- Date : 09/03/2023
- Read: 3 mins
Budget 2023 allocated Rs. 2,400 crores for tourism, focusing on developing 50 destinations. It will benefit stocks in the hotel industry, tour packages, and the food and beverage industry.
The government prioritises domestic travel and tourism over international travel. In Budget 2023, on the one hand, the government announced a slew of measures to promote the domestic travel and tourism industry. On the other hand, the government increased the Tax Collected at Source (TCS) on overseas tour packages from 5% to 20%. In this article, we will understand how the Budget 2023 announcements will boost the domestic travel and tourism industry. We will also understand which hospitality industry stocks will benefit from this theme.
Tourism stocks that will benefit from Budget 2023
Budget 2023 has allocated Rs. 2,400 crores for the tourism industry. During the Budget 2023 speech, the Finance Minster announced that the government would develop 50 destinations with physical and virtual connectivity. The government has allocated Rs. 10 lakh crores capital expenditure that will majorly go towards infrastructure development like roads, railways, airports, etc. All these measures will boost connectivity and the tourism industry.
The tourism stocks will benefit from these initiatives. Some of the hospitality industry stocks that will benefit include:
1) Hotel stocks
Hotel stocks have done well in the last one year as commercial and leisure travel has picked up after the Covid pandemic receded. The Budget 2023 proposals on infrastructure development and promoting 50 tourist destinations will further boost hotel stocks.
Chart: IHCL 1-year stock performance
The above chart shows the IHCL (owner of Taj Hotels) stock has gained 68% in the last one year (as of 5th March 2023). Apart from IHCL, Lemon Tree Hotels' share price has done well by gaining 47% in the last one year.
Going ahead, the hotel occupancy levels and average room rates (ARR) are expected to improve further, leading to higher profitability for IHCL, Lemon Tree Hotels, and other hotel stocks.
2) Thomas Cook
Apart from hotel stocks, the Budget 2023 proposals are expected to benefit tours and travel agencies like Thomas Cook. The company provides tour packages, foreign exchange services, Visa and Passport services, etc.
Also Read: 3 Tips To Travel The World By Saving Smartly
3) Food and beverages stocks
When the travel and tourism industry does well, the food and beverage industry automatically gets a boost. The stocks listed in this sector, such as Varun Beverages, Westlife Foodworld Ltd., Jubilant FoodWorks, Barbeque-Nation Hospitality, etc., are expected to benefit.
Chart: Varun Beverages 1-year stock performance
The above chart shows the Varun Beverages stock has more than doubled, giving 125% returns in the last one year (as on 5th March 2023). Apart from Varun Beverages, the Westlife Development Limited (McDonald’s master franchise in West and South India) stock has done well in the last one year, giving returns of 50%.
The travel and tourism industry has vast employment potential and can boost the economic growth of the local destinations and the country overall. The more the number of people that will travel, the more will hotel, tour package, food and beverage stocks benefit. In the long run, these stocks will benefit from compounding and help in wealth creation.
Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.