The domestic hotel industry could see a double-digit rise in revenues in 2018-19 along with improved operating margins and sustain the growth momentum in 2019-20.

According to estimates from Icra, the industry is expecting a revenue growth of around 10-11 per cent in 2018-19 on the back of a 5-6 per cent growth in revenue per available room (RevPAR) and increased food and beverages and business travel income.

Revenue per available room is further supported by higher domestic travel and occupancy, resulting in an improvement in the average room rent. An improvement in RevPAR has a positive impact on the operating margins of hotel companies. Domestic revenue passenger kilometre, a proxy for domestic travel, showed robust annual growth of 19.2 per cent in 2018 against 17.7 per cent in 2017, Icra said.

“The growth in the domestic hotel industry is surely a result of increased domestic travel. With higher aspirations and changing lifestyle, people are opting for destination weddings and organising marriage rituals at boutique hotels, which was previously limited to the HNIs. A spurt in travel along with the aspirations have contributed to a higher demand for rooms pan India,” said Harshvardhan Neotia, chairman of Ambuja Neotia Group.

While strong demand in Mumbai will drive average room rents (ARRs), healthy demand and limited supply in Delhi is expected to drive ARRs in the region. Hyderabad and Pune are expected to be strong growth markets over the next two years, while demand will support Bangalore despite heavy supply.

In Calcutta, the occupancy levels at 66.8 per cent in 2018 were the highest since 2013, according to India hotel market review by Howarth.

“As a city that lacks a strong growth engine for corporate demand, it has shown an ability to generate business opportunities by cultivating new avenues for demand. Its prominence as a regional centre for the east, including for neighbouring countries, has been underscored by the expansion of travel,” the report said.