Maha Kumbh Mela, Coldplay Concert To Drive Hotel Sector Growth In Final Quarter

The Maha Kumbh Mela and Coldplay's concert tour are expected to boost hotel sector growth in final quarter of fiscal 2024-2025. The sector saw robust growth in third quarter of fiscal 2024-2025, fueled by high occupancy and double-digit increases in average room rates. "The growth momentum is likely to continue in fourth quarter, driven by business travel and meetings incentives-conferences and events or MICE-related demand," stated Elara Capital.

The Maha Kumbh Mela, held once every 12 years, is scheduled in Prayagraj from Jan. 13 to Feb. 26, 2025. "The religious event is expected to attract a massive influx of devotees from across the globe. With Varanasi and Ayodhya within driving distance of Prayagraj, the high tourist footfall in Prayagraj will likely boost traffic in adjacent markets as well," according to the Hotels Sector Report by Elara Capital.

"Taj Ganges owned by Benares Hotels, a subsidiary of Indian Hotels, will be a beneficiary of the Kumbh festival," it said.

Popular British rock band Coldplay's concert tour is expected to drive hotel demand given pan-India participation. Coldplay's concert is scheduled on Jan. 18, 19 and 21, 2025 in Mumbai and Jan. 25- 26, 2025 in Ahmedabad. The report highlighted that Juniper Hotels with 269-room Hyatt Regency is set to benefit from the concert in Ahmedabad.

Elara Capital remains positive on hotel stocks. Chalet Hotels, JUNIPER and IH are their top picks in the space. While, in the primary market, Ventive Hospitality was listed on Dec. 30, 2024. Schloss Bangalore (Hotel Leela), ITC Hotels and Brigade Hotel Ventures are likely to list in fourth quarter.

Growth In Q3

Elara Capital expects hotel companies to post 15-20% growth in revenue per available room, as sector has witnessed good growth in third quarter, supported by high occupancy and double-digit growth in average room rate.

"Average room rate growth has been visible across business and leisure destinations, with the exception of Cochin micro-market, in our view," the report said.

Occupancy growth has also been strong, driven by business travel, MICE and leisure travel. "Underpinned by ARR growth and operating leverage benefit, expect Elara Hotels universe to post healthy margin expansion," the report further said.

In third quarter of fiscal 2024-2025, the number of auspicious days for Hindu marriages rose to 16 from 12 last year, boosting demand for hotel banquets. Dry days in third quarter of fiscal 2024-2025 increased slightly to eight from seven in third quarter of fiscal 2023-2024.

New signings were up 80% year-on-year to 7,838 keys (67 hotels) cumulatively for October-November, as per HVS Anarock. New openings rose 5% year-on-year to 2,086 keys (27 hotels) through the period. New hotel openings and pipeline continue to show an upward trajectory, implying growing demand in the industry.