Weaker performance ahead for Indian hotels industry: ICRA

The Indian hotels industry is expected to finish 2011-12 on a weaker note with subdued pricing power eroding margins.

Although some revival in operational metrics was witnessed during late 2010-11, the industry continued to lack the pricing power to drive out of its current stagnancy.

Globally weak macroeconomic scenario, the European sovereign debt crisis, geo-political turmoil in the Arab countries, high interest rates, inflation and a muted domestic corporate performance during the current fiscal year to 31 March 2012 have sapped the industry's ability to sustain inflation-adjusted 'average room realisations' (ARRs).

With uncertainty continuing to cloud the near term, wavering business / consumer confidence and a sluggish economy, there is no significant trigger for the industry during the next two-three quarters.

"While the start of the third quarter of 2012-13, may bring some relief to the industry in some specific markets, we expects real traction to return to the industry only by 2013-14," the ratings agency said in a statement.

Overall, ICRA expects this to be a slow and long slog to recovery.