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Business News/ Markets / Stock Markets/  FY25 Outlook: Hotels to see revenue growth of 9-11%, a 3rd straight Year of growth- CareEdge

FY25 Outlook: Hotels to see revenue growth of 9-11%, a 3rd straight Year of growth- CareEdge

Stock Market Today: Indian Hotels , EIH Ltd , Lemon Tree Hotels, Chalet Hotels share price have risen 69%-189.5% in last one year. As the same has been led by rising occupancy and better average room rate, CareEdge expects Hotels to See 9-11% Revenue Growth in FY25, a3 Straight Year of growth

Hotels to See 9-11% Revenue Growth in FY25, 3 Straight Year of GrowthPremium
Hotels to See 9-11% Revenue Growth in FY25, 3 Straight Year of Growth

Indian Hotels Company , EIH Ltd ,  Lemon Tree Hotels,   Chalet Hotels share price have risen 70%-189% in last one year. The same has been helped by continuing upcycle as Revenue per available room (RevPAR) have improved regularly in the back of  rising occupancy and improvement in average room rates (ARR).

The outlook remains strong and share prices of EIH, Lemont Tree Indina Hotels, Chalet Hotels rose up to 5.7% on Monday

The analysts and experts expect the earnings growth trend to continue. CareEdge  expects the Hotels to see 9–11% revenue Growth of in FY25, which will be the third consecutive year of Growth in the Current Upcycle.

One significant aspect of the  Hotel industry's post-pandemic trajectory has been the strong recovery in demand, which has been accompanied by a progressive balancing of supply and demand for branded hotel room inventory.

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The industry is presently experiencing its second upcycle year. Revenue per Available Room, or RevPAR, increased by an astounding 88% in FY23 compared to the previous year, and it now stands at 4,200–4,400 (average for branded hotels in India), which is 9% more than it was before to the pandemic, as per CareEdge Data.

In the current fiscal year, average room rates (ARRs) in India are anticipated to range from 7,200 to 7,400. This as per Care Edge is anticipated to increase to 7,700 to 7,900 in FY25.

As  CareEdge Ratings predicts that FY24 will conclude with RevPAR increase of 12–14%, even on a high base of FY23. This upward trend in growth is anticipated to continue in FY25, with y-o-y revenue growth of 9–11% anticipated. The same will be supported by robust domestic leisure and business travel as well as rising overseas visitor arrivals, which will help industry participants' credit profiles.

As the industry progresses, it is also expected that the favorable trend in operating margins, which averaged 27–30% in FY23 (for a few companies, the margins were in the range of 33–35%), would continue over the following two years, expects  CareEdge.

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The Governments increased budgetary allocations, new tourism policies, the ambitious plans to develop airports, roads, and highways—all of which are expected to improve connectivity and thereby facilitate travel and tourism. All these are seen as supportive for medium-term growth prospects.

Most other analysts also remain positive on prospects

Rating agency ICRA also has made maintained a Positive outlook on the Hospitality sector for FY2025. As per ICRA , there have been 23 upgrades seen in the credit ratios of Hospitality industry during FY24. Also there have been no downgrades as per ICRA.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions








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Ujjval Jauhari
Ujjval Jauhari is a deputy editor at Mint, with over a decade of experience in newspapers and digital news platforms. He is skilled in storytelling, reporting, analysing and writing about stocks, investment ideas, markets, corporates and more. He is based in New Delhi.
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Published: 01 Apr 2024, 04:07 PM IST
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