As occupancy rates grow, the hotels in these two key segments experience the highest ADR growth in the Indian hospitality industry.
The Indian hospitality segment reported growth in all Key Performance Indicators (KPIs) in year-to-date (YTD) October 2018, according to recent data from STR, a source for all premium global data benchmarking, analytics and marketplace insight for the hospitality industry. Occupancy has risen to 64.9% (+1.4%), ADR has reached Rs 5,698.10 (+1.5%), and RevPAR growth has seen it hit Rs 3,698.05. While supply has remained stable at 3.0% for this period, demand has outpaced supply growth by 4.4%.
Despite this seeming positive on the surface, growth rates have remained generally slow for the Indian hotel industry as it struggles to reach pre-global financial crisis levels. ADR growth rate declined in consecutive years between 2009 and 2015, with a CAGR of -6.5%. Slight improvements have been noted since 2016, but we are still far from the 2008 rates.
STR analysts cite 2009 to 2017 supply growth as a likely reason for India’s sluggish ADR growth, as hotel supply saw a Compound Annual Growth Rate (CAGR) of 3.7%. Increased competition has seen hotels struggle to manage their occupancy, resulting in marginal ADR growth.
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