Hotel stocks hit record highs, driven by strong growth expectations

- A 5x returns upgrade: Hotel stocks trump Nifty 50 - Luxury margins boost: 100-150-bp hike likely

Stocks of leading hotel companies have been hitting their all-time highs this month, driven by expectations of a strong performance in the October-December quarter (Q3) of 2024-25 (FY25) and continued growth in 2025-26 (FY26), supported by a higher base. After a slow first quarter in FY25, the sector, led by branded hotels, is benefiting from rising demand and limited supply, resulting in healthy occupancy rates and increasing average room rates. The positive operational metrics and outlook have improved sentiment for the sector. The average returns of the top five players by market capitalisation are 5x those of the benchmark National