The hotel industry is recovering after three years in the pandemic

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  • Resumption of international travel, conferences, G20 meetings and weddings are boosting demand for hotels, analysts say.
  • Demand for holiday travel is also continuing, analysts say.
  • Mumbai, Delhi and Bangalore are likely to lead revenue per available room (RevPAR) growth, according to a report from Nuvama Institutional Equities.

The hotel industrywhich is recovering from the lows of the pandemic in recent months is expected to post record profits in the January to March quarter, analysts expect.

“Q4FY23 will be a record quarter thanks to a continued wave of travel, mass weddings and normalization of international travel,” said Nuvama Institutional Equities analysts.

Analysts say the hotel industry is in a recovery zone since the opening up of the economy with international travel resuming due to social and corporate events.

“Leisure was the first segment to stand out during the recovery; this has not stalled or abated even after the economy reopened. International travel resumed as there were social events, corporate events and MICE. There is currently no slowdown in demand,” the report said.

More boost from G20 events
Despite the good results since the end of the lockdowns, there is room for more growth, analysts expect.

“We believe that given the high base the industry is on, incremental supply and demand will be in sync, normalizing price movements. The main benefit could come from continued demand for leisure travel, the normalization of international travel and events such as the G20 summit”said the Nuvama report.

Based on the G20 calendar, several events are scheduled in March and April 2023 in cities like Amritsar, Gandhinagar, Mumbai, Chennai, Udaipur, Visakhapatnam, Darjeeling, Guwahati, Hyderabad, Kumarakom, Goa, Varanasi and Bhubaneswar.

The G20 holds annual summits where leaders from member countries meet to discuss global economic issues. India holds the presidency of the G20 this year.

From a high base
In fact, the strong performance of hotel companies in the December quarter reflects strong demand pick-up.

The net profit of Tata group hospitality company Indian Hotels Company rose fourfold in the third quarter to a record high of ₹383 crore on strong demand.

“Supported by strong demand in the third quarter, both leisure and business hotels in key domestic markets reported occupancy rates of over 70% and rate growth of 27% compared to pre-Covid levels,” Indian Hotels Company said in a statement. exchange request .

Moreover, even Lemon Tree reported a significant increase in net profit in the third quarter, which rose to ₹48.6 crore from a loss of ₹5.2 crore in the same period last year.

Mumbai, Delhi and Bangalore lead regional growth for the industry
Analysts say the demand outlook for the sector will remain robust in 2023 thanks to events such as the hockey and cricket world cup, apart from the ongoing G20. It also bodes well for more price hikes this year.

“For CY23, companies are projecting average room rate (ARR) growth of 5-10% with a 2-5% increase in occupancy,” according to a Nuvama Institutional Equities report.

Rreports say that hotel prices in several destinations have increased in recent months due to the wedding season, the return of corporate travel and events.

It states that most cities have bounced back growth from pre-Covid levels. The report said that Mumbai, Delhi and Bangalore are likely to lead revenue per available room (RevPAR) growth. Moreover, the report also says that Tier 2 and Tier 3 cities have also grown quite a bit.

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