India’s tourism sector has been on a recent high buoyed by three elements integral to Indian culture: religion, cricket, and music.
To be more specific, the once-in-a-lifetime Maha Kumbh Mela; the Indian cricket team’s recent success, including the Champion Trophy title it won on Sunday; and concerts headlined by the likes of Diljit Dosanjh, Bryan Adams, Ed Sheeran, and Coldplay.
But while both industry and market experts are optimistic about the prospects of India’s travel and tourism sector, the Nifty India Tourism index has lost more than 9% over the past three months, according to Capitaline data. And there are only two passively managed funds providing exposure to India’s travel and tourism boom—one from Kotak Mutual Fund and the other from Tata Mutual Fund.
What gives?
On the index’s decline, market experts blamed it on the wider market correction, assuring that the sector holds much potential for investors.
So why aren’t there more funds dedicated to India’s travel and tourism segment? For this, Sandip Bansal, deputy chief investment officer at ASK Investment Managers, offered two explanations: the sector does not have many large investible companies, and several of the mid-cap or small-cap firms in the space are covered by broader consumption or infrastructure funds.
Also read | On tourism, govt’s heart is in the right place. Where’s the money though?
That said, according to Bansal, India’s tourism industry presents multiple investment opportunities across airlines, luggage manufacturers, hotel operators, and travel technology companies as more people travel for leisure or business.
“The travel and tourism sector is certainly poised for outperformance,” said Prashant Biyani, vice president–institutional equity research, Elara Securities, adding that the Nifty India Tourism index’s decline was not alarming.
However, the sole gainer on the Nifty India Tourism index on Monday was EIH Ltd, the flagship company of the Oberoi Group, which ended the day’s trading up 0.62% at ₹341.85 per share. Among the top losers were VIP Industries Ltd, BLS International Services Ltd, and Devyani International Ltd, which shed nearly 5% each on a day the benchmark Nifty 50 index shed 0.41%.
According to data from Capitalmarket, except for InterGlobe Aviation (Indigo airline), which gained over 3% in the past three months, other major travel and tourism-related stocks have declined—VIP Industries lost 38%, Easy Trip Planners Ltd 29%, and BLS International Services 27.5% over that period.
Khumb, cricket and concerts
Biyani expects the Maha Kumbh Mela’s impact to extend far beyond its nearly two-month run (from 13 January to 26 February). The Hindu religious event, which marked the culmination of a dozen 12-year cycles, or 144 years, drew an estimated 660 million pilgrims to Prayagraj, according to the Uttar Pradesh government.
The economic ripple effect of that will be undeniable, said Biyani, pointing to work opportunities generated ahead of and during the Maha Kumbh Mela as well as packed flight and hotel bookings, even as peak rates.
A packed calendar of cricket matches and high-profile concerts are also expected to fuel growth in India’s travel and tourism sector.
According to a report by Tata Mutual Fund, Taj The Trees, JW Marriott (Sahar and Juhu), The Westin (Garden City and Powai Lake), Four Seasons, The St. Regis Mumbai, and The Oberoi Mumbai were almost fully booked during key concert dates.
Also read | After a strong Q3, top hotels see room for further growth
Mumbai saw a jaw-dropping 350% year-on-year surge in flight bookings around Coldplay’s concert in the city in January, and Chandigarh—one of the stops on Diljit Dosanjh’s DIL-UMINATI tour in December—recorded a 300% jump, Tata Mutual Fund said in its report, citing travel booking platform Ixigo.
Business conferences and corporate events have also made a strong comeback since the pandemic, it added.
The travel and tourism industry’s contribution to India’s GDP is estimated to surge from $199.3 billion in 2023 to $512 billion by 2028, according to a report by India Brand Equity Foundation report.
“In India, the industry’s direct contribution to the GDP is expected to record an annual growth rate of 7-9% between 2019 and 2030,” it said, adding that India’s luxury travel market is expected to expand by 12.8% between 2015 and 2025.
Jinesh Joshi, research analyst at PL Capital, added that strong demand driven by religious events and concerts had partly helped counterbalance the broader effects of India’s consumption slump. “This (travel and tourism) is one sector that is doing extremely well and has no major challenge in sight.”
Also read | India’s travel rush has a clear winner—and it’s not airlines