Hospitality Sector To See A Boost As World Cup Fever Soars

As the festivities of the ICC Cricket World Cup 2023 kick off in India on October 5, the hospitality sector has seen a remarkable surge in demand. The 10 host cities specifically have seen a rise in reservations in hotels and homestays. The 45-day-long celebration is all set to reap rich dividends for key stocks in travel, and hospitality.

A major factor that is contributing to the sector's performance is strong demand with limited supply playing an important role in growth and profitability. Hotels emerge as the top beneficiaries of such events as both domestic and international tourist influx generate substantial demand in host cities pushing occupancy rates to nearly 100%.

Multiple reports suggest an eight to ten-fold surge during high-stake matches like that of India vs Pakistan. Stocks in companies like Indian Hotels Company Limited (IHCL) or Lemon Tree Hotels could benefit from the event.

A Motilal Oswal report noted that improving travel trends coupled with multiple large global events such as the ICC Cricket Men's World Cup are expected to push the demand higher for hotels in the upcoming quarters. 'As a result, we expect that increased occupancy, combined with sustained momentum in ARR growth, will contribute to a strong performance for the majority of the hotel companies in FY24,' the report stated further. The brokerage has retained its 'Buy' rating on Indian Hotels Company (IHCL) stock with a target price of Rs 490 per share for FY25. It has also retained its 'Buy' rating on Lemon Tree Hotels with a target price of Rs 135 per share for FY25.

The shares of Indian Hotels shares have surged in eight out of the last 11 trading sessions with the stock climbing nearly 3% on October 5 (day 1 of the World Cup) itself.

This is the first time India is hosting the Cricket World Cup solely. Before this, India has co-hosted the 1987, 1996 and 2011 editions with other nations. The tournament is being held across 10 stadiums in different cities with the semi-final being hosted at Wankhede Stadium, Mumbai and Eden Gardens, Kolkata, respectively, while the final match will take place at Narendra Modi Stadium, Ahmedabad.