Branded Hotel Boom: Double-Digit Growth Projected Amid Rising Demand

Branded hotels in the country are poised for double-digit revenue growth driven by increased domestic travel and foreign tourist arrivals. Asset-light management strategies and improved connectivity will fuel expansion. Challenges include a potential economic downturn and rising airfares impacting business and leisure travel.

Branded hotels in the nation are set to experience a significant revenue surge, with predictions of a 13-14% growth in 2024-25, followed by 11-12% the subsequent fiscal year, according to a report released on Thursday.

Key drivers include domestic leisure and business travel, alongside rising foreign tourist numbers and the expanding MICE segment, as reported by Crisil Ratings. The hotel sector saw a remarkable 17% growth last year.

In response to the rising demand, the pace of room additions is expected to escalate, primarily through asset-light management contracts, leading to a 20% supply increase over this fiscal and the next. Operating margins are anticipated to improve by 100-150 bps, and the sector will benefit from strong cash flows and asset-light expansion strategies.

(With inputs from agencies.)