Shares in five-star hotel companies are on a roll.

The scrips of Indian Hotels Company, East India Hotels, ITC Hotels and Asian Hotels have touched their 52-week highs this week.

The surge in these shares is attributed to a positive outlook on the sector which in turn is due to the rising occupancies in these hotels across the country.

"We expect the shares prices of hotels to move up further because we're still at the beginning of the season. The industry has about five months more before the season tapers off, and the bookings during these months are very healthy," said Uttam Dave, chief executive officer of Panell Kerr Forster Consultants, a hospitality industry consultant.

Dave said there would, however, be some 'wait and watch' effect where people would still like to hold on to investing in the hotel firms wondering whether this boom is sustainable.

"Once this season tapers off and both the economy and travel sector continues to do well, the investor confidence in hotel shares would return completely," he added.

During the current season, most of the five-star hotels have registered highest occupancies ever in the last 3-4 years. These are expected to move up further as the year-end season is approaching.

This has been mainly due to the increased foreign tourist inflows as well as a surge in domestic tourism because of aggressive marketing by the Indian government abroad, and also due to various initiatives undertaken by the hotels themselves.

Interestingly, the boom in the occupancy rates has not been fueled by a reduction in the average room rates, which has either remained stagnant or has moved up marginally. Even the revenue per available room has seen a significant surge over the last one year.

The current market prices of hotel shares are, however, nowhere near the 1994-96 levels, when the East India Hotels scrip touched Rs 770 or the Indian Hotels Company share hit Rs 1,400.

Analysts say that those years were abnormal in terms of price movements and the current prices cannot be compared with those levels since a lot of new supply has also come into the market since then.

They added that the current rally is much more realistic and is likely to retain the steam at least during the coming months.