INSUBCONTINENT EXCLUSIVE:
By DK AggarwalIndian tourism and hospitality industry, which accounts for around 6.23 per cent of the national GDP and 8.78 per cent of
total employment, has emerged as one of the key industries driving growth of the services sector and, thereby, the Indian economy.
The
industry is at the cusp of an upcycle and Indian hotel companies are at the forefront to capitalise on the robust industry dynamics on the
back of strong brand and unique value proposition
Actually continuous transformation has enhanced the industry, making it on par with global standards, especially in the luxury
segment.
Medical tourism is also witnessing a huge growth in India due to low costs of important medical procedures, compared with major
economies such as the US or the UK
The industry has also seen a significant growth in room inventory across various categories from upscale luxury to limited services, as well
as boutique and budget hotels.
The growth of the hotel industry has always been linked to the prospects of the tourism industry, which is a
prime demand driver of the industry
The tourism sector can be called as a sunrise industry, an employment generator, a significant source of foreign exchange for the country
The hotel industry has recorded healthy growth fuelled by robust inflow of foreign tourists as well as increased tourist movement within the
Recent data showed foreign tourist arrivals (FTAs) have increased 6.7 per cent to 74.74 lakh in January-September 2018, in addition to the
strong growth of 13.7 per cent to 70.03 lakh recorded in January-September 2017
Total foreign tourist arrivals in India in 2017 stood at 10.18 million, up 15.6 per cent over that in 2016
September 2018 from 1.18 lakh in September 2017 indicates that the footfall will continue to increase going forward
At home, air traffic has been growing at 20.1 per cent year-on-year due to affordable fares and rising personal income in the 2018 calendar
With the increase in tourism with rising foreign and domestic tourists, hotel sector is poised to grow.
The growing demand and limited
supply has led to a significant increase in occupancy as well as rates
To note, the growing demand and supply constraints have pushed occupancy above 67 per cent
In the first half of the CY2018, market-wide occupancy, ADR and RevPAR were at 65.9 per cent, Rs 5,868 and Rs 3,868 respectively
The movement was positive, across all three parameters
Going forward, the demand growth in the hotel sector is anticipated at 12.5 per cent, while supply is estimated to grow at 8 per cent during
FY 2018-21, which is leading to higher occupancies for the industry.
Higher travel and tourism boosts occupancy rates
Improving occupancy is leading to higher average revenue per room, which directly impacts profitability of the hotel companies
India being the seventh largest country in the world and home to 37 world heritage sites, it has a huge potential to scale up its ranking on
industry, international hotel chains are increasing their presence in India and there is an expectation that International hotel chains will
account for around 47 per cent share in the Tourism Hospitality sector of India by 2020 and 50 per cent by 2022.
Going forward, the
prospect of the Indian hospitality business continues to be positive, both for the business and leisure segments
And the industry is expected to witness robust growth in the coming years led by higher occupancy, limited capacity addition and a rise in
spending by domestic travellers.
The sector has the potential for growth on the back of increases in disposable incomes, increase in foreign
tourist arrivals, impetus from government-led initiatives, and the growing middle-class population
Besides, the industry will get a boost from strong travel facilitation policies, sustainable and proactive planning and improving
EIH, IHCL, Lemon Tree, Cox and King, Mahindra Holidays are some of the stocks that are expected to see good returns going forward.
Chairman
Managing Director,SMC Investments and Advisors Limited
