Indian hotel companies have shown resilience during the pandemic and now the markets are celebrating them
- After a complete halt during the COVID-19 pandemic, hotels in India are beginning to clock sales and are back on the path to recovery.
- Most of the listed hotels have already shown a gradual quarter-on-quarter growth with their latest results for the October-December quarter of the current financial year.
- The travel and tourism industry seems to be an elated industry with the news of the COVID-19 vaccine being rolled out across the globe.
Here’s how India’s top hotel stocks have fared in the last six months
|Company||Change in share price in last six months|
|Lemon Tree Hotels||+50%|
|Mahindra Holidays and Resorts||+40%|
While most of the stocks are yet to recover to their pre-COVID levels, the recovery in the last few months have been fuelled by various reasons and especially, with the distribution of the COVID-19 vaccines.
Vaccine – shot of hope for travel and tourism
The COVID-19 vaccine rollout has started across the globe triggering hopes for people to go on leisure as well as business travel. “While we anticipate a gradual revival in corporate travel, leisure demand is already strong and this traction is expected to further increase in months ahead,” said a report by ICICI Direct dated February 12.
Resilience of hotels
Most of the listed hotels have already shown a gradual quarter-on-quarter growth with their latest results for the October-December quarter of the current financial year. Analysts say this is reflecting in their share price movement. “One is the business recovery, from a complete standstill gradually the businesses have started recovering. Secondly, they have done a good job of cost rationalisation during the pandemic,” Himanshu Shah of Dolat Capital told Business Insider.
Even unlisted companies like OYO Hotels and Homes have seen a recovery in business thanks to “revenge travel”. The term gained popularity in China, after people having been stuck in a lockdown, started travelling within the country, just to get out of their homes. OYO said that during the Valentine’s Day weekend, its online traffic was up by 70% of pre-COVID levels.
Premium hotels will be the first to cater to demand
The coronavirus pandemic has changed a lot of things, and the most important of them all is our priority towards safety and hygiene. And that’s where premium hotels will have an edge over others as people travel more often. “Most of the listed stocks are premium hotels. Business and leisure travellers will now prefer branded names as they will still be cautious,” Kranthi Bathini, equity strategist at WealthMills Securities told Business Insider.
Despite all the disruptions during the pandemic, travel and tourism is set to make a big comeback as Bathini puts it “man is made for mobilisation”.
Back on track for business
Hotel companies have also announced that they are now back on track with their plans for new hotels across the country.
|Company||New projects already under development or signed||To be completed by|
|Chalet Hotels||Commercial projects at Renaissance Complex, Powai, Mumbai Marriott Complex, Whitefield, Bengaluru||Q4FY23 & Q4FY22|
|Lemon Tree||Lemon Tree Mountain Resort, ShimlaLemon Tree Vembanad Lake Resort, Alleppey,KeralaAurika, Intl. Airport, Mumbai||Mumbai project to be completed by 2022.|
|IHCL||Signed six new hotels with over 1100 rooms in third quarter|
And that may translate into more business for hotels. “Despite investment activity being paused since March 2020, there are emerging signs of re-valuations and a slow demand revival, improvised cost structures and reduced profit levels in the next two years,” said a report by real estate services company JLL.
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