A study conducted by CRIS INFAC, CRISIL’s research arm has revealed that led by business travel, the demand for hotel rooms in the premium segment will grow at a compounded annual growth rate of 9 per cent over the next five years.
The study projected that in cities like Mumbai, Delhi, Chennai, Bangalore and Hyderabad, room demand will outpace supply in the short to medium term, and thus the average room rates (ARRs) are expected to increase by 13 percent to 14 percent annually over the next two years.
The study has also projected supply scarcity in Delhi, Goa and Jaipur. In sharp contrast, however, Hyderabad will witness an excess supply, due to which occupancy rates will plummet to levels as low as 65 percent by 2007-08. Among leisure destinations, CRIS INFAC believes that there will be a supply shortage in Goa and Jaipur (especially during the peak seasons), and this will be reflected in their respective ARRs.
