India hotel and hospitality sectors set for a brighter future
The Indian hotel industry is expected to see a 7%-9% growth in revenues in FY2025 with occupancy likely to be the highest in a decade.
That’s the view of industry ratings agency ICRA, which said sustained domestic leisure travel, demand from meetings, incentives, conferences and exhibitions (MICE), including weddings and business travel, ICRA said.
Spiritual tourism and city breaks are also expected to contribute to revenue growth in FY2025, it added.
ICRA said domestic tourism has been the prime demand driver in FY2024 and is likely to remain so in the near-term. The number of foreign tourists visiting India is yet to recover to pre-Covid levels and an increase in foreign tourists depends on the global macroeconomic environment, the organisation said.
“Demand is expected to remain strong across markets in FY2025, as consumer sentiments continue to be healthy and corporate performance is stable,” said ICRA Ltd Vice President and Sector Head Corporate Ratings Vinutaa Sriraman.
She further said domestic tourism would be the prime driver of growth in the tourism and hospitality sectors.
ICRA said it “estimates pan-India premium hotel occupancy at decadal highs of (around) 70%-72% in FY2024 and FY2025, after recovering to 68%-70% in FY2023”.
Pan-India premium hotel average room rates (ARRs) are expected to go up to around Rs 7,200-7,400 (£69–£71) in FY2024 and rise further to Rs 7,800-8,000 in FY2025, it added.
On the demand outlook over the medium term, ICRA said it remains healthy, “supported by a confluence of factors, including improvement in infrastructure and air connectivity, favourable demographics, and anticipated growth in large-scale MICE events with the opening of multiple new convention centres in the last few years, among others”.
India-UK FTA negotiations resume
A delegation representing the Indian government have met with UK delegates as talks over the bilateral trade deal between the two countries resumed in London.
Outstanding issues discussed included the UK’s reluctance to agree with India that British car makers have to increase their use of Indian components in their vehicles to 45% to get concessions from New Delhi.
Negotiations for a free trade agreement (FTA) between India and UK were launched in January 2022.
The delegation from India, led by Commerce Secretary Sunil Kumar Barthwal, said India has been mulling Tariff Rate Quotas (TRQ) to meet the UK’s demand for a reduction in import duties on electric vehicles from Britain as part of the trade deal. The two sides are also yet to agree on Britain’s demand for an import duty cut on its whisky, the official added.
The UK’s Department of International Trade said: “A Free Trade Agreement (FTA) with India supports the government’s strategy of continuing to develop the United Kingdom’s status as an independent trading nation which seeks trade and investment opportunities, champions free trade, and supports the levelling up agenda in all regions of the UK.
“India is an important partner for the UK, and an FTA offers the opportunity to deepen our relationship. India is one of the dynamic, fast-growing economies at the heart of the Indo-Pacific and while our bilateral trading relationship is already significant, amounting to £23.3 billion in 2019, an FTA could strengthen it further as UK exports could increase by up to £16.7 billion by 2035. Securing an agreement which enhances our trade relationship will give the UK access to a market which promises both short and long-term benefits.
An FTA with India needs to work for the UK. We have been clear that any trade agreement with India must work for UK consumers, producers, and businesses. We remain committed to upholding our high environmental, labour, food safety and animal welfare standards in our trade agreement with India.”
It added: “The government has also been clear that when we are negotiating trade agreements, we will protect the National Health Service (NHS). As part of the government’s commitment to secure the best deal for the UK, within negotiations we will consider the merits of an Interim Agreement as a potential option to deliver early benefits. Trade with India brings opportunities for the UK strategically, as consumers, producers and workers, and as we explore the industries of the future.”
