Moneycontrol Pro Panorama | Hotel sector still has room to check in

The sharp increase in the supply of rooms and expansion plans of hotels bear testimony to the booming hotels and hospitality sector. (Representative image)

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India’s luxury hotel sector seems to defy all concerns, be it geopolitical tensions, border conflicts, inclement weather conditions, inflation and more.

Endorsing this is the June quarter (Q1 FY26) performance of ITC Hotels, the first among listed luxury hotels to announce results on Wednesday. Revenue rose 16 percent year on year (YoY) on the back of robust occupancy rates in spite of dampeners such as the Indo-Pak conflict in May.

Forecasts are equally optimistic for other hotel chains such as Indian Hotels Company (expected today), EIH, and Chalet Hotels, to name a few. Occupancy rates are improving and so are average room rates across properties. If this reflects the strong appetite among consumers for holidays, the sharp increase in the supply of rooms and expansion plans of hotels bear testimony to the booming hotels and hospitality sector.

What’s driving this travel and tourism fad in India? A favourable demographic profile, increasing preference for travel, as well as improving infrastructure and connectivity, are the key demand drivers that will continue to sustain the luxury hotel sector’s performance in the quarters ahead, states this MC Pro Research article. Technology integration and personalisation have become enablers for the hospitality sector in India.

But beyond this, it is the shift in consumer preferences towards creating memorable and transformative experiences. In a world where material needs are met for some sections of society, the experience economy model monetises their increasing need for meaning, connection, impact and novelty, says our columnist Chandu Nair.

To draw a parallel, China saw a discretionary spending surge as per capita income doubled (2007-11). With India now crossing $2,000, a similar boom can be expected ahead. Consumption accounts for 56 percent of India’s GDP and is the fastest-growing segment of its economy, projected to double by 2034, according to a report  by Angel One and Iconic Asset. Nair’s article also gives insights into how new businesses are creating value around the experience economy.

Indeed, the experience economy is supporting a consumption boom, albeit only for the upper crust of society -- the luxe and loaded.

A Mordor Intelligence report on India’s hospitality sector highlights that premium hotel chains have mastered the art of luring the crème-de-la-crème with appealing holiday themes including nature, heritage, cultural, wellness, and MICE (Meetings, Incentives, Conferences, and Exhibitions) segments, each requiring specialised tourism and hospitality services and amenities.

The outlook for Q2 FY26 as well the full year FY26 for the luxury hotel sector is positive. Stock prices have rallied too, although analysts believe that the price-to-earnings multiples still offer room to check in.

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Vatsala Kamat
Moneycontrol Pro