The Indian hotel industry is likely to witness only a marginal revenue growth of about seven per cent in 2012-13 with uncertain economy impacting demand, according to a study by rating agency ICRA.
“Visibility on the immediate term growth remains clouded with an uncertain economy impacting demand even as lumpy supply additions occur. ICRA revises downwards the revenue growth estimates to 5-7 per cent, with a seasonally stronger second-half partly compensating for the low operating margins in the first half,” says the report.
New lows
It further says that the hotel industry hit new lows during the second quarter of 2012-13 with falling revenue per available room (RevPARs) and escalating power costs eroding the operating margins, which coupled with increase in fixed costs (interest and depreciation) resulted in many players posting net losses.
World Tourism Organisation UNWTO projects a moderate 2-4 per cent growth in international tourist volumes this year in view of the continued global uncertainties in Europe, it says.
Tourist volumes
In 2012 calendar year, global tourist volumes are estimated to have grown by a modest 3-4 per cent compared with 5.9 per cent in 2011. Foreign tourist arrivals to India grew by 5.4 per cent in CY2012 at 66.5 lakh travellers.
ICRA says the growth trajectory has slowed down sharply from that of the previous two years — CY2010 and CY2011, respectively.
Overall, it does not anticipate decline in demand for the fiscal 2012-13. However, growth is expected to be subdued at 5-6 per cent.
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