Hotel stocks in India are a promising investment opportunity, as the sector is recovering and growing rapidly after being severely affected by the Covid-19 pandemic. India has a huge and diverse tourism market, with a range of destinations, cultures, cuisines, and experiences. The government is supporting the industry with various initiatives, such as easing visa norms, promoting domestic tourism, and developing infrastructure and connectivity. The hotel industry in India is projected to be worth USD 300 billion in the future, and to have the fastest hotel expansion rate in the world. In this article, we will explore the top hotel stocks in India and their performance.
Why invest in hotel stocks in India?
India is overflowing with beautiful places, and this pandemic has made both foreigners and Indians hungry for some wanderlust around the exotic beauty of this country. If you do not believe, here are some numbers and facts that you should consider-
- The Indian government is focused on tourism. It is set to become one of the most sought-after travel destinations in the world.
- India is home to some of the most well-known UNESCO heritage sites, which makes it popular among tourists.
- The variety of Indian culture that gives birth to a multitude of Indian cuisine has made it famous worldwide and is one of the top attractions for people who visit.
- If we take stock returns, India has provided an ROI of 70-180% in the last year.
- Hotel occupancy in India has grown more than 50% in FY22 than in FY21, as per the information made available by ICRA.
Factors to Consider Before Investing in Hotel Industry Shares
While the Indian hospitality sector holds immense promise, it is crucial for investors to consider certain factors before investing in hotel industry shares:
- Hotel stocks depend on the economy, location, and competition. Bad economy, less visitors, lower prices. Changing tourist tastes and new rivals can affect hotel popularity.
- Hotel investments need good management and smart decisions. Keeping up with trends and using modern technology is key to staying ahead. Better guest experience means more profit.
- Borrowing too much money for hotel investments can be risky. Too much debt can hurt hotel finances, making it hard to pay interest and costs. Careful planning and risk control are vital to protect hotel investments.
Best Hotel Stocks in India 2023
As the Indian hospitality sector continues to thrive, it becomes crucial for investors to identify the best hotel stocks in India that offer promising investment opportunities. Let's explore some of the top hotel shares in the country:
1) Indian Hotels Company Ltd.
IHCL is the market leader in India’s hospitality sector, with a rich portfolio of brands and companies. It operates various segments of hotels, such as luxury, upscale, mid-scale, and economy, under the names Taj, Vivanta, Ginger, and SeleQtions. IHCL has a legacy of over a century, as it was founded by Jamsetji Tata in 1903. It has a global presence, with 196 hotels in 12 countries and 40 more under construction.
IHCL has a strong financial performance, with a market capitalization of ₹ 54,664.08 Cr., an earnings per share (EPS) of ₹ 5.94, and a return on equity (ROE) of 9.95%.
2) EIH Ltd.
EIH Limited is the flagship company of the Oberoi Group, which is one of the most prestigious and respected names in the international hospitality industry. It owns and operates luxury hotels and resorts in India and abroad under the brands Oberoi, Trident, and Maidens. EIH Ltd. is known for its personalised service and attention to detail, which have earned it many awards and accolades.
EIH Ltd. also has a subsidiary, EIH Associated Hotels Limited (EAHL), which manages ten five-star hotels under the Trident Hotels brand and twenty luxury hotels under the Oberoi Hotels & Resorts banner. EIH Ltd. has a market capitalization of ₹ 11,057.01 Cr., an EPS of ₹ 0.88, and an ROE of 1.75%.
3) Byke Hospitality Ltd.
The Byke Hospitality Ltd. (TBHL) is one of India’s fastest-growing hospitality groups, with a unique selling point of offering Pure Vegetarian Hotels & Resorts to its customers. It has a presence in nine states and sixteen cities across the country, operating twenty-one hotels with 1,255 rooms.
TBHL caters to both business and leisure travellers who seek a cosy and vegetarian-friendly experience at affordable prices. TBHL has a solid track record and room for substantial growth in India’s thriving hotel industry. It has a market capitalization of ₹ 255.66 Cr., an EPS of ₹ -0.74, and an ROE of -4.72%.
4) Chalet Hotels Ltd.
Chalet Hotels Limited is a hospitality company that owns, develops, and manages high-end hotels in key metro cities in India. It has a portfolio of seven five-star hotels, comprising 2,328 rooms, located in Mumbai, Hyderabad, Bengaluru, and Pune. It has partnered with renowned brands like Marriott and Four Points to offer exceptional service and world-class amenities to its guests.
Chalet Hotels Ltd. has witnessed significant growth in its stock price in recent years, positioning it to benefit from India’s upcoming tourism boom. It has a market capitalization of ₹ 7,583.63 Cr., an EPS of ₹ 1.71, and an ROE of 2.69%.
5) Lemon Tree Hotels Ltd.
Lemon Tree Hotels (LTH) is India’s largest mid-priced hotel chain, ranking third overall in terms of chain size. It has 87 establishments in 52 locations across India, offering a diverse range of accommodations from super luxury to economy. It operates under three brands: Lemon Tree Premier, Lemon Tree Hotels, and Red Fox Hotels.
LTH has built a strong reputation for its commitment to quality and service excellence, as well as its social inclusion initiatives that employ people with disabilities and from economically weaker sections of society. The share price of LTH has shown significant growth in recent months, making it an attractive investment option. It has a market capitalization of ₹ 6,016.47 Cr., an EPS of ₹ -0.23, and an ROE of -1.49%.
Conclusion
With experts predicting robust growth and significant investment potential, the Indian hospitality sector is poised for a remarkable journey in the coming years. As demand surges and occupancy rates rise, investing in hotel stocks can prove to be a lucrative opportunity for investors seeking exposure to this thriving industry.
By carefully considering the aforementioned factors and exploring the top hotel stocks in India, investors can make informed decisions and capitalise on the growth and opportunities presented by the Indian hospitality sector.
Disclaimer
The investment options and stocks mentioned here are not recommendations. Please go through your own due diligence and conduct thorough research before investing. Investment in the securities market is subject to market risks. Please read the Risk Disclosure documents carefully before investing. Past performance of instruments/securities does not indicate their future performance. Due to the price fluctuation risk and the market risk, there is no guarantee that your personal investment objectives will be achieved.