Hotels & Restaurants Stocks

Hotels industry includes hotels of various prices and locations, especially in cities and tourist spots. Clients include both tourists as well as business clients travelling or holding conferences. As a result, an increase in the size of the hotel industry may be considered an indicator of the level of economic activity in the region.

As of March 31, 2023, the top 10 hotel brands by operating inventory size control over 76% of the total branded inventory in India. Of this, Marriott International controls approximately 22% of the total branded inventory, followed by IHCL at 16%.

As of March 2023, India boasts over 3,60,000 keys which include branded hotels, independently run hotels and aggregators. Of this, the branded segment has seen the highest growth and has an inventory of approximately 1,80,000 keys as of March 2023. Capacity utilisation or higher occupancy levels are a good sign for the Indian hotel industry or an individual hotel.

The Hotels sector in India encompasses a variety of accommodations catering to both tourists and business travelers, indicating economic activity. Major hotel brands dominate the market, with significant growth projected, driven by factors like online travel market expansion and rising domestic travel. Before investing, consider drivers like occupancy rates, financial health, and the competitive landscape. Angel One offers a straightforward platform for investing in Hotel stocks. Top companies include Indian Hotels Company, EIH, and ITC. Investing in Hotel stocks aligns with the sector’s growth potential, but thorough research is essential to select the right investment.

As per a report from the Hotel Association of India (HAI) and Benori Knowledge, the direct contribution of the hotel industry to GDP was $40 billion in 2022 and it is expected to reach $68 billion by 2027, expanding at a CAGR of 11.20%. According to a report by Google and Boston Consulting Group, the Indian online travel market is slated to grow at a CAGR of 13.5% from 2023 to 2028. According to KPMG, domestic travel in India is expected to grow at a CAGR of 13.1% from 2023. According to another report by FICCI and EY, the wellness tourism market in India is expected to expand at a CAGR of 20-25% from 2023. All of these factors will add to the growth of the hotel industry.

Despite an increase in inventory over the past decade, hotel supply across key Indian cities still has room for growth. For example, Bengaluru has 88 rooms per million square feet of office space, which is low compared to mature markets such as Singapore, London and New York at 447, 393 and 348 rooms per million square feet respectively.

1. Check Out the Major Drivers: Major drivers for the sector could include trends in travel and tourism, including business travel. You could check out which hotel chains are focusing on operation efficiency, occupancy rates, etc. These metrics will help you choose the right stocks.
2. Financial Fitness: Check if the financial health of individual companies is in order or not. Scrutinise profitability, cash flow, and capital efficiency to assess their operational strength.
3. Competitive Landscape: Map the major players in the Indian hotel market and their market shares. Since hotel chains require a large initial investment, disruption is hard to come from new players, though other major cash-rich companies may enter this business.

Investing in hotel stocks via Angel One is easy. Simply follow these steps:

1. Log in to your Angel One account.
2. Click on the search icon and look for your desired hotel stock.
3. Now, place your buy order. Simply click on the ‘Buy’ button, enter your desired quantity, and select the order type.
4. To complete your transaction, click on the ‘Buy’ button.

If you don’t have a Demat account with Angel One, you can open one for free online within minutes.