Indian hotel stocks show strong revenue growth potential

Hotel stocks are gaining attention from analysts, who see promising growth ahead. The 13 largest hotel companies in India reported an 18.4% increase in revenue for the December quarter, which is slightly more than the 18.1% growth in the previous quarter. Several factors are driving this optimism. Events like the IPL cricket tournament and international tours, along with a weaker rupee, are attracting more tourists. Additionally, rising domestic travel and increased business meetings are expected to boost the hotel industry. Analysts predict good results for the March 2025 quarter, benefiting from major events like Coldplay's tour and the Kumbh Mela. The hotel industry is projected to grow 7-9% in 2024-25 and 6-8% in 2025-26, according to ICRA, which will help hotels manage their debts better. Although new hotel rooms are being added, the demand is expected to outpace supply, resulting in higher profits for the companies. The government is also supporting tourism through initiatives like developing new tourist spots and improving e-visa processes, which will positively impact the hotel sector. Despite a market correction, hotel company valuations have improved. However, many have seen negative returns year-to-date in 2025, with several companies' shares declining significantly. Chalet Hotels demonstrated strong performance with a 23% revenue increase for the December quarter, while Lemon Tree Hotels and Indian Hotels Company also reported impressive figures. Analysts expect continued growth for these companies, fueled by new room additions and improved operational efficiency.