Hotels, Restaurants & Tourism share price target

The hotel industry in Q2FY24 delivered a performance similar to its first-quarter, as market conditions and demand dynamics stayed unchanged. Although the July -September quarter is traditionally the weakest for the industry, it maintained its momentum.

According to HVS Anarock, Sep’23 was another strong month: hotel industry RevPAR of INR 4,331 was 16% above Sep’22 levels with ARRs being 18% higher YoY while occupancies were down by 200bps YoY at 60-62% (Aug’23 RevPAR was 16% above Aug’22 levels). We estimate that industry RevPAR for H1FY24 (Apr’Sep’23) has likely grown by ~15% YTD vs. H1FY23.

The hotel industry kicked off FY24 with a strong performance in the April-June quarter, riding on high demand that has continued into the new financial year. As supply trails demand, the market dynamics are allowing hotels to raise room rates.

According to HVS Anarock, Jul’23 was another strong month with hotel industry RevPAR of INR3,965 being 16% above Jul’19 (pre-Covid) levels and 11% above Jul’22 levels. While Q2FY24 (Jul-Sep’23) is seasonally the weakest quarter owing to monsoon impact, hotels continue to follow a strategy of keeping rates at least 8-10% higher than previous year levels.

According to HVS Anarock, Jun’23 was another strong month with hotel industry RevPAR of INR4,288 being 27% above Jun’19 (pre-Covid) levels and 13% above Jun’22 levels. For Q1FY24 overall (Apr-Jun’23), industry RevPAR is up 14% YoY with ARRs up 17% YoY and occupancies lower by 200bps YoY.

As per HVS Anarock, May’23 was another strong month with hotel industry RevPAR of Rs4,216 being 24% above May’19 (pre-Covid) levels and 13% above May’22 levels (Apr’23 RevPAR of Rs4,536 was 19% above Apr’22 levels). For May’23, industry ARR of Rs6,800 was up 16% YoY, while occupancy declined by 200bps YoY to 62%.

Indians have been bitten by the travel bug. ‘Netflix and chill’ is out, ‘going on a vacation’ is in. The hotels sector has seen a resurgence over the past year, fueled by robust demand for leisure travel, corporate trips, and events. The momentum seen after travel restrictions were lifted in Q1FY23 has continued, with occupancy rates surpassing pre Covid levels across all four key hotels under focus.

As per HVS Anarock, Apr’23 was another strong month with hotel industry RevPAR of Rs4,536 being 23% above Apr’19 (pre-Covid) levels and 19% above Apr’22 levelsn (YoY basis). For Apr’23, industry ARR of Rs7,200 was up 20% YoY while occupancy remained flat YoY at 63%.

As per HVS Anarock, Mar’23 was another strong month with hotel industry RevPAR of ~Rs4,850 being 21% above Mar’19 (pre-Covid) levels. In Mar’23, Mumbai continued to clock the highest occupancy rate among cities at 77% followed by New Delhi at 75% while in ARR terms, Mumbai clocked over Rs11,000 followed by Goa at Rs10,000 and New Delhi at over Rs9,500.