India’s resort sector is hogging the headlines with the nation witnessing its largest-ever hospitality IPO. Brookfield-backed Schloss Bangalore, proprietor of The Leela lodges, lately mopped up ₹3,500 crore.
However there’s a much bigger story brewing beneath: India’s high listed resort firms now benefit from the highest enterprise worth (EV) per room on the earth. Take a more in-depth have a look at the numbers.
Tata Group-owned The Indian Accommodations Firm (IHCL), the nation’s largest listed resort participant, instructions an EV/room of ₹4.06 crore. EIH, operator of the Oberoi chain, stands at ₹5.3 crore. Quickly-to-be listed Schloss Bangalore, which operates on the very top-end of luxurious lodges, has an EV/room of over ₹5 crore.
In distinction, international hospitality giants with far bigger portfolios and stronger worldwide model fairness commerce at considerably decrease EV/room figures. US-listed Marriott Worldwide, which manages over 5.8 lakh rooms globally, has an EV/room of ₹1.25 crore. Equally, Hilton Worldwide stands at ₹2.17 crore. UK’s InterContinental Accommodations Group has an EV/room of lower than ₹20 lakh. France’s Accor is even decrease at ₹14 lakh. China’s H World Group has an EV/room of lower than ₹10 lakh.
On a excessive
So why are India’s resort valuations per room so elevated?
First, Indian resort firms proceed to personal a big portion of their stock, in contrast to their international friends which primarily function underneath asset-light franchise or administration contracts. Proudly owning land and buildings, particularly in high-value city-centre places, leads to far larger capital depth. This drives up the associated fee, even when the precise room rely stays modest. As an illustration, IHCL has almost 26,500 rooms, a fraction of what Marriott or Accor personal or handle globally.
Two, optimistic progress expectations are already baked into these valuations. Traders are assigning a premium to Indian resort shares on the again of bettering home tourism, larger room charges and occupancy and international travellers returning to India post-pandemic. With comparatively youthful resort chains and room portfolios which can be nonetheless increasing, Indian shares are being priced for future potential.
Examine this with international friends the place resort majors like Marriott, Hilton, and Accor have shifted virtually solely to a franchise-plus-management mannequin. This method retains debt and capital expenditure off their books, serving to scale quickly with out bloating their balance-sheets. In consequence, their enterprise worth displays fee-based earnings, not real-estate holdings, which naturally brings down EV/room metrics. However this doesn’t essentially sign under-valuation, it displays the distinction in enterprise fashions.
Asset-light fashions
Again in India, indicators of a shift are seen. Companies like IHCL, EIH, and ITC Accommodations are actively transferring in direction of an asset-light technique to drive future growth. New tasks are more and more administration or franchise-led. As an illustration, 15,900 of the brand new 19,500 IHCL rooms to be added can be underneath administration contract. If this continues, India’s per-room valuation metrics could begin converging with international benchmarks over time.
Curiously, the robust valuations haven’t come on the again of heavy borrowing. A lot of the high listed Indian resort companies in the present day have low debt on their books. As an alternative, enterprise worth which is the sum of market capitalisation and the online debt on the balance- sheet has expanded largely resulting from rising market capitalisation within the post-Covid rally. Round 80 per cent of listed Indian lodges shares have overwhelmed Sensex’s 14 per cent three-year CAGR.
During the last three years, high gamers have delivered good-looking returns. EIH and IHCL shares have grown at a CAGR of 42 and 51 per cent in final three years. As compared, 3-year inventory returns of world lodges like InterContinental (22.4 per cent CAGR), Hilton Worldwide (20.4 per cent CAGR), Marriott Worldwide (15.2 per cent CAGR) and Hyatt Accommodations (14.3 per cent CAGR) mirror extra modest beneficial properties.
Mid-tier hospitality shares in Indian listed area have participated too. Chalet Accommodations is up 46 per cent in three years. Lemon Tree Accommodations has gained 33 per cent, whereas Royal Orchid has delivered 44 per cent.
A have a look at trailing EV/EBITDA additional underlines India’s valuation premium. Indian Accommodations trades at 40 instances, Chalet at 30.4, and Lemon Tree at 24.1 and Schloss Bangalore at 23. As compared, Marriott stands at 19.9 instances, Accor at 12.8, and Las Vegas Sands at simply 11. Hilton is the one outlier at 27.8 instances. Whereas the premium valuation is partly defined by extra owned belongings, for it to maintain the Indian resort shares might want to ship with none glitches on the robust progress expectations as effectively.
Revealed on Could 31, 2025
