Indian Hospitality Sector expecting another strong quarter

The hospitality sector is expected to post strong growth when compared to pre-Covid-19 and report a flat to a marginal decline in revenue on a sequential basis. Revenue for Chalet Hotels and Indian Hotels Company Limited is predicted to increase by 4% and 20%, respectively, over pre-Covid-19 levels. 

Despite the fact that 2Q was the weakest, Revenue Per Available Room in 2QFY23 is probably going to stay largely flat to slightly low sequentially because higher rates will be offset by lower occupancy. However, a slight seasonal decline in the banqueting industry is expected.

For Chalet Hotels, the benefits of higher room revenue will be offset by wage inflation, resulting in an earnings margin that is predicted to stay flat on a sequential basis. There may be some moderation in the higher wage and marketing costs for Indian Hotels Company Limited. While Indian Hotels Company may experience a 200 basis point margin moderation, Chalet Hotels are likely to report flat margins.

Due to both lower occupancy and the average daily rate, Indian Hotels Company Ltd.'s revenue per available room is likely to fall by 9.8% on a quarterly basis.

However, positive results in the US and UK should help the total consolidated revenue. It is expected that revenue will increase by 66% YoY and 20% compared to pre-Covid-19 levels. The average daily rate is expected to increase by 30.5% annually, and occupancy is expected to increase to 67% from 57% in 2QFY22. The momentum for a room addition is likely to continue. A strong average daily rate should help margin, but higher wage inflation should cause a QoQ decline of about 200 basis points.

Chalet Hotels' revenue growth is expected to be 91.1% YoY and 4.2% higher than pre-Covid-19 levels. While occupancy will remain low, a significant increase in the average daily rate will drive the hospitality industry. The occupancy is likely to increase to 75% from 56% in 2QFY22 and 74% in 2QFY20, while the average daily rate is predicted to increase by 99.1% YoY while remaining unchanged in comparison to pre-Covid-19 levels. Revenue per occupancy is likely to decrease by 3%/ 300 bps on a quarterly basis, while the average room rate will increase by 3.7%. On a sequential basis, the margin is anticipated to remain flat, driven by higher room revenue.

For hospitality businesses, the upcoming quarters are anticipated to be extremely successful, driven by pent-up demand for leisure travel and continued strong recovery of corporate demand.