The hotel sector is expected to report growth driven by average room rates in the coming quarters, following a muted first half of the fiscal year. The second half of the year is likely to show a rebound, driven by a pick-up in weddings and travel.
Revenue per available room (RevPAR) growth is likely to remain in the mid-to-high single digit for the year. Top picks of analysts include Chalet Hotels, Indian Hotels, Lemon Tree Hotels, and Apeejay Surrendra Park Hotels, with 18-42% upside to the current market price of these stocks.
Hotels in Bengaluru, New Delhi, and Hyderabad have continued to outperform peers, while those in Mumbai have lagged due to relatively weaker RevPAR growth. However, events like concerts and the T20 Cricket World Cup are expected to drive hotel demand in Mumbai in the second half of the fiscal year.
India Ratings and Research estimates room additions by large companies at about 10-12% in the fiscal year, mainly through asset-light models. Occupancies are expected to remain flat to marginally higher, supported by limited new supply in central business districts and the return of renovated rooms.
Analysts remain constructive on Chalet Hotels, with an expected upside of 18% due to its concentration in high-barrier business districts and exposure to premium corporate demand. Lemon Tree Hotels is expected to gain 25% driven by aggressive asset-light expansion in Tier II and III cities.
Remember, this is perspective, not prediction. Do your own research before making any investment decisions.
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