Shares of Leela Palaces Hotels & Resorts climbed 4% following a positive brokerage report projecting strong quarterly growth for the luxury hospitality sector. Nomura expects resilient domestic demand to drive revenue and profit for top Indian hotel chains despite international travel concerns.
Shares of Leela Palaces Hotels & Resorts rose 4.17% to reach Rs 495.55 on the National Stock Exchange on Monday, July 6, following a report from brokerage firm Nomura. The brokerage noted a positive outlook for the Indian hospitality sector, specifically for the quarter ending in June, driven by strong domestic luxury travel demand.
Domestic Demand as a Key Growth Driver
Nomura’s analysis suggests that the Indian hospitality industry continues to benefit from high domestic demand, which has helped offset the impact of reduced international travel caused by ongoing instability in the Middle East. The brokerage highlighted that the luxury hotel segment, in particular, is seeing consistent interest from domestic leisure travelers, which supports a favorable outlook for revenue and profit margins in the near term.
Sector Performance and Projections
Nomura expects Leela Palaces to lead the sector in performance for the June quarter, forecasting a 14% year-on-year rise in revenue and a 16% increase in EBITDA, a measure of operating profitability. Other major players are also expected to see growth. Indian Hotels is projected to report 13% growth in both revenue and EBITDA, while ITC Hotels’ hospitality segment is anticipated to grow by 8% on a standalone basis.
When including its residential segment, ITC Hotels may see a more substantial 22% growth in both revenue and EBITDA. Additionally, Chalet Hotels is expected to see a 10% revenue increase and 12% EBITDA growth, excluding its residential operations. For Indian Hotels, the brokerage pointed to sustained pricing power and the stabilization of new properties, such as Ginger Ekta Nagar and Taj Varanasi, as factors supporting these growth targets.
Monitoring Sector Trends
While the outlook for the hotel sector appears positive, investors may monitor how these companies manage their expansion costs and capacity utilization in the coming quarters. The performance of these stocks often depends on sustained average daily room rates and revenue per available room, known as RevPAR, which indicate how effectively hotels are pricing and filling their rooms. The next key updates will come when these companies release their formal financial results for the quarter, which will confirm if actual growth matches these initial projections.