Indian Hotels (IHTL.NS), the parent company of the luxury Taj brand, is establishing itself as a key player in India’s booming tourism sector. The $12 billion company announced on Monday that it is developing its fifth hotel in Mumbai, with an ambitious plan to expand its portfolio to over 700 properties by 2030. At least 10% of these new additions will be located overseas. However, as hotel rates surge domestically, an increasing number of Indian travelers are considering international destinations.
Despite broader concerns about a slowdown in domestic consumption affecting the Indian economy, Indian Hotels remains resilient. In the three months ending December, the company posted revenue of 25.9 billion rupees ($296 million), reflecting a 29% year-on-year increase. Its EBITDA margin also expanded by 80 basis points, surpassing 39%. Over the past year, the company’s stock has outperformed the Nifty 50 (.NSEI) by 34 percentage points. Indian Hotels currently trades at 63 times its projected earnings for the 2025 financial year—nearly double the valuation multiple of global hotel giants like Marriott International (MAR.O) and Hilton Hotel (HLT.N).
One of the key drivers of this surge is the spending power of affluent Indians, who are investing heavily in luxury weddings and high-profile events. There is a growing appetite for unique experiences. For example, Coldplay’s concert in Ahmedabad in January attracted 134,000 attendees, and the demand for accommodations pushed rates to extreme levels. A nearby Taj property charged as much as 120,000 rupees ($1,386) for a two-night stay in a double-occupancy room.
This is not an isolated case. A shortage of hotels in premium locations is causing prices to escalate across the board, even as the number of foreign visitors to India remains below pre-pandemic levels.
However, as domestic travel costs rise, international destinations are becoming more attractive to Indian tourists. According to Amit Kumar of HDFC Securities, once expenses within India reach a certain threshold, traveling abroad starts to seem like a better value. A study by Capital Economics predicts that India, currently the world’s 10th-largest source of outbound tourists, could rise to fourth place by 2035, trailing only the United States, China, and Germany. Popular destinations for Indian travelers include the Maldives, the United Arab Emirates, Oman, and Thailand.
Despite Indian Hotels’ success, analysts are raising concerns about the long-term sustainability of high domestic hotel rates. Karan Khanna of Ambit Capital warns that an unexpected surge in hotel supply could bring prices down more quickly than anticipated. Competing brands, such as ITC Hotels (ITCT.NS), have already announced significant expansion plans, particularly in smaller cities.
To address these uncertainties, Indian Hotels is focusing on a capital-light investment strategy. For now, though, it continues to thrive, benefiting from India’s growing appetite for luxury experiences.
On January 17, Indian Hotels Company reported revenue of 25.9 billion rupees ($296 million) for the three months ending in December, marking a 29% year-on-year increase. Net profit also grew 29%, reaching 5.8 billion rupees.
