The creation of a stock index geared for hospitality and tourism companies in India has segment executives excited for the future of the industry.
The National Stock Index of India launched the Nifty India Tourism Index on June 18. Hotel executives in India predict insights from the index will provide better benchmarking for hotels and resorts, as well as other tourism offerings, and could lead to more investment opportunities.
NSE Indices owns and manages the index, and its CEO, Mukesh Agarwal, said its launch will “facilitate the creation of products, which will create opportunities for asset managers to invest in the tourism industry, thereby providing valuable tools for investors aiming to capitalize on the growth and resilience of this vibrant industry.”
The Nifty India Tourism Index is designed to track a maximum of 30 companies from the country's larger Nifty 500 Index, with weightage of individual stock based on its level of free float market capitalization. Currently, the Nifty India Tourism Index has 17 travel and tourism sector stocks. As of November, the top weightage in the index was that of Indian Hotels Company Limited, the parent company of brand Taj Hotels, Resorts & Palaces.
ITC Hotels, which since June has been publicly listed separate from its parent firm, ITC, is the latest hotel entity to join the index. The index also includes Chalet Hotels and EIH, part of the The Oberoi Group.
Sunder Advani, chairman and managing director of Advani Hotels & Resorts India, said the launch of a tourism index is an exciting development that recognizes the growing importance of India’s tourism and hospitality sectors.
“The introduction of a Nifty 50 Index has significantly benefited the tourism industry in India by serving as a benchmark for tracking the performance of tourism-related businesses and fostering growth in the sector,” Advani said.
The inclusion of hotel and tourism companies in a recognized index will facilitate funding through public offerings or private investment, Advani added.
“Government bodies could use index trends to assess the health of the tourism sector and develop policies that support its growth,” he said.
Vishal Vithal Kamat, executive director of Kamat Hotels, said he hopes hospitality and tourism will gain more respect in India. Tourism’s reputation traditionally has been low due to it not “capturing high grassroot-level employment [or] technical-level employment,” he added.
Naveen Jain, founder and managing director of business advisory and asset-management firm Nouvelle Knowledge Services, said the index is the start of a change in how the hotel industry is perceived in India by both guests and investors. But he added it is too early to expect dynamics to immediately change.
“[The index] just means the equity markets have recognized the importance of hospitality sector with increasing number of listed players. … It could provide as a valuation benchmark for new players to get listed on the exchange for sourcing funds,” he said.
Rewriting the narrative
Hoteliers in India are concerned that the industry is not recognized as a value and employment creator, a gripe shared by hoteliers in many other global markets, Kamat said.
“I am hoping that more than a business, we are looked up on as an industry and a key driver in the local and macro economies,” he added.
Advani agreed.
“Unfortunately, our industry is not taken as seriously as it should be, and things like this are a positive step in that direction. The inclusion of several established chains in the … index underscores the significant role that the tourism and hospitality/hotel industry plays in the growth of India’s economy,” he said. “The presence of well-established hotel chains highlights the sector’s maturity, resilience and contribution to both employment and gross domestic product. As one of the largest employment generators, tourism is a crucial driver of economic activity.”
Jain added that hotels and tourism are an important growth driver for the country.
“What is important to note here is that increased formalization of the sector is happening where more numbers of star-rated hotels are coming up and being recognized. Premiumization is at play here, too. Inclusion in any index is symbolic to better fundamentals,” he said.
In 2024, several Indian hotel firms announced plans to file initial public offerings, but Jain said the index will only boost the number of Indian hospitality companies that decide to go public.
“It paves the way for the launch of dedicated sectoral funds in the tourism space,” Jain said.
Kamat said being listed on the index will also be good for hotel operations.
“It will help companies who are listed on the exchange through exposure and keep them under pressure to perform well and consistently. It may not get other companies to list, but those who have a long-term vision will definitely gain and will want to aspire to be part of this index,” he said, adding he hopes his firm will soon join the index.
But inclusion in the index does not guarantee success, Kamat said.
“I would love to see the index go up and away, but the reality is that there are many other factors apart from our industry doing well that will affect the index,” he added.
Tourism and hospitality in general in India have seen huge strides in performance since the pandemic. Jain pointed to increasing room rates, higher occupancies, more profitability and higher hotel valuations, all of which would help boost the index.
Advani agreed.
“With India becoming a global travel hub, the hospitality industry will benefit from a stronger focus on infrastructure development, better government policies and international collaborations. As the sector grows, it will contribute increasingly to India’s GDP, and the index will play a pivotal role in shaping industry trends and investment patterns,” Advani said. “Overall, both the index and the hospitality industry are expected to continue their upward trajectory, fostering a more dynamic and competitive tourism ecosystem in India.”
India's hoteliers take much pride in their brand of hospitality, Kamat said.
“The importance of Indian brands cannot be stressed less, comparing ourselves to the best in the world and doing equal business. Indians are second to none in hospitality,” Kamat added.