Hospitality industry in line for robust Q2

The overall outlook for the hospitality industry for the second quarter looks robust. Analysts say that average room rates (ARRs) for July-September have seen an increase of around 22-25 per cent.

However, the occupancy rates in business destinations are expected to fall by around 2 per cent this quarter.

For instance, the occupancy level in Bangalore has fallen to 59 per cent in August this year compared with 65 per cent in August 2006.

The ARRs in Bangalore have also fallen to Rs 12,322 this August compared with Rs 12,993 in August last year. Bangalore has seen an addition of around 500 rooms this year to its overall inventory.

"Occupancy rates are expected to fall in business destinations as more room supply would come in. Also, an increase in the ARRs will lead to a fall in the occupancy levels," said Sudhir Nair, a research head at Crisil Research.

Pune, however, is expected to continue with the highest occupancy levels. In August 2007, Pune recorded an occupancy level of 77 per cent compared with 80 per cent during the same period last year. ARRs in Pune stood at Rs 10,051 during August '07 as compared with Rs 6,354 during August '06.

On the other hand, average occupancy levels in leisure destinations have shown an increase of around 53 per cent this quarter compared with 51 per cent in the corresponding previous quarter.

The occupancy level in Goa, for instance, stood at 66 per cent during August '07 compared with 54 per cent in August 2006. ARRs in Goa were recorded at Rs 4,828 for August 2007 against Rs 4,220 for August 2006. The industry has also recorded an increase of 20-23 per cent in RevPars (revenue per available room).

The average increase in RevPar stood at 23 per cent for August 2007 compared with 21 per cent in August 2006.

"Increase in RevPars was higher in the April-August '07 as compared with April-August '06 because at many destinations, the room rates had already hit their peak," said an analyst.

With September being the peak season for the hospitality sector, hotels have also revised their room rates upwards by 15-25 per cent across most locations.

Rates in tourist destinations such as Goa and Kerala have seen a revision of up to 30 per cent. Since the peak season has just begun for the industry, analysts say the next quarter is going to be equally rewarding for the sector.

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HOTELS ARE HOT

Average Room Rates in July-September have increased by 25 per cent

Occupancy levels in leisure destinations up by 53 per cent against 51 per cent in corresponding previous quarter

Hotels have revised their room rates upwards by 15-25 per cent across most locations