India’s travel boom enters the departure lounge

ITC Hotels

12/02/2025 02:39

(The author is a Reuters Breakingviews columnist. The opinions
expressed are her own.)
    By Ujjaini  Dutta
       BENGALURU, Feb 12 (Reuters Breakingviews) - Indian
Hotels  IHTL.NS , owner of the luxury Taj brand, is emerging as
a flag bearer of the South Asian country's tourism boom. The $12
billion company on Monday unveiled a fifth hotel under
development in Mumbai. Overall it plans to more than double its
footprint of properties to over 700 by 2030, and at least 10% of
the additions will be overseas. But as domestic room tariffs hit
the roof, Indians are increasingly eyeing overseas destinations.
    The company shows no sign of being affected by a domestic
consumption slowdown that is rippling across the economy.
Revenue hit 25.9 billion rupees ($296 million) in the three
months to the end of December, up 29% year-on-year, and its
EBITDA margin grew 80 basis points to over 39%. Over the past 12
months, the stock outperformed the rallying Nifty 50  .NSEI  by
34 percentage points and Indian Hotels is valued at 63 times its
earnings for financial year 2025, roughly double the multiple
for Marriot International  MAR.O  and Hilton Hotel  HLT.N .
    Rich Indians are splurging on weddings and events, and
people are hungry for experiences. Coldplay’s concert in
Ahmedabad in January had an audience of 134,000, and room rates
for one nearby Taj property leapt as high as 120,000 rupees,
roughly $1,386, for a double-occupancy two-night stay. It's not
a one-off: a shortage of hotels in prime locations is pushing up
prices across the board even though foreigners are visiting
India in fewer numbers than before the Covid pandemic. 
    Overseas destinations start to look relatively attractive to
domestic travellers beyond a certain expense, says Amit Kumar at
HDFC Securities. India may become the world’s fourth-largest
market for outbound tourism after the United States, China and
Germany, up from 10th, by 2035, says Capital Economics. Popular
destinations for the South Asian country's travellers include
the Maldives, United Arab Emirates, Oman and Thailand.
    Concerns about the sustainability of room rates within India
are growing, however. Karan Khanna, an analyst at Ambit Capital,
warns of a potential faster-than-expected surge in domestic
supply as rivals including ITC Hotels  ITCT.NS  announce
significant expansion plans in smaller cities. To address those
worries, Indian Hotels is talking up its capital-light
investment strategy. For now, it is on the move with rich India.
  
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    CONTEXT NEWS
    Indian Hotels Company on January 17 reported revenue of 25.9
billion rupees ($296 million) in the three months to the end of
December, up 29% from the same period last year. Net profit for
the period also rose 29% to 5.8 billion rupees. 

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic: Indian Hotels has dramatically outperformed local
stocks    https://reut.rs/4gxPLNK
Graphic: Foreign tourist arrivals in India have not recovered to
pre-Covid levels    https://reut.rs/3EJz44t
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 (Editing by Una Galani and Aditya Srivastav)
 ((For previous columns by the author, Reuters customers can
click on  DUTTA/ 
ujjaini.dutta@thomsonreuters.com))