Why Indian Hotels Share Price is Rising

Shares of hotel companies were on a roll, on Wednesday, hitting their respective new highs and surging up to 7% on the BSE in the intraday trade, on a healthy business outlook.

Indian Hotels Company, Chalet Hotels, EIH, and Lemon Tree Hotels were among the frontline stocks, trading higher in the range of 3% to 6%.

Performance of Hotel Stocks on Wednesday

Company	Change (%)
Indian Hotels Company	5.5
EIH Hotel	4.4
Lemon Tree	4.2
Chalet Hotels	2.3

Data Source: BSE

In comparison, the S&P BSE Sensex was up 0.5% .

Among these hotel companies, Indian Hotels shares rallied the most on Wednesday.

Let's find out why.

#1 Improved demand outlook

The surge in share price of the company can be attributed to the robust demand projection for chain-affiliated hotels.

This resurgence is linked to the recovery of domestic travel and leisure activities, indicative of a rebounding economy and heightened consumer assurance.

Furthermore, the anticipation of a notable upswing in foreign tourist arrivals significantly contributes to this rally.

The imminent G-20 Summit, gathering the world's leading economies, and the forthcoming Cricket World Cup are expected to draw a substantial inflow of international visitors to India. Consequently, the demand for hotel accommodation is set to surge.

Additionally, the approaching wedding season, spanning October to December, is another instrumental drive. Recognized as a peak period for the hospitality sector, this period is projected to generate increased bookings for hotel rooms.

Notably, the Indian wedding industry's staggering valuation of over Rs 3 trillion (tn) underscores the substantial revenue potential during this season.

In a broader context, the prevailing positive industry dynamics, where room demand is forecasted to outpace supply in the medium term, have amplified investor confidence.

#2 Luxury Line expansion

On 7 August 2023, the company signed an agreement with Ambuja Neotia Group for an addition to its luxury line in West Bengal.

The new hotel, called Taj Ganga Kutir Resort & Spa, will be located in Raichak, within the eastern Indian state.

It will have 59 rooms, including 12 suites, and will offer a range of amenities and facilities, including a spa, infinity pool, and fine dining restaurant.

The hotel is expected to open in 2024.

This is IHCL's second luxury hotel in West Bengal. The first, Taj Krishna, is located in Kolkata, the state capital.

IHCL is expanding its luxury line in eastern India to cater to the growing demand for luxury accommodations in the region. The company is also expanding its presence in other parts of India, such as the south and the north.

The expansion of IHCL's luxury line has also generated positive sentiment in the market.

Positive long-term outlook

The Ministry of Tourism has been allocated a budget of Rs 2,400 crore ($2.1 billion) in the 2023-24 fiscal year, with a substantial portion dedicated to enhancing tourism industry and infrastructure in India.

This is expected to increase domestic demand and a resurgence in international travel.

Investor interest in the Indian hospitality space is also on the rise, with projected investments exceeding US$ 2.3 bn over the next five years, further bolstering the positive outlook of the industry.

Growth in India's service sector and higher disposable income of people working in it are also expected to increase demand for corporate travel and holidays.

All segments of leisure, weddings, conference events, airline crew layovers, and corporate travel are expected to grow further during the year.

How Indian Hotels shares have performed recently

In 2023 so far, Indian Hotels share price has rallied 33%. In the past five trading sessions, the stock is up around 5%.

Indian Hotels has a 52-week high of Rs 425.5 touched on 31 August 2023 and a 52-week low of Rs 272.0 touched on 29 August 2022.

The stock is currently trading at a PE (price to earning) ratio of 66.9x.

About Indian Hotels

The Indian Hotels Company is primarily engaged in the business of owning, operating & managing hotels, palaces and resorts.

The company operates its hotels under four main brands catering different segments viz. luxury Taj, upscale/ upper upscale Vivanta/ Seleqtions and midscale/lean luxury Ginger segments.

To know more about the company, check out its factsheet and quarterly results.

You can also compare Indian Hotels with its peers:

Indian Hotels vs EIH

Indian Hotels vs Chalet Hotels

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