ITC Hotels, IHCL, EIH, Taj GVK shares see mixed reaction after GST rate revision

Shares of leading hotel operators, including ITC Hotels, IHCL, EIH, and Taj GVK, closed mixed on Thursday, September 4, following changes in GST rates announced by the GST Council.

Hotel rooms with tariffs up to ₹7,500 per day are set to become cheaper, as they will attract a lower GST rate of 5%, without input tax credit (ITC), from September 22, a move likely to boost tourism.

At present, hotel rooms with a daily tariff of up to ₹7,500 attract a 12% goods and services tax (GST) with input tax credit.

The GST Council, chaired by Finance Minister Nirmala Sitharaman, on Wednesday cleared sweeping changes to the indirect tax regime, approving an overhaul of rates by limiting slabs to 5% and 18%, effective from September 22, the first day of Navaratri.

Following this, shares of hotel operators witnessed some momentum on Thursday. While at close, shares of ITC Hotels settled at ₹244 apiece on the National Stock Exchange (NSE), falling 2.65%. Shares of Oberoi Hotels and EIH, which owns the Trident hotel chain, also declined nearly 1.45%. Similarly, Chalet Hotels shares were ended 1.25% lower.

Meanwhile, shares of The Indian Hotels Company Ltd (IHCL), which operates the Taj and Ginger hotel chains, closed with modest gains of 0.38%. However, newly listed Leela Hotel operator Schloss Bangalore were mostly trading lower but rose 0.45% at close.

In contrast, shares of budget and mid-range hotel chains were upbeat. Taj GVK Hotels (1.35%), Juniper Hotels (1.08%), Kamat Hotels (0.50%), Mahindra Holidays & Resorts (0.62%), and Lemon Tree Hotels (0.73%) settled with gains.

Tourism in India is emerging as a significant contributor to the Asia Pacific hospitality sector. The demand surge in the industry is supported by both international travellers and an uptick in domestic travellers exploring more within India, which is projected to reach 5.2 billion by 2030 from 2.5 billion in 2024, representing a CAGR of 13.4%.

Robust underlying demand, along with strong operational execution, has supported the rally across the domestic hospitality space, while the global market is shaken up due to tariff uncertainty, as many industries are preparing for challenges.

Organised hotel players have maintained an aggressive expansion strategy, further strengthening their market positions. Six properties were added by Lemon Tree Hotels, IHCL welcomed two new hotels, and one more addition was made to Royal Orchid’s portfolio. Through this wave of expansion, the companies are catering for the rising demand in the sector across diverse segments and regions.