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ITC Hotels to Lemon Tree: Hotel stocks rally on rising demand, GST rate cut hopes
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4 min read | Updated on August 28, 2025, 14:37 IST
SUMMARY
Indian hotel stocks are riding a growth wave backed by robust travel demand and rapid expansion by major chains. The sector has outperformed with strong returns over the years, leading to increased investor confidence in the long-term growth. Top players such as ITC Hotels, Lemon Tree, and Chalet Hotels have seen an increase in share price, supported by expansion strategies and surging demand.
Stock list
Tourism in India is emerging as a significant contributor to the hospitality sector growth
Indian hotel stocks are experiencing strong momentum in 2025, driven mainly by expectations of GST rate cuts, increased tourism and demand surge in the industry. With several hospitality companies posting remarkable three-year CAGR growth in their stock prices, Hospitality stocks have taken the spotlight and have delivered strong returns. Major hotel stocks have demonstrated strong investor confidence, which is reflected in the stock price trend.
Returns of leading hotel stocks
| Company | Market cap* (crore) | YTD return | 3-year CAGR |
|---|---|---|---|
| Lemon Tree | 13,195 | 8.9% | 34% |
| Chalet Hotels | 22,352 | 4.8% | 47% |
| ITC Hotels* | 49,647 | 36% | - |
| Indian Hotels | 1,09,768 | (12.1%) | 40% |
| Royal Orchid | 1,439 | 47.6% | 33% |
| Kamat Hotels | 868 | 28.3% | 47% |
| TAJ GVK Hotels | 2,602 | 8.49% | 36% |
*return as of 26 August closing
In the past week, shares of leading hotel chains like Lemon Tree Hotels surged over 5%, Chalet Hotels rose by 4.55%, ITC Hotels registered gains of 4.39%, while IHCL advanced nearly 2.72%. This surge was driven by the hope of a GST rate cut on hotel tariffs from 18% to 5%. Investors believe this would push the demand for the hotels, making it more affordable, thereby boosting occupancy rates and industry profitability.
Key operational metrics
| Company | Revenue (Cr) | Net Profit (Cr) | Current Keys Inventory (in 000s) | Occupancy Rate % | ARR (₹) | RevPAR (₹) |
|---|---|---|---|---|---|---|
| Lemon Tree | 315.77 | 48.10 | 10.7 | 73 | 6,236 (10% YoY) | 4,523 (19% YoY) |
| Chalet Hotels | 894.55 | 203.13 | 3.4 | 66 | 12,207 (17% YoY) | 8,059 (10% YoY) |
| ITC Hotels | 815.54 | 133.71 | 13.3 | 73 | 10,900 (9% YoY) | 7,900 (13% YoY) |
| Indian Hotels | 2,041.08 | 329.32 | 30.1 | 74 | 14,552 (12% YoY) | 10,810 (11% YoY) |
| Royal Orchid | 78.77 | 11.19 | 9.6 | 69 | 5,488 | - |
| Kamat Hotels | 82.65 | 4.23 | 1.8 | 55 | 6,336 | - |
| TAJ GVK Hotels | 106.39 | 36.22 | 1.2* | 82* | 9,633* | 7871* |
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. Adding more hotels helps to grow their market share and positions them for steady growth in future.
Another key growth driver contributing to this lucrative growth in the sector is the strategic acquisitions and partnerships. For instance, Indian Hotels recently acquired controlling stakes in ANK Hotels Pvt Ltd and Pride Hospitality Pvt Ltd, adding 135 hotels and 6,800 keys to its portfolio. India’s hotel M&A activity has grown by over 15% in recent years, fuelled by post-pandemic recovery, investor optimism, and rising demand in leisure and business travel.
Many other macro factors contributed to the growth, with the Union Budget 25-26, allocation of ₹2,541 crore toward tourism development, including plans to create 50 new destinations across states. Schemes like PRASHAD, Swadesh Darshan, and UDAN are facilitating sectoral growth by enhancing infrastructure, connectivity, and destination development.
Before you go
Overall outlook for the hospitality segment remains positive. The Indian tourism sector is witnessing a rapid surge, with revenues projected to cross $59 billion by 2028. This sector is witnessing strong attraction from investors, the government and tourists. The combination of favourable policy reforms, ongoing operational expansion, expected GST rate cuts, and broader economic recovery is likely to boost hotel companies' performance in the coming quarters.
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