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The financial year 2013-2014 has been good for the Indian hospitality sector with occupancy rates taking an upward turn, breaking the three-year streak of declining nationwide occupancy rates for the first time since FY2011. Branded/organised hotel rooms crossed the 1-lakh mark (to reach 1,03,855) in FY 2014, an increase of 10.2 per cent (of 9,600 branded rooms) over the previous year.
Noida showed the highest increase in supply over the previous year at 33.1 per cent, owing to the small base of hotels in this market. Both Pune and Bangalore witnessed similar growth in supply (15.8 per cent and 15.7 per cent) followed by Gurgaon at 13.8 per cent, Chennai at 12.2 per cent and Ahmedabad at 12.1 per cent, while Mumbai at 1.7 per cent saw the least growth. The tide is turning for the Indian hospitality sector, says HVS, a global hospitality consulting organisation.
Room rates still down “The worst seems to be over for the Indian hospitality sector with the beginning of an upward trend in FY-2014 as per our latest survey – Trends & Opportunities Report 2014, which is due for a global release next week,” said Achin Khanna, Managing Director, Consulting and Valuation (South Asia), HVS, told BusinessLine .
“The participant base has registered a significant rise from 120 hotels with 18,160 rooms in FY1996 to a record 814 hotels with a room count of 99,301, an increase of an additional 97 hotels and approximately 13,180 rooms in FY2014, since the last survey,” Khanna added.
Stating that occupancy rates increased to 58.9 per in FY 2014 from 57.8 last fiscal, he pointed out that on a nationwide basis, the supply of branded hotel rooms grew at a CAGR of 17.8 per cent over the past five years, while demand for these rooms grew at 17.6 per cent for the same period. Despite occupancy rates increasing in FY 2014, average room rates (ARR) continued to show a downward trend at ₹5,531 in FY 2014, from ₹6,032 and ₹5,773 in FYs 2012 and 2013, respectively.
“This is because, many new hotels came up during April 2013-March 2014 with rooms being occupied as and when they got ready, as a result of which ARRs did not stabilise enough to be counted. Second, most of the new hotels were in the economy, budget and mid-scale segment, which took the ARR further down,” explained Khanna. HVS anticipates that over 45,000 branded rooms would be developed over the next five years, taking the total hotel supply to 1,50,700 rooms by FY 2018-2019.
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