Indian Hospitality Sector Thriving: Hotels Set for Strong Growth!

Discover how the Indian hospitality sector is thriving in FY25 with strong growth driven by weddings, MICE activities, and strategic expansions.

hospitality sector lemon tree hotels poised for 21 upside amid robust demand trends

The Indian hospitality industry is looking great for the third quarter of FY25. After facing some challenges earlier in the year, hotels are bouncing back strong! The busy wedding season and exciting MICE events (Meetings, Incentives, Conferences, and Exhibitions) have really helped.

Top hotel companies are expected to see their Revenue Per Available Room (RevPAR) grow by 10-12% compared to last year. This growth mainly comes from a rise in room prices, which are expected to increase by 8-10%. Recent checks in November show that many weddings are happening, which has led to a strong performance in hotels. Luxury hotels are doing even better, with RevPAR growth at 15-17%.

December is also expected to be busy because of corporate events, cultural festivals, and holiday tourism, but we should watch for a drop in demand as the year ends.

Cities such as Mumbai and Delhi NCR are seeing the most growth, with RevPAR increasing in low double digits due to active convention centers. Meanwhile, Bengaluru and Hyderabad are recovering well, too, driven by business from the IT sector and strong MICE events.

Overall, there’s good news for the hospitality sector, with rising demand in flying and a steady increase in foreign tourists. Hotels are adding new locations and enhancing their services, ready to meet the growing demand.

The future looks promising! Strong demand, corporate price increases, and improving operational efficiency are likely to boost room prices and occupancy rates. With a growing economy, better connectivity, and more people looking for experiences, this industry is set to thrive!

Indian Hotels: Buy! Target at Rs 950, currently at Rs 880 (8% potential upside). They plan to have over 700 hotels by 2030, doubling their revenue to around Rs 150 billion. They aim for an impressive return on capital by FY30.

Lemon Tree: Buy! Target Rs 190, currently at Rs 157 (21% potential upside). They are set for continued growth due to strong wedding demand and stable business conditions, with a 33% projected PAT growth over the next few years.

(The author is Head – Research, Wealth Management, Niftystat. Note: Recommendations and views are solely the author’s and do not reflect the views of the the llv news the llv.com

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