Premium hotel companies are expected to do subdued business over the next two quarters, given the tepid growth in the arrival of foreign tourists, oversupply of rooms in the industry and sluggish global operations. In the last one year, foreign tourist arrivals have grown at just close to 2.8% compared with a year ago. For premium hotel companies such as Indian Hotels and East India Hotels, or EIH, revenues from foreign tourists contribute 71% to their total revenues. This is reflected in the low revenue growth of Indian Hotels and East India Hotels, respectively.
On a standalone basis, for financial year 2012-13, net sales of Indian Hotels and EIH grew 8 and 1.5%, respectively. Besides this, in financial year 2012-13 , the supply of rooms in the hotel industry rose 24% compared with FY12, while the demand in the same period grew 21%.
Of this, close to 60% has been in the upper upscale and upscale segments, indicating tough competition ahead for premium hotel companies in terms of attracting travellers. Due to this, in the January-March 2013 period, the occupancy rates of Asia-Pacific declined to 63.4% from 64.8%. Revenue per Available Room or ReVPAR for the region fell 9.9% to $100.
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Premium hotel companies are expected to do subdued business over the next two quarters, given the tepid growth in the arrival of foreign tourists, oversupply of rooms in the industry and sluggish global operations. In the last one year, foreign tourist arrivals have grown at just close to 2.8% compared with a year ago. For premium hotel companies such as Indian Hotels and East India Hotels, or EIH, revenues from foreign tourists contribute 71% to their total revenues. This is reflected in the low revenue growth of Indian Hotels and East India Hotels, respectively.