{"id":28707,"date":"2023-03-28T11:52:44","date_gmt":"2023-03-28T06:22:44","guid":{"rendered":"https:\/\/flattrade.in\/kosh\/?p=28707"},"modified":"2023-03-29T10:03:35","modified_gmt":"2023-03-29T04:33:35","slug":"premium-hotel-biz-to-post-strong-growth-on-higher-arr-and-occupancy-report","status":"publish","type":"post","link":"https:\/\/flattrade.in\/kosh\/premium-hotel-biz-to-post-strong-growth-on-higher-arr-and-occupancy-report\/","title":{"rendered":"Premium hotel biz to post strong growth on higher ARR and occupancy: Report"},"content":{"rendered":"\t\t
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The premium segment in the hotel sector is expected to register robust growth across various operating parameters in the current fiscal and next fiscal, helped by economic recovery and easing of restrictions after the pandemic, according to CRISIL rating agency. Recovery is visible across categories such as leisure, corporate, MICE (meetings, incentives, conferences, and exhibitions), and international travel.<\/span><\/p>\n

\u201cThe average room rate (ARR) of premium hotels increased 13% on-year in fiscal 2022 and is expected to rise 19-21% in fiscal 2023 to a decadal high of Rs 7,500-10,000,” said Pushan Sharma, Director- Research, CRISIL Market Intelligence & Analytics<\/p>\n

Sharma added that the occupancy level will touch a decadal high of 67-72% in fiscal 2023, compared to 50% in fiscal 2022. This is also in sharp contrast to fiscal 2021, which saw ARR plunge 20-25% YoY and occupancy halved to 31% following the pandemic onset.<\/p>\n

The growth in ARR and occupancy in fiscal 2023 was due to higher domestic demand, including revenge travel, leisure, corporate, and MICE events. Moreover, demand for staycations has been increasing as a form of revenge travel, and customers have been combining business travel and leisure travel.<\/p>\n

Meanwhile, foreign tourist arrivals are yet to reach pre-pandemic levels as foreign tourist arrivals in the first nine months of fiscal 2023 stood at about 54 lakh, which was only about 70% of the fiscal 2020 level, according to data from Ministry of Tourism. In fiscal 2024, international passenger arrival is expected to rebound to pre-pandemic level, according to CRISIL, as various events such as the Indian Premier League, the G20 summit, continued demand from corporates, leisure travel, MICE events and weddings, will ensure higher ARRs and occupancies.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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Recovery and Growth<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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CRISIL said that the recovery in the hotel sector is K-shaped, and premium hotel segment is expected to report decadal high ARRs and occupancy rates. In comparison, the budget hotels segment is likely to see ARR trend at about 20% higher than pre-pandemic (fiscal 2020) level, but occupancies are at about 90% of the pre-pandemic level.<\/p>\n

Nonetheless, the growth rate is unlikely to be uniform across premium hotels segments. Leisure destinations are expected to log a higher occupancy level of 70-75% in fiscal 2023, compared with 65-70% for business destinations, according to CRISIL MI&A Research\u2019s tracking of 12 destinations, of which eight are business and four are leisure. This is despite average room rate at leisure destinations being 1.1 times than that of business destinations in FY23.<\/p>\n

Meanwhile, hospitality companies had reduced their employee-to-room ratio to 20-30% between fiscals 2020 and 2022, and have carried forward the cost rationalisation even post the revival in demand, according to the rating agency. This move, along with improving ARRs and occupancy levels, is likely to improve the industry\u2019s margin in the present fiscal and the next financial year.<\/p>\n

\u201cOwing to better operational parameters, revenue of the premium hotel industry is expected to surge about 80% YoY in FY23, and improve further by 15-20% in FY24. Also, employee cost as a percentage of net sales, which was 32% in FY22, is projected at 21-22% in FY23. All these factors is expected to translate into a new high for EBITDA margin at 30-32% for fiscals 2023 and 2024,\u201d said Elizabeth Master, Associate Director- Research, CRISIL Market Intelligence & Analytics.<\/p>\n

CRISIL expects improving dynamics of hotel companies will lead to an increase in the number of rooms. Supply additions, which were postponed due to Covid-19, had gathered momentum during fiscals 2022 and 2023. Further, CRISIL expects supply to increase 10-12% YoY in FY23, with limited supply additions of 3-4% in fiscal 2024.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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\n\t\t\t\t\t\n\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\tOpen a Free Demat Account<\/span>\n\t\t\t\t\t<\/span>\n\t\t\t\t\t<\/a>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"The premium segment in the hotel sector is expected to register robust growth across various operating parameters in…","protected":false},"author":5,"featured_media":28708,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"csco_display_header_overlay":false,"csco_singular_sidebar":"","csco_page_header_type":"","csco_page_load_nextpost":"","csco_post_video_location":[],"csco_post_video_location_hash":"","csco_post_video_url":"","csco_post_video_bg_start_time":0,"csco_post_video_bg_end_time":0,"csco_post_video_bg_volume":false,"footnotes":""},"categories":[65],"tags":[326,741,46,43,95,78,139,48,26,744,692,144,693,737,77,47,24,23,84,738,21,740],"class_list":{"0":"post-28707","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-industry","8":"tag-itc","9":"tag-margin","10":"tag-market-news","11":"tag-market-update","12":"tag-markets","13":"tag-nifty","14":"tag-nifty-futures","15":"tag-nifty-today","16":"tag-nse","17":"tag-occupancy","18":"tag-opening-bell","19":"tag-options","20":"tag-pre-market","21":"tag-premium-hotels","22":"tag-sensex","23":"tag-sensex-today","24":"tag-share-market","25":"tag-stock-market","26":"tag-stocks","27":"tag-taj","28":"tag-trading-account","29":"tag-travellers","30":"cs-entry","31":"cs-video-wrap"},"yoast_head":"\nPremium hotel biz to post strong growth on higher ARR and occupancy: Report - 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