Hotel industry market cap tripled since 2019; Jefferies sees momentum continuing in 2024
Read here: Ambuja, Bharti, SBI, L&T, Zomato among top 11 picks by Jefferies for 5 years The brokerage has listed key trends that will keep the hotel industry rising this year: Hotel sector market cap has tripled since 2019: The brokerage noted that the hotel industry market capitalisation has more than tripled in the past three years vs Dec 2019 levels, led by: 1) strong operating performance and earnings surprises drove growth in the stock prices of the listed incumbents; 2) valuation re-rating of the sector on strong tourism theme; 3) listings of Samhi, Park, and Juniper in the past six months. Travel theme driving investor interest: As per Jefferies, the strong travel theme playing out in India has focused attention on the hospitality space for the right reasons.
The surge in domestic tourism post-COVID, infrastructure creation by the government, the resurgence of corporate travel, mega hospitality events, and the emergence of the brand “India" have led to a surge in travel demand. Furthermore, in the past two budgets, the government has been vocal about channelling investment and rolling out initiatives to make India a global tourist hub, it stated.
Strong performances, led by luxury segment: Jefferies also pointed out that based on a recent Horwath HTL industry report, hotel industry ADRs (average daily rates) are over 30 percent higher in CY23, at ₹7,500 vs sub- ₹5700 pre-COVID (CY19). ADRs suggest a broad-based rise, with all cities above Dec-19 ADRs and most cities having room prices running at 30-50 percent above this level, it informed.
Occupancy CY23 broadly matches CY19 levels. Relative to 2019 and 2008 highs, pricing is strongest in the Luxury segment, it added.
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