In the global hotel industry, major players like Marriott, Hilton, and Accor have adopted a franchise-plus-management model, which helps them scale rapidly without increasing debt and capital expenditure. This approach results in their enterprise value being based on fee-based income rather than real-estate holdings, leading to lower EV/room metrics. While this may differ from India’s hotel industry, where high EV per room is observed, it does not necessarily indicate under-valuation but rather highlights the diversity in business models and valuation strategies.
The contrast in business models between global hotel chains and India’s hotels sheds light on the varying approaches to value creation and financial structuring within the industry. Understanding the factors contributing to India’s hotels enjoying the highest EV per room globally can provide insights into the market dynamics, investment attractiveness, and potential growth opportunities in the hospitality sector. As investors and industry stakeholders analyze these differences, they can leverage this knowledge to make informed decisions regarding investments, partnerships, and strategic developments in the evolving landscape of the hotel industry.
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