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.