The Indian hotel sector has the headlines, with the country experiencing the largest IPO in the hospitality industry. Bangalore, owner of the Leela Hotels, supported by Brookfield, recently wiped 3,500 billion GBP.
But there is a bigger story that bride: India’s most important hotel companies now enjoy the highest company value (EV) per room in the world. Take a closer look at the numbers.
The Indian Hotels Company (IHCL), the largest listed hotel player in the country in Tata Group, has an EV/room of 4.06 billion GBP. Eih, operator of the Oberoi chain, is 5.3 billion GBP. Bangalore Castle, which will soon be listed, which works at the top end of luxury hotels, has an EV/room of over 5 billion GBP.
In contrast, global hospitality giants with far larger portfolios and stronger international brand shares in the case of significantly lower EV/room numbers. The American Listed Marriott International, which manages 5.8 LAKH rooms worldwide, has an EV/room of 1.25 billion GBP. Similarly, Hilton Worldwide is 2.17 billion GBP. The British Intercontinental Hotels Group has an EV/room of less than £ 20. France’s accor is even lower at 14 Lakh. China’s H World Group has an EV/room of less than £ 10.
At a high
Why are the Indian Hotel’s ratings increased so much?
First, Indian hotel companies continue to have a large part of their inventory, in contrast to their global colleagues, who mainly work under franchise or management contracts of assets. The possession of the country and buildings, especially in high -quality locations in the city center, leads to a much higher capital intensity. This increases the costs, even if the actual number of rooms remains modest. For example, IHCL has almost 26,500 rooms, a fraction of what Marriott or Accor have worldwide.
Two optimistic growth expectations are already integrated into these reviews. Investors turn the Indian hotel shares a premium for improving domestic tourism, higher room prices and occupancy and global travelers who return to India after pandemic. With relatively younger hotel chains and room portfolios that are still expanding, Indian stocks are praised for future potential.
Compare this with global colleagues, in which Hotel Majors like Marriott, Hilton and Accor have almost exclusively changed in a model for franchise factors. This approach keeps the debts and investment expenses in your books and helps to scale quickly without building your equilibrium leaves. As a result, your company value reflects fee -based income and not in reality, which of course lowers the EV/room metrics. However, this does not necessarily signal an undervaluation, but reflects the difference in business models.
Asset light models
Back in India, signs of a shift are visible. Companies such as IHCL, EIH and ITC hotels are actively in the direction of a strategy for wealth lights in order to promote future expansion. New projects are increasingly managed or franchise. For example, 15,900 of the new 19,500 IHCL rooms that are added will be added to a management contract. In this case, India’s evaluation metrics in India can work with global benchmarks over time.
Interestingly, the strong reviews did not focus on strong borrowing. Most of the best listed Indian hotel companies today have low debts in their books. Instead, the company value, which represents the sum of the market capitalization and the net debt on the remaining amount, is mainly due to the rising market capitalization in the rally after the kovids. Around 80 percent of the listed Indian hotels shares defeated the three-year CAGR of 14 percent.
Top players have achieved beautiful returns in the past three years. EIH and IHCL shares have grown with 42 and 51 percent in the past three years. In comparison, 3-year shares of global hotels such as Intercontinental (22.4 percent CAGR), Hilton Worldwide (20.4 percent CAGR), Marriott International (15.2 percent CAGR) and Hyatt Hotels (14.3 percent CAGR) reflect them with more modest profits.
The room listed in the Indian also listed in the Indian room. Chalet Hotels have risen by 46 percent in three years. Lemon tree hotels increased 33 percent, while Royal Orchid delivered 44 percent.
A look at the subsequent EV/EBITDA continues to underline the evaluation premium of India. Indian hotels act 40 times, chalet at 30.4 and lemon tree at 24.1 and Bangalore Castle around 23. In comparison, Marriott is at 19.9 times, accor at 12.8, and Las Vegas Sands with only 11th Hilton is the only outlier for 27.8 times. While the premium assessment is partially explained by more ownership, the Indian hotel shares must have to deliver without disturbances in the strong growth expectations.
Published on May 31, 2025