during 2017 in terms of key growth parameters like occupancies and ARRs have been the highest since 2008, the report says. 

Nationwide occupancy crossed the 65% mark for the first time since 2007/08, with hotels clocking an overall weighted occupancy of 65.6% in 2016/17, an increase of 3.5% over the previous fiscal. The increase in occupancy was complimented with an increase of 2.4% in weighted average rate (INR 5,658) during the same period. The growth in both occupancy and average rate resulted in the nationwide RevPAR rising by 6.0% over the previous fiscal to reach INR 3,709, the report says.

The report says that the overall supply-demand scale is currently tilted in favour of growth in demand outpacing supply and most conducive for significant rate growth. The average rate growth of 2.4%, the report says is marginal compared to the opportunities. The demand-supply equation today as well as in the next 48 to 60 months is more than likely to present an opportunity for substantial average rate enhancement and hotel operators who “draft strategies to seize the occasion” will be at an advantage, the report notes.

When the new supply growth in the branded and organised segment was 5.9%, the demand grew by 9.6%. Last time the nationwide occupancy breached the 65% mark was in 20076/08. When viewed by positioning, Five-Star Deluxe and Three-Star hotels clocked 66.5% occupancy 2016/17, while Four-Star hotels achieved 6 5.6 % occupancy. Five-Star hotels were just shy of the 65% mark and closed at a nationwide occupancy of 64.6%, whereas Two-Star hotels managed 62.7%. Therefore, it is apparent that hotels across all positioning benefited from the supply-demand gap in the year 2017, the report says.

Among the cities, Mumbai continues to lead in terms of both occupancy (74.2%) and average rate (INR 7,693) for the third year running. Noida displayed the lowest occupancy (56.9%), and Ahmedabad, the lowest average rate (INR 3,840).

However, all major markets witnessed an increase in RevPAR in 2016/17 except for Agra. Interesting to note, Noida (including Greater Noida) saw the highest year-on-year growth in RevPAR (16.0%), followed by Hyderabad (11.4%) and Ahmedabad (10.7%), reveals the report.

 
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