The owner of Oberoi and Trident defers results triggering a sell-off in India's hotel stocks

Advertisement
The owner of Oberoi and Trident defers results triggering a sell-off in India's hotel stocks
Oberoi hotel in Mumbaieihltd.com
  • EIH Hotels which operates the Oberoi, Trident chain as well as one of Delhi’s oldest hotels – Maiden, has seen its stock price battered since late February.
  • Chalet Hotels, which runs – Marriot, Hyatt and Novotel in India, saw its profits jump three times in Q4FY20 but even then the market fears saw its share price down by 2% on June 9.
  • The hospitality, travel and tourism industry being severely impacted due to the coronavirus pandemic.
From Oberoi to OYO, the Indian hospitality industry opened doors for business on June 8, but the market is still skeptical of people booking rooms. The latest trigger for panic selling in the shares of hotel stocks came was the delay in declaration of earnings by EIH, which operates the Oberoi, Trident chain as well as one of Delhi’s oldest hotels – Maiden.

The owner of Oberoi and Trident defers results triggering a sell-off in India's hotel stocks
BI India

However, EIH is not alone. Chalet Hotels, which runs the premier hotels – Marriot, Hyatt and Novotel in India, saw its profits jump three times to ₹42 crore in the quarter ended March 31. However, even then the market fears saw its share price down by 2% on June 9.

With the hospitality, travel and tourism industry being severely impacted due to the coronavirus pandemic, almost all of India’s listed hotels have seen their share price tumble since February.
Advertisement

“It is well known that the hospitality and tourism industry is the worst affected by the outbreak of COVID19 (coronavirus). This has been reflected in the stock prices of hospitality stocks, which have declined by 62% to 82% from their 52 week highs,” said a report by Nirmal Bang on the hospitality sector dated June 2.

HotelsShare price change since the beginning of 2020
Chalet Hotels-53%
EIH Hotels-48.6%
Indian Hotels Company Limited-37.6%
Lemon Tree Hotels-60.4%

India’s hotels were shut for almost three months due to the coronavirus lockdown, and only some opened up as quarantine centres for international returnees in May.

Advertisement

Sanjay Sethi, MD & CEO, Chalet Hotels while announcing initiatives like sanitized stay, deferred hotel construction said they will help in the near mid-term revival. “With the new regulations to open up the economy we are gearing‐up our portfolio for a quick scale up and eagerly waiting to welcome our guests,” said Sanjay Sethi, MD & CEO, Chalet Hotels.

However, the optimism of the hotel industry still faces a challenge – whether travel will actually resume anytime soon. With work from home and video conferencing being the new norm, business travel could be impacted.

“Leisure demand will likely be the first to bounce back. Domestic corporate travel will depend on the economy,” said a recent report by STR realty. And the economy isn’t looking good.

Advertisement

For leisure travel, hoteliers are excluding ‘airline travel’ and are looking at weekend getaway spots or ‘driving destinations’ as India opens its state borders.

The hope for budget hotels

Corporates, who are cutting down costs, could now turn to budget hotels that they consider safe and hygienic. And that’s what budget hotels like Lemon Tree, OYO, FabHotels are betting on.
Advertisement

OYO Hotels & Homes, FabHotels have all launched a spree of initiatives for sanitized and clean hotels to bring in consumers.

“It has been a long wait, but we’re delighted to welcome our guests once again to our select hotels across India. All you need to do is look for a #SanitisedStay tag & we’ll take care of the rest. #AtitiDevoBhava,” wrote OYO founder Ritesh Agarwal on Twitter.

OYO’s rival in the budget hotels space – FabHotels too has gone in the similar route advertising “100% Safe Place to Stay” hotels. “From an economic standpoint as hotels and tourism in India have suffered unprecedented financial damage over the last 70 days, losing more than 20% of the annual business already, with a prolonged recovery expected now,” said Vaibhav Aggarwal, Founder & CEO, FabHotels.
Advertisement

SEE ALSO:
Parle G clocked record sales in May⁠— it may be because broke and starving migrant labourers could barely afford anything else

Anand Mahindra’s Sanjivani solution for cos – think like a startup and do a Marie Kondo style clean up of portfolio

Titan tightens cost enough to clock a 21% growth in profit⁠— the best in five quarters