New Delhi [India], December 26 (ANI): Branded hotels in India are likely to see double-digit revenue growth this financial year and the next, fuelled by demand outpacing supply, asserted Crisil Ratings.

The rating agency pegged revenue for such hotels at 13-14 per cent this fiscal and 11-12 per cent in the next.

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While domestic leisure and business travel will continue to be the primary demand drivers, growing traction in MICE (meetings, incentives, conventions and exhibitions) segment and pickup in foreign tourist arrivals will provide an additional fillip, the rating agency said in a report Thursday.

This comes on the back of a strong 17 per cent growth recorded last fiscal, the Crisil report claimed.

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To meet increasing demand, the pace of room additions, which has increased since last fiscal, is expected to pick up further. As a result, the rating agency expects supply will increase by a cumulative 20 per cent over this fiscal and the next.

Operating margin is expected to improve by 100-150 basis points this fiscal and sustain at similar levels in the next. 100 basis points is equal to 1 percentage point.

"The domestic leisure segment will continue to drive growth on the back of rising travel aspirations and better regional connectivity. Further, the positive economic outlook and the government's 'Meet in India' initiative to promote corporate events will support the business and MICE segments," said Mohit Makhija, Senior Director, of CRISIL Ratings.

"Foreign tourist arrivals are also expected to surpass the pre-pandemic levels this fiscal."

These factors, according to Makhija, will drive up the average room rates of branded hotels by 6-7 per cent this fiscal on an already high base. That said, growth in room rates is expected to moderate to 3-4 per cent next fiscal as significant room capacities come up.

The number of branded hotel rooms is slated to rise 8-9 per cent this fiscal and 11-12 per cent in the next, with leisure and nonmetro destinations accounting for 65 per cent of additions.

The top seven metros will account for 25 per cent of additions. The balance additions are expected in up-and-coming spiritual tourism destinations.

Pallavi Singh, Associate Director, CRISIL Ratings, said, "The hotel industry is expanding more into non-metros and emerging leisure destinations as travellers seek more choices and infrastructure in these regions improve." (ANI)

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