Hotel industry revenues, margins likely to return to pre-COVID levels this fiscal: ICRA

‘Domestic leisure, transient travel will be main demand drivers’

The hotel industry's revenues and margins are expected to return to pre-COVID levels in 2022-23 despite potential impact on demand in case of further waves of the pandemic, according to rating agency ICRA.

Domestic leisure and transient travel will be the main demand drivers, although there will be a gradual recovery in business travel and foreign tourist arrivals (FTAs), ICRA said in a statement.

Pan-India, premium hotel occupancy is expected to be at 68-70% for FY23, it said, adding that the average room rate (ARR) is expected to hover at about ₹5,600-5,800.

"The improved operating leverage along with sustenance of cost-optimisation measures will support margins and accruals for hotels," the agency said.

Notwithstanding the potential impact on demand with further COVID waves, if any, ICRA said it expected the industry's revenues and margins to return to pre-COVID levels in FY23.

ICRA vice-president and sector head Vinutaa S said the hotels industry witnessed a healthy start to FY23, with 56-58% occupancy in premium hotels in the first quarter of the financial year.

It had climbed from 40-42% in FY22 and was closer to the pre-COVID occupancy of 60-62% in Q1 FY20, she added.