India Hotel RevPAR to Hit 10-Year High in FY25: ICRA

New Delhi, Jan 7 (PTI) Rating agency ICRA on Tuesday said it expects the country's premium hotel Revenue per Available Room (RevPAR) to achieve a ten-year high of Rs 5,500-5,800 in the current financial year ending March, against Rs 5,000-5,300 in FY24.

The RevPAR -- a measure calculated by multiplying the occupancy with the average daily room rate -- is expected to increase further to Rs 5,800-6,200 in FY26. ICRA's sample set comprises 13 large hotel companies.

The rating agency also expects the revenues of the Indian hospitality industry to grow by 7-9 per cent year-on-year in FY25 and 6-8 per cent Y-o-Y in FY26, over the high base of FY24.

Further, it estimates the pan-India premium hotel occupancy to improve to about 72-74 per cent in FY26 from 70-72 per cent in FY25.

"The Average Room Rates (ARRs) for premium hotels are projected to rise to Rs 7,800-8,000 for FY25 (up 8 per cent Y-o-Y) and subsequently improve further to Rs 8,000-8,400 in FY26," ICRA stated.

The pan-India premium hotel ARRs stood at Rs 7,200-7,400 in FY2024, growing by over 15 per cent over FY23. It was at Rs 7,800-8,000 in FY25 (April-Dec).

Sustained domestic leisure travel, demand from Meetings, Incentives, Conferences and Exhibitions (MICE), including weddings, and business travel (despite a temporary lull during the general elections) have driven demand in YTD FY25.

ICRA anticipates this trend to continue over the next 9-12 months. Spiritual tourism and tier-II cities are expected to contribute meaningfully in FY26 as well.

Notably, domestic tourism has been the prime demand driver in YTD FY25 and is likely to remain so in the near term.

However, Foreign Tourist Arrivals (FTAs) are yet to recover to pre-Covid levels and the improvement would depend on the global macroeconomic environment.

In the hotel industry, YTD (Year to Date) refers to the period from the beginning of the current year to the current date. It is a metric that can be used to analyse performance, compare data, and establish trends over time.

Vinutaa S, Vice President and Sector Head – Corporate Ratings, ICRA Ltd, said demand is expected to remain strong across markets in (Jan-March) Q4 FY25 and FY2026 as underlying drivers remain healthy.

"The ARRs are likely to witness healthy YoY increase in FY25 and FY26 across markets. This sharp rise in ARRs of premium hotels will result in spillover of demand to mid-scale hotels," Vinutaa stated.