Chennai: Hotel room tariff expected to increase

CHENNAI: Hotel industry in India is looking at an increase in room tariffs between 6 -10 per cent while city and property-specific hikes could be even be higher, say sources.

Also, occupancies across hotels in India too are witnessing a rise, hovering around the 68-69 per cent mark.

This was amongst the highest increase in a decade. Research agency ICRA expects revenue improvement and margin expansion for the industry.

The CAGR growth is expected to be a strong 10-12 per cent during FY-19. Margins are likely to expand due to operating leverage, with return of stronger revenue growth.

 “The average room rates (ARRs) have slowly but steadily started to improve on a pan-India basis,” said Pavethra Ponniah, Vice-President and Sector Head, Corporate Sector Ratings, ICRA.

The RevPAR (revenue per available room) also improved following an uptick in ARRs and occupancy. RevPAR is calculated by multiplying a hotel’s average daily room rate by its  occupancy rate. According to market sources, in FY18, the average room rate for the hotel industry in India stood at around 5,760; while RevPAR stood at 3,837.

 Hikes in corporate rates have been in double digits (of around 10 - 15 per cent in some cases) beginning late last year. Corporate clients make up for around 50-60 per cent of occupancies across branded hotel chains; followed by occasion-specific bookings and so on.