India’s hotel boom: Are these 5 top stocks still undervalued? – Stock Insights News

India’s hospitality industry is on a robust growth curve. One of the most important indicators, Revenue per Available Room (RevPAR), is expected to increase further in the next few quarters. RevPAR indicates both the occupancy of hotels and the rates they are commanding, and thus it is the easiest way to understand the performance of a hotel. Demand is high in metro cities such as Mumbai, Delhi NCR, Bangalore, and Hyderabad. Large concerts, sports events, and cultural events are driving occupancies and rates even further.

Government incentives are joining the frenzy. Fifty new tourist spots are coming up, with special emphasis on medical and spiritual tourism. The e-visa system is being streamlined to attract more foreign tourists. A depreciating rupee is also making India more affordable for overseas tourists. Improved airports and road linkages are enhancing accessibility. Future events such as the Asia Cup and an increase in spiritual tourism, are supporting demand.

For investors, hotels have emerged as a sought-after theme. Of over 20 listed participants, we highlight 5 companies here. These companies are big, actively traded stocks. They also present regular occupancy numbers, hence the ease of monitoring and comparison. We have used Q1 FY26 numbers for our analysis.

Performance in 5 Large Cap Hotel Stocks in India (Q1 FY26)

Source: Investor Presentations

#1 EIH: Luxury Focus Shields Margins

EIH is primarily engaged in owning and managing premium luxury hotels and cruises under the luxury Oberoi, Trident and Maidens brands. The Company is also engaged in flight catering, airport restaurants, project management and corporate air charters.

EIH’s Q1 FY26 performance showed that it can safeguard its margins in turbulent times. Occupancy remained largely stable at approximately 70%, though average room rates were up. This rate discipline helped propel a healthy double-digit increase in RevPAR.

The strength originated from emphasis on luxury positioning. RevPAR increased 16% year-on-year (YoY) to Rs 11,350, with Oberoi Hotels registering more than 20% growth. This indicates that EIH is effectively capitalizing on demand in the luxury segment. Even when volumes remain stable, increased rates are coming through to profits.

The quarter was not challenge-free. Operation Sindoor and Middle East tensions damaged travel in northern markets. Shimla and Chandigarh were directly affected. However, other destinations counterbalanced the weakness. Jaipur and Ranthambore posted strong growth, and Hyderabad was helped by the Miss World event.

International hotels provided additional buffers. Mauritian, Egyptian, and Marrakesh properties demonstrated good recovery as regional travel recovered from previous-year conflict. This diversification diminishes dependence on local cycles and enables smoothing of performance.

That growth is significant. The pipeline has increased to 25 projects with more than 2,000 keys, of which 1,750 are in India. The combination of owned and operated assets will increase the Oberoi and Trident footprint without tipping it toward extreme capital intensity.

Overall, Q1 FY26 reaffirmed the strengths of EIH. Pricing power remains unimpaired, luxury positioning is yielding dividends, and expansion guarantees visibility of growth. For investors, the company shows a consistent capability to maintain earnings through rate discipline while building up for future demand.

#2 Indian Hotels: Record-Breaking Run Continues

Indian Hotels Company (IHCL) is India’s leading hospitality companies. It is a part of the giant Tata group. IHCL and its subsidiaries comprise diversified portfolio across luxury, upscale/upper upscale and lean luxury/midscale segments. IHCL’s operations are spread across four continents, 12 countries and over 100 cities.

IHCL continued its longest-ever run of quarter-on-quarter (QoQ) growth into Q1 FY26. This was its 13th straight quarter of solid performance. Consolidated revenue increased 32% YoY to Rs 21 billion, while earnings before interest, tax, depreciation, and amortisation (EBITDA) moved up 29% to Rs 6.4 billion. Margins remained at above 30%, despite factoring in wage increases and external disturbances.

RevPAR at domestic hotels increased by 11% like-for-like basis. International hotels performed better with 13% RevPAR growth, driven by resilience in the US where The Pierre moved back into profit and Campton achieved almost 30% RevPAR growth. London too enjoyed post-refurbishment growth, recording a dramatic increase in the month of July.

In spite of headwinds from Operation Sindoor, border tensions, and Middle East disruptions, occupancy held high and rates continued to rise. Major business cities held up as supply additions remained constrained. Hyderabad clocked 50% growth, led by Falaknuma Palace, while Goa remained soft but is anticipated to improve post-remodeling of Fort Aguada.

The company grew rapidly in the quarter. Twelve hotels were added and six were opened, including three luxury lodges in South Africa. IHCL currently has 249 operating hotels with another 143 under development, nearing a 400-hotel mark. As part of its Accelerate 2030 strategy, the company continues to be on target to achieve 700 hotels by 2030. In addition to this, recently, the company signed an agreement with The Clarks group to manage their portfolio of 150+ hotels. This dramatically improves the companies footprint across India.

