Time to cherry pick travel-related stocks ahead of holiday season: Analysts

Hotel, Airline stocks to buy: Analysts suggest investors selectively park their money in hotel and aviation stocks, as compared to luggage and travel aggregators, amid better earnings visibility

The travel and tourism sector has been thriving after Indians began indulging in "revenge travel" in the wake of the Covid-19 pandemic. According to the World Travel & Tourism Council’s (WTTC’s) 2024 Economic Impact Research (EIR) report, India's travel and tourism sector contributed over ₹19.13 trillion to gross domestic product (GDP) in 2023, up 10 per cent from 2019 levels. This is expected to reach ₹43.25 trillion by 2034.

 

On the bourses, related stocks such as Indian Hotels (up 1,102 per cent), Lemon Tree (732 per cent), EIH Ltd (528 per cent), IndiGo (478 per cent), and Safari Industries (867 per cent) have proved to be multibaggers for investors.

 

"India's travel sector has seen a boom post-Covid-19 because of pent-up demand, revenge tourism, increasing disposable income, and a burgeoning middle class leading to higher travel consumption. Among the various industries involved, supply often takes years to match the demand in sectors like hotels and aviation, which leads to disproportionate returns for shareholders," said Karan Khanna, lead analyst for Hotels and Property at Ambit Capital.

 

The trend is set to get a major fillip in the months ahead, with the holiday season beginning from late April or early May. Analysts suggest investors selectively park their money in hotel and aviation stocks as compared to luggage and travel aggregators, amid better earnings visibility.

 

Booming travel demand

 

WTTC anticipates India’s travel market to reach $125 billion by financial year 2026-27 (FY27), from $75 billion in FY20. Individually, the airline market is estimated to be worth $40 billion by FY27 (vs $20 billion in FY20), while the Indian hotel market, including domestic, inbound, and outbound, is projected at $52 billion (vs $32 billion in FY20).

 

Aamar Deo Singh, senior vice president for research, Angel One, estimates occupancy rates across hotels to grow by 70-72 per cent in FY26, with average room rate (ARR) rising by around 8-9 per cent, boosting profitability for these companies. For aviation companies, he expects air passenger traffic to grow around 10 per cent in FY26. 

 

Choose carefully

 

As most travel and tourism-related stocks are sliding in 2025, analysts suggest investors use this correction to bet on names providing valuation comfort and earnings visibility.

 

Shares of VIP Industries, TBO Tek, Yatra Online, Samhi Hotels, SpiceJet, Safari Industries, Easy Trip Planners, and Le Travenues Technology have crashed between 16.45 per cent and 42 per cent during the period, ACE Equity data shows.

 

On the contrary, shares of Kamat Hotels, Taj GVK Hotels, and InterGlobe Aviation have risen to 32.68 per cent. By comparison, the benchmark Nifty 50 has been muted (down 0.67 per cent) so far in 2025.

 

Devarsh Vakil, head of prime research at HDFC Securities, advised that investors capitalise on the revenge travel theme by focusing on the market leader in the aviation sector as it provides an enhanced margin of safety compared to competitors. "Within hotels, I prefer Lemon Tree due to its more attractive valuation profile," he said.

 

On luggage stocks like Safari and VIP Industries, Khanna pointed out that the two listed players offer discounted prices to gain/retain market share, leading to lower revenues in 2024, despite continued volume growth.

 

"Thus, while focusing on expanding total addressable market (TAM) and gaining market share via discounting bodes well for established brands in the long term, we reckon it will impact profitability for another 6-12 months," he said.

 

As for travel aggregators like Yatra.com, Le Travenues Technology-owned ixigo, and Easy Trip Planners, Khanna said investors should bet on companies focusing on improving technology and end-user preferences.