The Maha Kumbh Mela has proven to be a blessing for the hospitality and airline sectors, with profits expected to surge amid rising demand. This uptick is reflected in the share prices of companies such as Benares Hotels, a subsidiary of the Tata Group’s Indian Hotels.
On Wednesday morning, Benares Hotels Ltd saw its share price jump to $141.26 on the Bombay Stock Exchange (BSE), representing an 11.50% increase from the previous closing price of $127.90 on Tuesday. This rise comes even as the BSE Sensex and small-cap segment experience declines.
Benares Hotels Ltd operates notable properties like Taj Ganges and Taj Nadesar Palace in Varanasi, as well as Ginger, Gondia in Maharashtra. The Indian Hotels Company Limited (IHCL) is the ultimate holding company of Benares Hotels.
For the third quarter (October-December), Benares Hotels announced a 20% year-on-year increase in net profit to $1.81 million. The company’s revenue rose 16.2% to $5.33 million during the quarter. The Kumbh Mela and related travels in the region have significantly boosted domestic demand, leading to an expected revenue surge.
Airlines have also benefitted from the high demand, with airfares to Prayagraj from major cities skyrocketing. Ticket costs for Delhi to Prayagraj flights have soared to $257.69 or more from $64.42 earlier. Mumbai to Prayagraj flights now cost between $257.69 and $722.22.
Flying non-stop from Delhi to Prayagraj with Akasa Airlines will cost $312.85, while Air India charges $370.67 for the same route. Flights with layovers are even more expensive. Similarly, ticket prices for SpiceJet’s direct flight from Mumbai to Prayagraj start at $265.38.
Direct flights from Hyderabad to Prayagraj are fully booked until the last week of February, forcing travelers to opt for connecting flights. The fastest route, involving a one-hour layover in Mumbai, takes five hours and is priced at $374.37 for January 29. A day later, on January 30, the same flight is priced at $478.23.
An ICRA report states that the Indian hotel industry is poised for a 7-9% revenue growth in FY2025, driven by strong domestic leisure travel demand and events like weddings and business travel. ICRA expects occupancy to hit decadal highs, with tier-II cities and spiritual tourism contributing significantly.
While domestic tourism remains a key driver, foreign tourist arrivals have yet to fully rebound post-Covid, contingent on the global economic climate. ICRA foresees premium hotel occupancy peaking at around 70-72% in FY2024 and FY2025, with average room rates climbing to $96.93-$99.51 in FY2025.
Despite some outliers exceeding pre-Covid levels, the industry is expected to reach the 2008 peak by FY2025. The medium-term outlook remains positive, supported by infrastructure enhancements, air connectivity improvements, and the growth of large-scale MICE events with new convention centers opening in recent years, the report states.