New hotels kept growing. International growth is in the works, too. The Frankfurt hotel Taj Grand Hotel Hessischer Hof is opening later this year, backed by a new Chambers club and a Bombay Brasserie restaurant. IHCL anticipates this hotel will capture diaspora demand and business travel in one of Europe’s prime gateways.

To the future, management has directed for double-digit top-line growth in FY26. The wedding and meetings, incentives, conferences and events (MICE) segments are healthy, with a strong events pipeline in H2. Supply issues across major markets should help to underpin pricing power, and the expanding pipeline confirms visibility of constant growth.

IHCL continues to demonstrate margin resilience, robust brand equity, and controlled growth. Pricing power remains undisturbed against challenges. The company’s blend of domestic leadership, global growth, and capital-light approach offers clear visibility on earnings sustainability.

#3 ITC Hotels: Post-Demerger Performance Shines

ITC Hotels is an Indian hospitality company that operates and manages hotels. It has around 143 hotels and is India’s third largest hotel chain. It has a franchise agreement to operate most of its hotels as part of The Luxury Collection of Marriott International. It was a subsidiary of ITC until its demerger in 2025.

ITC Hotels posted its best-first-quarter performance ever in 1QFY26. Consolidated revenue was at Rs 8.6 billion, up 20%, with profit at Rs 1.3 billion, up 53%. EBITDA margins widened to over 30%, buoyed by robust demand across segments.

Its key operating statistics were in good health. Average daily rate increased 9%, while occupancy increased by 275 basis points. This drove a 13% RevPAR gain. The company enjoyed a 34% RevPAR premium to the industry, showing strong brand positioning in luxury and upscale segments.

Growth was widely spread across room and food businesses. Room revenue increased on the back of retail, MICE, and weddings. Food and beverage revenue grew 13%, led by catering and banqueting. This demonstrates good traction across various customer segments.

The portfolio kept growing. ITC went past 200 hotels, with 143 operational and 58 in the pipeline. Eight new hotels with approximately 700 keys were signed during Q1 FY26 at destinations like Goa, Mysore, Ranthambore, and Vrindavan. The pipeline of more than 5,300 keys is skewed substantially toward brownfield assets.

The “asset-right” strategy continues at the core. Managed hotels contribute to an increasing proportion of growth, for faster, capital-effective expansion. By 2030, ITC aims for 220 operating hotels and more than 20,000 keys, with 70% of inventory under management contracts, where the company manages the hotels but does not own the properties.

Q1 FY26 reflected ITC Hotels’ capacity to grow with margin increases, underpinned by premium positioning and brand leadership. The capital-light asset-right strategy, supplemented by selective owned investments and strong sustainability advantage, offers visibility of profitable scale-up towards its 2030 aspirations.

#4 Lemon Tree: Mid-Market Momentum and Margin Expansion

Lemon Tree Hotels is largest mid-priced and the third largest overall hotel chain in India. It operates in the upscale segment and in the mid-priced sector, consisting of the upper-midscale, midscale and economy segments. It delivers differentiated yet superior service offerings, with a value-for-money proposition.

Lemon Tree reported its all-time high Q1 revenue of Rs 3.2 billion, an 18% YoY increase. Net EBITDA increased 23% to Rs 142 crore, with the EBITDA margins increasing to 44.8%. Profit after tax increased 139% to Rs 48 crore. Average Room Rate (ARR) increased 10% to Rs 6,236. Occupancy increased to 72.5%, up by almost 600 bps. RevPAR was up 19% to Rs 4,523.

The growth, according to the management, came in spite of geopolitical tension headwinds. The performance was underpinned by firmer corporate and airline business. Aurika Mumbai shifted occupancy from 46% last year to 76% this quarter, a stabilisation sign. The playbook is clear — build occupancy first, then raise rates.

Renovation continued to be a priority. Around 350 rooms were closed in Q1 in Delhi, Hyderabad, and Bangalore. Investment is being directed toward refurbishing the entire owned portfolio by FY27. Early gains are evident. In refurbished hotels, ARR has increased 15–19% and occupancies by around 10%. When finished, profit margins are set to increase considerably as renovation and tech expenditure reduce from 6% of revenue to something like 2-2.25%.

The asset-light model picked up. Fourteen new franchise and management contracts were finalized, adding 1,273 rooms to the existing pipeline. Five new hotels comprising approximately 400 rooms were operationalized. Total inventory now stands at 226 hotels with 18,430 rooms, of which 116 are operational. Management fee income increased 29% YoY to Rs 37 crore.

