The Indian hotel sector has hugged headlines in a country that has witnessed the biggest hospitality IPO of all time. Supported by Brookfield, Schloss Bangalore is the owner of Leela Hotels and has recently wiped out 3,500 crores.
But underneath it there is a bigger story brewed. India’s top listed hotel companies have achieved the highest corporate value (EV) in the world. Take a closer look at the numbers.
TATA Group-Owned The Indian Hotels Company (IHCL) is the largest listed hotel player in the country, leading an EV/room of 4.06 crore. The operator of the Oberoi chain, EIH, is 5.3 crores. Approaching the list of Schloss Bangalore, operated in the top end of luxury hotels, Schloss Bangalore has an EV/Room of over 5 crore.
In contrast, the global hospitality giant, with a much larger portfolio and stronger international brand equity trade, has significantly lowered EV/room figures. Marriott International, US List, which manages more than 58,000 rooms worldwide, offers eV/£1.25 crore. Similarly, the Hilton Worldwide costs 2.17 crores. The UK InterContinental Hotels Group has EVs/rooms worth less than £200,000. The French Accor is even lower at 14 Racas. H World Group in China has EVs/rooms for less than £10 Lakh.
expensive
So why do hotels in India get so high per room ratings?
First, Indian hotel companies continue to own a large portion of their inventory, unlike global peers, which operate primarily under assets franchises or management agreements. Owning land and buildings, especially in high value urban center locations, will result in much higher capital strength. This reduces costs even if the actual number of rooms remains modest. For example, IHCL has nearly 26,500 rooms, with almost all of the ones owned or managed worldwide by Marriott or Accor.
Second, optimistic growth expectations are already burned into these ratings. Investors are allocating premiums to Indian hotel stocks behind improved domestic tourism, room rates, occupancy rates and improvements for world travelers returning to India. With a relatively young hotel chain and a still growing portfolio of rooms, Indian stocks are taking on the price of future possibilities.
Compare this with global peers who have moved almost entirely to franchise and management models with hotel majors such as Marriott, Hilton and Accor. This approach helps keep debt and capital expenditures from the book and quickly expand without inflated the balance sheet. As a result, their corporate value reflects rate-based income rather than property ownership, which naturally lowers EV/room metrics. However, this does not necessarily indicate an underestimation, but reflects differences in business models.
Asset Light Model
Back in India, you can see signs of a shift. Companies such as IHCL, EIH and ITC hotels are actively moving towards asset light strategies to promote future expansion. New projects are increasingly managed or franchise-driven. For example, 15,900 new IHCL rooms added are based on a management agreement. If this continues, Indian room-by-room metrics may begin to converge with global benchmarks over time.
Interestingly, there is no strong rating behind heavy borrowings. Most of the currently listed Indian hotel companies have less book debt. Instead, the total market capitalization of corporate value and balance sheet net liabilities increased primarily due to an increase in market capitalization at post-Covid gatherings. Approximately 80% of the listed Indian hotel stocks have beaten Sensex’s 14% CAGR for three years.
Over the past three years, top players have provided handsome returns. EIH and IHCL shares have grown at CAGRs of 42% and 51% over the past three years. In comparison, three-year stock earnings for global hotels such as InterContinental (22.4% CAGR), Hilton Worldwide (20.4% CAGR), Marriott International (15.2% CAGR) and Hyatt Hotel (14.3% CAGR) reflect more modest earnings.
Hospitality stocks from the middle class of India’s listed space are also participating. Chalet hotels have increased by 46% over three years. Lemon Tree Hotel won 33%, while Royal Orchid won 44%.
Looking at the subsequent EV/EBITDAs, India’s rating premium is further highlighted. Hotels in India trade 40 times, Chalets at 30.4, Lemon Tree at 24.1, and Shlos Bangalore at 23. By comparison, Marriott is the only miss with 19.9 and Accor with 12.8 and the Las Vegas Sands with just 11.8. Premium valuations are partially explained by more property ownership, but to maintain Indian hotel stocks, strong growth expectations must also be provided without any glitches.
Released on May 31, 2025
