Rating agency forecasts weak India growth through Q1 2016

Rating agency ICRABSE said Indian hotel industry revenue growth is expected to remain weak at 3-4 percent during the first half of 2015-16. 

According to a report by the rating agency, pan India occupancies are expected to improve by 2-4 percent during 2015-16, leading to RevPAR growth of 3-5 percent, even as supply growth curbs average room rates (ARR) expansion. Room inventory in the country is expected to grow by 12 percent during 2015-16, as compared to 4 percent during 2014-15, the report added. 

"Notwithstanding delays in commissioning of under construction supply during 2009-2014, supply additions (in the premium segment) still continue to trickle in from projects announced during the pre 2009 industry heydays," ICRA said in the report. 

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Domestic travel, going by domestic Revenue Passenger Kilometre (RPKM) trends have shown strong growth during the past 12 months. However, weak corporate results can impact discretionary travel.

"Travel for business can be curtailed in view of technological advancement which supports highly interactive meetings in virtual spaces. In ICRA's view, pickup in consumer confidence, coupled with improved connectivity from newer airlines and higher travel is expected to revive demand for hotels soon," the report said.

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