CRISIL SME Tracker: Small-city tag no drag for budget hotels

Budget hotels located in smaller cities have fared better than peers in larger cities on key metrics, a CRISIL analysis reveals. The analysis covered more than 250 rated micro and small enterprises (MSEs) operating budget hotels across two regional segments — metros and Tier-1 cities, and Tier-2 and smaller cities.

The average room rate (ARR) for the hotels analysed was Rs 2,500 per night for standard rooms, with marginal variance depending on the city. However, the average occupancy rate (AOR) in smaller cities was found to be 70 per cent — given lower room inventory and paucity of branded hotels —