India’s lodge sector is hogging the headlines with the nation witnessing its largest-ever hospitality IPO. Brookfield-backed Schloss Bangalore, proprietor of The Leela inns, just lately mopped up ₹3,500 crore.
However there’s an even bigger story brewing beneath: India’s prime listed lodge corporations now benefit from the highest enterprise worth (EV) per room on this planet. Take a better have a look at the numbers.
Tata Group-owned The Indian Resorts Firm (IHCL), the nation’s largest listed lodge 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 inns, has an EV/room of over ₹5 crore.
In distinction, world 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 Resorts 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 lodge valuations per room so elevated?
First, Indian lodge corporations proceed to personal a big portion of their stock, not like their world friends which primarily function beneath asset-light franchise or administration contracts. Proudly owning land and buildings, particularly in high-value city-centre places, ends in far increased capital depth. This drives up the associated fee, even when the precise room rely stays modest. As an illustration, IHCL has practically 26,500 rooms, a fraction of what Marriott or Accor personal or handle globally.
Two, optimistic development expectations are already baked into these valuations. Traders are assigning a premium to Indian lodge shares on the again of enhancing home tourism, increased room charges and occupancy and world travellers returning to India post-pandemic. With comparatively youthful lodge chains and room portfolios which can be nonetheless increasing, Indian shares are being priced for future potential.
Examine this with world friends the place lodge majors like Marriott, Hilton, and Accor have shifted nearly solely to a franchise-plus-management mannequin. This strategy retains debt and capital expenditure off their books, serving to scale quickly with out bloating their balance-sheets. Because of this, 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 Resorts are actively transferring in direction of an asset-light technique to drive future enlargement. New initiatives are more and more administration or franchise-led. As an illustration, 15,900 of the brand new 19,500 IHCL rooms to be added might be beneath administration contract. If this continues, India’s per-room valuation metrics could begin converging with world benchmarks over time.
Curiously, the sturdy valuations haven’t come on the again of heavy borrowing. Many of the prime listed Indian lodge companies right this moment have low debt on their books. As a substitute, enterprise worth which is the sum of market capitalisation and the online debt on the balance- sheet has expanded largely as a result of rising market capitalisation within the post-Covid rally. Round 80 per cent of listed Indian inns shares have crushed Sensex’s 14 per cent three-year CAGR.
Over the past three years, prime 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. Compared, 3-year inventory returns of world inns like InterContinental (22.4 per cent CAGR), Hilton Worldwide (20.4 per cent CAGR), Marriott Worldwide (15.2 per cent CAGR) and Hyatt Resorts (14.3 per cent CAGR) replicate extra modest positive factors.
Mid-tier hospitality shares in Indian listed house have participated too. Chalet Resorts is up 46 per cent in three years. Lemon Tree Resorts 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 Resorts trades at 40 instances, Chalet at 30.4, and Lemon Tree at 24.1 and Schloss Bangalore at 23. 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 lodge shares might want to ship with none glitches on the sturdy development expectations as effectively.
Printed on Might 31, 2025
