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Business News/ Companies / Hotels see reduced y-o-y revenue per room for Q4 of FY24
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Hotels see reduced y-o-y revenue per room for Q4 of FY24

Hospitality sector sees strong growth in Q4 of FY24 with RevPAR increasing by 11.4%. contributed to the number of new hotels opened.

India's hotel industry is growing strongly as anticipated but elections and summer will be a challenging period. (Image: Pixabay)Premium
India's hotel industry is growing strongly as anticipated but elections and summer will be a challenging period. (Image: Pixabay)

The hospitality sector in India has experienced a muted growth in the fourth quarter of financial year 2024 when it comes to the room revenues being generated compared to the same period in 2023.

The sector, which has seen interesting developments in growth momentum with new hotel signings in tier II and tier III cities, has not registered a similar kind of growth on the operational side, where it has seen some slowdown.

According to a recent report by JLL, a real estate and hospitality consultancy, the RevPAR (revenue per available room) metric, which hoteliers utilize to gauge room yield based on occupancy rates, has grown by 11.4% during the last quarter of financial year 2024 (January to March).  

The report said that the RevPAR numbers have stabalised in the Q4, FY24. The corresponding quarter in FY23 experienced a very large growth of 100.8% year-on-year over 2022 because the Omicron wave of the covid-19 pandemic had slowed or shut down operations of many businesses during that period.

The fourth quarter of FY24 noted a RevPAR growth of 5.5% quarter-on-quarter (Q-o-Q) compared to the previous quarter. This is because the October-December period typically sees a decrease in hotel stays owing to the festive and winter holiday season when people travel back home to meet and stay with their families instead of going on vacations. 

During the Q4 of FY24, there was also a robust demand for hotel rooms in both business and leisure destinations starting with the beginning of the wedding season in January. The occupancy levels in key business markets were also strong, averaging around 70%.

In the same quarter, 90 branded hotel signings comprising 9,710 rooms were registered. Hotel signings are when owners of individual hotels ask hotel management chains to take over the day to day operational management of their properties. 

Furthermore, 13 hotels signed were conversions of other hotels, accounting for 12% of the inventory signed this quarter. Conversions happen when the owner of a hotel decides to make their hotel move from an unbranded property to work with a brand or change their brand to another hotel management company. (Say for instance, the owner of a Taj Hotel decides to move to working with ITC Hotels to manage their hotel.)

There were also 36 hotel openings across India with about 2,316 rooms, of which 75% of the total number of keys were in tier II and III cities, including Jaipur, Indore, Surat, and Ayodhya, to name a few.

Also read: Tier-III cities show strongest recovery in hotel business

When compared, the rate of increase in average daily rates (ADR) and RevPAR were higher in the last quarter of 2023 and 2024 over 2022, indicating a recovery and growth post-pandemic.

In FY2024, Goa stood out with the highest ADR and maintained a lead over other cities. New Delhi and Mumbai also showed high ADR values too, indicating strong pricing power in these markets.

Occupancy rates in FY2024 showed a robust performance, particularly in Mumbai, which has maintained high occupancy levels close to 80%. New Delhi and Goa also showed high occupancy rates in FY2024, indicating strong demand.

Chennai showed improvement in both, a higher average daily rate and RevPAR. Hyderabad, on the other hand, while still showing improvements in ADR and RevPAR, had lower occupancy rates compared to other major cities. The city's occupancy rate in FY2024 remained lower compared to other key markets, indicating it is not yet fully capitalizing on its capacity.

Also Read: Real estate majors are coming for the hotel industry bearing a 10,000-cr purse

Jaideep Dang, managing director of hotels and hospitality group, India for JLL, said the sector's performance in this quarter had a healthy consumer sentiment and continued domestic corporate travel was the driving factor of strong business.

He said that strong demand in key business and leisure destinations, coupled with limited supply additions, contributed to the growth in ADR levels. He cautioned that there are potential challenges the sector could face, like a harsh summer, increased outbound travel from India and a slight lull owing to the general elections.

 

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ABOUT THE AUTHOR
Varuni Khosla
Varuni serves as a Senior Assistant Editor at Mint. Her responsibilities encompass crafting compelling narratives that take a deep dive into hospitality companies, the business of art, luxury brands, the intricacies of the business of sports, advertising and marketing landscapes, gaming insights, tourism and travel industry trends. She also covers alcohol commerce. She is skilled at communication, meticulous research, and insightful analysis keeping contemporary shifts and advancements within the lifestyle and business domains at the heart of her work.
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Published: 22 May 2024, 01:13 PM IST
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