International presence, while modest, is slowly becoming a reliable strategy. The Dubai hotel remained robust, aided by healthy Indian tourist traffic. An expansion into Nepal and neighbouring markets is in progress, with the objective of reaching Indian diaspora demand. This provides diversification without heavy capital outlays.

Q1 FY26 reinforced Lemon Tree’s profitable scale-up capability. Pricing and occupancy increases underpinned record revenues, with renovations and technology spending elevating profit margins further once done. The combination of domestic pipeline growth, overseas additions, and an asset-light approach gives visibility of higher, capital-efficient growth.

#5 Chalet Hotels: Navigating New Supply with Rate Hikes

Chalet Hotels is engaged in the business of hospitality (hotels), commercial and retail operations and real estate development.

Chalet Hotels reported good Q1 FY26 results in the face of external volatility. Geopolitical tensions, airspace shut-downs, and an aviation mishap affected travel in May. However, hospitality revenue increased 18% YoY to Rs 3.9 billion. EBITDA increased 20% to Rs 1.6 billion, while EBITDA margins improved to 41.7%.

RevPAR was up 10% YoY to Rs 8,059. Average Daily Rate (ADR) was up 17% to Rs 12,207, driven by Bengaluru and Hyderabad. Occupancy fell to 66%, down 4.4%, led by the addition of new supply at Bengaluru Marriott and softness in the Mumbai Metropolitan Area. Without new inventory, occupancy was at 68%.

The like-for-like portfolio remained stable. ADR increased 13%, with occupancy declining marginally. RevPAR increased 7%, demonstrating that rate lifts have compensated for volume pressure. Leisure hotels were strong performers, with same-store RevPAR increasing almost 21% as Courtyard and Dukes Retreat returned to stability.

The company also increased capacity. The company added 121 rooms at Marriott Whitefield (Bengaluru), increasing inventory to 512, with a further 8 rooms to be added. Dukes Retreat in Khandala opened 44 new rooms and a banqueting facility, with 30 more rooms in the works. The Delhi Airport project is on time for next year’s opening.

The pipeline is healthy. Chalet has around 3,300 operating rooms and approximately 1,200 rooms under development. Management sees itself passing 5,000 keys (operational + pipeline) by the end of FY26, with a combination of greenfield developments and acquisitions.

Q1 FY26 reflected Chalet’s resilience in maintaining EBITDA margins with rate hikes in the face of occupancy challenges. A diversified hospitality model of commercial property, residential sales, and hospitality is propelling earnings expansion. With an evident pipeline and prudent capital deployment, Chalet is positioned for long-term growth and value creation.

Are these hotel stocks undervalued?

Let’s now take a look at the valuations of these hotel companies, using the Enterprise Value to EBITDA metric.

Name	EV/EBITDAx
EIH	19.7x
IHCL	34.9x
ITC Hotels	35.8x
Lemon Tree	22.9x
Chalet	24.6x
Industry Median	16.8x

Source: Screener.in

As is abundantly clear, all the companies discussed here, are trading at a multiple to the industry median. And this is on the back of an overall re-rating of the sector in the last few years (post-pandemic).

So, while the macro trends, industry demand-supply dynamics and stock company balance sheets perhaps justify this overall rerating, one needs to pause and consider how much of the future growth and profitability is already baked into current stock prices.

As we know, the most lucrative investment opportunities are generally when great companies are selling cheap in the markets. One needs to evaluate that given future prospects, whether the current valuations are attractive or not.

Conclusion

The optimism within India’s hotel industry is not easy to overlook. Occupancies are good, room rates are solid, and growth plans are aggressive. The five players covered here are taking advantage of the wave with a combination of terrific brands, pricing strength, and growth pipelines.

But below the upbeat scenario lies layers worth paying attention to. Not all drivers of demand are as strong. Spikes driven by wedding- and event-related activity tend to dissipate once the season is over, whereas momentary boosts generated by concerts or sporting events are not a sure bet for repeat performance.

Expansion into smaller cities might appear inviting today, but demand within these markets can be spasmodic and yields less certain returns. Even booking platforms and loyalty programs, much touted as game-changers, are unlikely to change the economics at their root if supply rises too rapidly.

The general truth is that hospitality operates in cycles. There can be flattering quarters for weak operators, and shocks that dink even the leaders temporarily. For investors, this implies that it won’t do to focus only on the current spike. Entry and exit points need to be picked with caution, considering the sector’s growth prospects as well as its very swings. Discipline will be as important as demand in this cycle.

Disclaimer:

Note: We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information. 

The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only. 

Ekta Sonecha Desai has a passion for writing and a deep interest in the equity markets. Combined with an analytical approach, she likes to dig deep into the world of companies, studying their performance, and uncovering insights that bring value to her readers.

Disclosure: The writer and her dependents do not hold the stocks discussed in this article. 

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