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Room rates expected to rise by 7-8% in FY25

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Average room rates to continue to be elevated in FY25 by 7-8 per cent

The Indian hospitality sector is looking forward to a bright future, with experts predicting a further increase in average room rates (ARRs) for FY25. The industry witnessed a substantial rise in ARRs during FY24, and this positive trend is expected to continue into the next fiscal year.

According to Ajay Bakaya, MD of Sarovar Hotels, the first quarter of FY25 saw a 16 per cent growth in ARRs, surpassing last year’s gains. Experts anticipate that this trend will stabilize at these elevated rates throughout FY25. This optimism is supported by the market dynamics, with areas experiencing higher demand witnessing steeper rate hikes, as noted by Rajeev Menon, President of APEC for Marriott International.

Credit rating firm ICRA’s data shows a significant increase in the average daily rate (ADR) for premium hotels across India in FY24. ADRs have seen a healthy rise of 14-16 per cent compared to the previous fiscal year. ICRA projects a further increase in revenue per available room (RevPAR) for pan-India premium hotels in FY25.

Factors such as robust leisure travel, a strong MICE sector, and the expected recovery of Foreign Tourist Arrivals (FTAs) contribute to the optimistic outlook for ARRs in FY25. Industry experts predict an 8-10 per cent growth in industry ARRs pan-India, with a focus on luxury and Tier-1 cities. Major hotel chains like Accor and Wyndham Hotels and Resorts share this positivity, citing India as a land of opportunity with great value for travelers.

Overall, the Indian hospitality industry is primed for continued growth in FY25, driven by strong domestic demand and a resilient MICE sector. With the potential for increased FTAs, higher room rates may be on the horizon, but with the industry booming, guests can expect a comfortable and luxurious stay.

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