The hospitality industry has seen plenty of interest since the catastrophic impact of the pandemic, which led to losses in FY21.
The hotel industry market cap has more than tripled since 2019 on the combination of a strong earnings rebound and positive surprises, as well as three recent listings.
The industry has good tailwinds.
The anticipation is, demand for rooms will outrun supply for a few years despite capacity expansions.
Hotel companies, which have experienced substantial share price gains in the past six months, are not only expected to post robust revenue growth in the seasonally weak July-September quarter (second quarter, or Q2) of 2023-24 (FY24), with the trend continuing in the second half (H2) of FY24, but according to some analysts, they will also benefit from a structural uptrend in progress.
To begin with, larger players in the listed hotel sector are expected to report strong growth in Q2 compared to the year-ago quarter.
Led by higher demand from the business segment, the sector is expected to achieve a growth rate of 15-30 per cent.
Consumption-related stocks, such as hotels, and quick service restaurants (QSRs), have been hitting the ball out of the park ahead.
On the other hand, the Miss World Pageant scheduled for later this year in New Delhi, too, could provide some tailwind to these stocks, especially hotels and aviation.
However, analysts suggest investors put their best foot forward and buy these counters only on a decline given the recent rally and economic headwinds.