New Delhi, April 23 -- India's hospitality sector is entering a "golden cycle" marked by sustained average daily rate (ADR) growth, mid-teen internal rates of return and attractive valuations, making the risk-reward trade-off increasingly compelling for investors, Nomura Asian Equity Research said in its latest report.

The brokerage expects the ADR growth cycle to continue over the medium term, driven by a widening demand-supply gap in the luxury segment. According to Hotelivate data cited in the report, supply in key business cities and the luxury hotel segment is projected to grow at only 6-7% annually due to high barriers to entry. In contrast, demand is likely to expand at a high-single to low-double-digit pace, supported by rising s...