The Indian hotel industry is witnessing a strong rebound as hotel stocks surge, driven by optimistic February data that is expected to boost earnings in the current quarter. Stocks like Chalet Hotels Ltd., Lemon Tree Hotels Ltd., and Indian Hotels have rallied significantly, reflecting growing investor confidence in the hospitality sector.

Hotel Stocks Outperform Nifty 50

A custom index of 12 hotel stocks has surged 19% in the past month, adding ₹30,000 crore to their total market capitalization. In contrast, the Nifty 50 index has gained just 3% during the same period, highlighting the strong performance of hospitality stocks.

Interestingly, these hotel stocks began declining in January 2025, whereas the broader market correction started back in September 2024. However, the extent of the decline in hotel stocks was similar to that of the Nifty Midcap 100, which fell 21% from its September highs. Meanwhile, the Nifty index declined 16% during the same period.

Key Gainers in the Hospitality Sector

Among the top gainers, Chalet Hotels surged 8% during Monday’s trade, while Indian Hotels and EIH Associated Hotels gained 2.7% and 3.7%, respectively. Investors have turned bullish on these stocks due to strong demand and higher occupancy rates.

According to Jefferies, a leading brokerage firm, RevPAR (Revenue Per Available Room) for hotel companies increased 20% YoY in February, following 16% growth in January. This growth is attributed to the Maha Kumbh festival, which significantly boosted hotel occupancy and room rates. The report also highlights the strong underlying travel trends in the country.

Market Capitalization Growth

Of the ₹30,000 crore increase in market capitalization, Indian Hotels contributed the most, adding ₹17,366 crore since February 18, 2025. Its total market capitalization now stands at ₹1.2 lakh crore. Meanwhile, EIH Ltd. added ₹4,560 crore, Chalet Hotels gained ₹4,200 crore, and Lemon Tree Hotels saw an increase of ₹1,363 crore during the same period.

Analyst Ratings and Investment Outlook

Investor sentiment remains strong for the hospitality sector:

• 88% of analysts covering Chalet Hotels have a "Buy" rating on the stock.

• 64% of analysts tracking Indian Hotels recommend a "Buy", while six analysts suggest a "Hold", and three recommend a "Sell".

With a strong RevPAR growth trend, continued travel demand, and increased hotel occupancy, experts believe hospitality stocks could continue to perform well in the upcoming quarters.

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