Branded hotels are expected to post double-digit revenue growth of 13-14 per cent this fiscal and 11-12 per cent in the next, stated a report by CRISIL Ratings. This, it added, will be fuelled by demand outpacing supply. While domestic leisure and business travel will continue to be the primary demand drivers, growing traction in the MICE (meetings, incentives, conventions and exhibitions) segment and pickup in foreign tourist arrivals will provide an additional fillip. The growth comes on the back of a strong 17 per cent growth reported during the last fiscal.
The pace of room additions is expected to also pick up further majorly through the asset-light management contract route, in line with an increase since last fiscal. This, CRISIL Ratings said, will help meet increasing demand. As a result, supply will increase by a cumulative 20 per cent over this fiscal and the next.
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Operating margin is expected to improve by 100-150 basis points (bps) this fiscal and sustain at similar levels in the next, with benefits of operating leverage kicking in and other cost optimisation measures undertaken. Further, strong cash flows, asset-light expansion and sizeable equity raising will keep debt levels under check, thereby strengthening credit profiles.
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CRISIL Ratings analysed 52 branded hotel companies, accounting for around 43 per cent of total rooms, to release the findings.
Mohit Makhija, Senior Director, CRISIL Ratings, said, “The domestic leisure segment will continue to drive growth on the back of rising travel aspirations and better regional connectivity. Further, a positive economic outlook and the government’s ‘Meet in India’ initiative to promote corporate events will support the business and MICE segments. Foreign tourist arrivals are also expected to surpass the pre-pandemic levels this fiscal. These factors will drive up the average room rates (ARRs) of branded hotels by 6-7 per cent this fiscal on an already high base. That said,
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