Fewer new projects may serve hotels well
NEW DELHI: Fewer new hotel projects and dwindling additional room supplies will likely make 2017 more profitable for the hospitality sector, with industry experts penciling in higher occupancy rates and average rentals.
“The addition of supply has diminished. There are hardly any new projects announced and only those announced earlier are seeing maturity,“ said Abhijit Umathe, associate director (hospitality and leisure), Knight Frank. “This year's figures for all hotels should be good.“
Umathe expects occupancy rates around 65%, and revenue per available room to increase by as much as 3%. India added about 7,500 rooms last year, compared with annual inventory increases of about 12,000 over the past three to four years, according to industry estimates.
Although India lags Southeast Asian nations in quality room inventory, average room rentals and occupancy rates have lagged the rate of inventory building in the debt-laden hotel industry.Consulting firm HVS expects occupancy rates to be in the range of 6569%, with an appreciation in average room rates this fiscal. Achin Khanna, managing director of the consulting and valuation practice at HVS, said average daily rentals that have been flat over the last four to five years should appreciate.
With supply increasing in single digits and demand in early teens, the year ending March 31, 2018 would be even better for hotel chains.
Companies such as Carlson Rezidor are also expecting an increase in occupancies and room revenue this year.
“All our budgets are about 10-12% higher than last year. Excess supply is being absorbed in an orderly manner and there is a bit of a slowdown in the construction activity,“ said Raj Rana, CEO, South Asia at Carlson Rezidor. “All this is bound to boost the overall occupancy rates.“
“The addition of supply has diminished. There are hardly any new projects announced and only those announced earlier are seeing maturity,“ said Abhijit Umathe, associate director (hospitality and leisure), Knight Frank. “This year's figures for all hotels should be good.“
Umathe expects occupancy rates around 65%, and revenue per available room to increase by as much as 3%. India added about 7,500 rooms last year, compared with annual inventory increases of about 12,000 over the past three to four years, according to industry estimates.
Although India lags Southeast Asian nations in quality room inventory, average room rentals and occupancy rates have lagged the rate of inventory building in the debt-laden hotel industry.Consulting firm HVS expects occupancy rates to be in the range of 6569%, with an appreciation in average room rates this fiscal. Achin Khanna, managing director of the consulting and valuation practice at HVS, said average daily rentals that have been flat over the last four to five years should appreciate.
With supply increasing in single digits and demand in early teens, the year ending March 31, 2018 would be even better for hotel chains.
Companies such as Carlson Rezidor are also expecting an increase in occupancies and room revenue this year.
“All our budgets are about 10-12% higher than last year. Excess supply is being absorbed in an orderly manner and there is a bit of a slowdown in the construction activity,“ said Raj Rana, CEO, South Asia at Carlson Rezidor. “All this is bound to boost the overall occupancy rates.“
