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Hospitality sector stocks are buzzing. There are factors for both short-term as well as long-term growth. These factors are driving the rally. Not just the share market, long-term investors and industry players are also bullish on the sector.

Summer vacations are looming which means there will be good demand for hotels. Revenge travelling still has some steam left. At the same time, there are major international events that are believed to bring lot of tourists to India. These include events like G20 and cricket world cup, translating into good demand for the hospitality sector in the near future. Anarock expects the occupancy rate in 2023 to reach 66%, while Revenue per available room (RevPAR) is expected to be around Rs 4,690. This is 18% higher than a pre-covid year of 2019.

In another report by CBRE, in the next 2-5 years, the Indian hospitality sector can witness an investment of Rs 19,000 crore. It stated that in 2023, 12,000 new rooms could be added.

Short-term events like the G20 and cricket world cup are expected to trigger the growth of tourism which will sustain for a few years. The government is also looking to promote tourism.

It is reported that demand is expected to remain higher than supply for a few years and it would be more broad-based. That’s why it was reported that various international players in the hotel industry are investing heavily in the country and PEs are also putting money in both domestic as well as international hotel companies.

A few things to note here, since the demand is broad-based, it is possible that hospitality sector players might go in tier -2 cities. In fact, these high-end companies have a new customer segment. That is the aspirational rich that wants room and services of luxury hotels without all the extravagance. So companies can also cater to them by focusing on cost efficiency, creating hotels that provide all the services and quality of luxury hotels but remove extravagance and expenses that can be avoided.