Stock Markets Overview: The hotel sector has witnessed significant attention in 2024, particularly with notable performances from brands like Indian Hotels Co, EIH, TAJGVK Hotels & Resorts, Oriental Hotels, and Chalet Hotels. These stocks have not only captured market interest but have also shown impressive growth metrics.
Throughout the past month, while these hotel stocks experienced some volatility, they have collectively surged up to 56% year-to-date (YTD). This remarkable recovery reflects strong underlying demand in the hospitality sector.
Market analysts maintain an optimistic outlook for hotel stocks, anticipating robust occupancy rates and a healthy increase in revenue per available room (RevPAR). The sector’s resilience and recovery post-pandemic have built investor confidence.
Strong Demand Sustains RevPAR Growth
According to estimates from CareEdge, the hotel industry has experienced a noteworthy 14% increase in RevPAR during the fiscal year 2024 (FY24). Looking forward, RevPAR is projected to rise further to approximately 8-9% in fiscal year 2025, capitalizing on the strong performance initiated in FY24.
The surge in both domestic and international tourism has significantly boosted profitability in the hotel segment. With hotel room supply on the rise, CareEdge Ratings is optimistic that the demand will likely continue to surpass supply, ensuring sustained growth.
In a recent analysis by Antique Stock Broking, they have indicated that room rates are set to improve notably throughout the remainder of FY25. Although occupancy may see only a marginal uptick, rates are reverting back to high single-digit and low double-digit growth following a subdued first quarter, largely due to consistent demand.
Promising Expectations for Q2
As we move into the second quarter, travel trends have begun to recover, shaking off the impact of elections that hindered growth in Q1. Analysts at Jefferies India project industry RevPAR growth to soar to around 10% year-on-year (YoY), leading to an impressive 25% YoY growth in EBITDA for Indian Hotels Co on a like-for-like basis.
The ongoing wedding season in regions like Mumbai and the release of pent-up demand following the disruptive conditions of Q1 is expected to drive robust performance in Q2, according to Antique Stock Broking.
Antique Stock Broking remains upbeat on Chalet Hotels due to significant EBITDA growth driven by an expanding commercial portfolio. However, they have assigned a ‘Hold’ rating on Indian Hotels, primarily due to concerns surrounding high valuation levels.
Disclaimer: The aforementioned opinions and evaluations are based on insights from various analysts, experts, and brokerage firms and do not represent Mint’s views. Investors are encouraged to seek advice from certified professionals prior to making any investment decisions.
