The Indian hospitality sector is witnessing a boom and the industry's revenue per available room is expected to grow by around 8-9 per cent in FY2025, a report said on Friday, September 27. According to rating agency CareEdge, the industry is expected to see a strong growth of 14 per cent in revenue per available room during FY2024. For FY2025, growth is expected to be 8-9 per cent on a higher base set in FY2024. CareEdge expects the industry to register a growth of Rs 5,200-5,400 in average revenue per available room over a high base in FY2024, followed by a growth of 5-6 per cent in FY2026.
There are currently around 166,000 branded hotel rooms in India. Over the next five years, the industry is expected to add about 55,000 rooms, with a compound annual growth rate of 4.5-5.5 percent in supply during this period.
(CAGR) Will be recorded. The hospitality sector is currently experiencing an uptick driven by favorable demographics, strong domestic demand (demand growth lagging supply), increased investment and ongoing improvements in infrastructure and connectivity. “Due to the uptick in domestic consumption and underlying GDP growth, industry players are seeing strong capacity utilisation,” said Ravleen Sethi, director, CareAge Ratings.
Sethi said FY25 is expected to see higher revenue per available room with the current travel momentum continuing and expected to outpace existing supply in the medium term, which will aid in the overall improvement of credit profiles of industry players. The segment mix is moving towards upper midscale and midscale economy, with these segments expected to add more than 60 per cent of new supply. This growth is driven by multiple factors, including a growing middle class, significant growth in business travel (especially from small and medium-sized enterprises), and expansion of business activities in tier 2, 3, and 4 cities. According to the report, more than 70 per cent of the proposed new supply is concentrated in Tier 2 and 3 cities, followed by Tier 1, as hotel owners and operators look for opportunities to meet unmet demand in emerging and underserved markets.
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