Following the aftermath of the COVID-19 pandemic, there has been a resurgence in the travel and tourism industry, reflecting positively on the stocks within the hotel industry. Over recent times, hotel stocks have surged, and the recent quarterly results have shown promising earnings alongside this upward trend. Let’s understand if this upward momentum in hotel stocks is sustainable.
What’s Happening?
According to CNBC TV18, the recovery in the hotel industry is not only evident in the rising prices of stocks but also in the financial performance of companies. Since the beginning of 2022, the market capitalisation of 12 hotel companies has surged by over Rs 1 lakh crores.
Indian Hotels Company Limited (IHCL) has seen the most significant surge in market capitalisation, increasing by Rs 54,212 crores over the past two years. Additionally, EIH’s market capitalisation has increased by Rs 16,453 crores, and Chalet Hotels has seen a rise of Rs 12,794 crores.
These figures indicate that hotel companies are not only earning good profits but also gaining investors’ trust for the future.
Contribution of the Tourism Industry
Due to the COVID-19 pandemic, tourism suffered significant losses, but things have changed now. Both domestic and international tourism are picking up pace, directly impacting the hotel industry.
There is a rapid growth in domestic tourism, including spiritual tourism. Additionally, hotel booking rates are also increasing. The hotel industry is gaining strength from the surge in domestic travel and conferences.
What’s in it for Investors?
Currently, hotel stocks such as Chalet Hotels, Indian Hotels, and EIH have provided good returns to investors.
You can see the performance of other hotel stocks below.
What’s Next?
The inauguration of the Ram Mandir in Ayodhya has significantly boosted tourism, and this is expected to continue, further strengthening the hotel industry.
India Today states that according to ICRA’s report, the Indian hotel industry is poised for rapid growth in the coming days, with an expected revenue growth of 7 to 9% in FY25. This growth will be driven by domestic travel, including both leisure and business segments, along with conferences and incentive travel.
After reaching 68-70% in FY23, the estimated room booking rates in premium hotels across India are expected to remain around 70-72% in FY24 and FY25, which is the highest in the past decade.
That’s it for today. We hope you’ve found this article informative. Remember to spread the word among your friends. Until we meet again, stay curious!
*The companies mentioned in the article are for information purposes only. This is not investment advice.
*Disclaimer: Teji Mandi Disclaimer
