Travel and tourism to grow faster than GDP; Indigo, Chalet Hotels, Ixigo in focus: Anand Rathi

India’s travel and tourism sector is expected to grow much faster than the overall economy over the next few years, supported by rising disposable incomes, government push on tourism, and rapid infrastructure expansion.

Shobit Singhal, Research Analyst at Anand Rathi Institutional Equities, in a conversation on CNBC-TV18’s Finding Alpha said travel demand typically grows 1.5–1.8 times GDP growth. With India’s GDP expected to grow in the 6–8% range, travel demand could expand by 10–12% annually.

He noted that recent policy measures such as income tax relief, GST rationalisation and the implementation of the 8th Pay Commission are putting more money in consumers’ hands.

“As per our calculation, around ₹1 lakh crore savings will be in the hands of people, and some part of it will be spent in travel and tourism,” he said.

Government initiatives are also playing a key role. Singhal pointed to the push on spiritual tourism (Ayodhya, Varanasi), island tourism (Lakshadweep, Andaman & Nicobar), winter tourism, and large investments in transport infrastructure. India now has around 160–165 airports, up from about 90 pre-Covid, helping improve connectivity in tier-2 and tier-3 cities.

The key risks to the theme, he cautioned, remain external factors such as geopolitical tensions or pandemics.

On aviation, Singhal remains positive on

InterGlobe Aviation (IndiGo), calling it a clear market leader. The airline has organically gained market share after Covid, aided by the shutdown of weaker players and aircraft supply issues faced by competitors.

IndiGo currently has 63–65% domestic market share and an aircraft order book of around 900 planes, far ahead of peers.

“We believe that Indigo will continue to get one aircraft per week till 2035,” Singhal said.

IndiGo has also strengthened its international presence, marginally overtaking Air India with about 21.9% international market share. International operations now contribute 23–25% of revenue, with capacity expected to rise to 40% by 2030.

The airline’s EBITDA margins of 23–24% are among the highest globally, compared with a global average of 16–17%, according to Singhal.

Singhal believes the hotel industry is in a prolonged upcycle, driven by a demand-supply mismatch. While demand is growing at 10–12%, supply growth is limited to 4–5%, especially in top metro cities.

Although stocks like Indian Hotels Company have seen sharp rerating and now trade at 25–28x forward EBITDA, Singhal prefers Chalet Hotels on valuation comfort.

Chalet Hotels derives 80–85% of revenue from hospitality and the rest from commercial annuity assets. It operates largely in metro cities and plans to expand room inventory from ~3,300 keys to ~4,000 keys over the next 2 to 3 years. Its annuity business is also expected to double, with EBITDA margins of around 95%.

Among online travel agencies, Singhal is positive on Ixigo

, which is a market leader in online train bookings and continues to gain share in buses and airlines.

If Ixigo executes well in hotels, he expects its EBITDA margins to improve from ~8% to 13–15% over the next three years.

For the entire discussion, watch the accompanying video