Best Hotel Stocks to Buy: Analyzed
Shares of hotel companies, including Indian Hotels Company Limited (IHCL), Lemon Tree Hotels, India Tourism Development Corporation (ITDC), and Chalet Hotels, saw a rise of up to 4% on Thursday. This increase was due to expectations of good results in the second half of the financial year 2025-26 (H2FY26).
Key Points
- Hotel stocks rose due to expected strong H2FY26 earnings.
- Lemon Tree Hotels forecasts 15-20% growth in the second half of the year.
- GST rate cuts may slightly impact margins, but demand is strong.
- Indian Hotels saw 46 signings and 26 openings, reaching 250 hotels.
- Chalet Hotels launched a new brand, ATHIVA, with 900 keys.
- Analysts predict recovery with strong demand, MICE growth, and travel trends.
The hotel industry is predicted to grow significantly in the October to March period (H2FY26). Lemon Tree Hotels expects growth of 18-20% in the first half (H1FY26) and anticipates similar growth in the second half. This growth is fueled by a recent reduction in the Goods and Services Tax (GST) rate, but the company recognizes potential margin pressures due to lost input tax credits.
Indian Hotels Company (IHC) has experienced strong growth, with 46 new signings and 26 hotel openings, bringing its total to over 250 operating hotels with 25,500 rooms. Chalet Hotels launched ATHIVA, a new lifestyle brand, debuting with multiple hotels, including The Dukes Retreat Resort.
Analysts anticipate a mixed quarter for the Indian hospitality sector due to monsoon rains and seasonal factors. However, strong average daily rates (ADR) and recovering MICE demand are positive signs. Overall, the outlook remains strong with increased wedding and holiday travel.
Brokerages predict a luxury segment recovery with a 400-600 bps gap in key cities, offering opportunities for hotel companies like Chalet Hotels’ ATHIVA brand to expand and increase margins. ICICI Securities expects Lemon Tree Hotels to reach 20,000 rooms by FY26 with a better room mix.
“The Indian hospitality sector is poised for a sustained recovery and growth trajectory.”
