Hotel stocks rally; Taj GVK, Royal Orchid, EIH zoom over 15%

Taj Mansingh, hotelShares of hotel companies have rallied by up to 20% in otherwise range-bound market with 8 out of 15 top gainers from the hotel sector.Taj GVK Hotels, Oriental Hotels, Royal Orchid Hotels, EIH, EIH Associated Hotels, Advani Hotels & Resorts (India), Kamat Hotels (India) and Viceroy Hotels were up between 12% and 20% on the BSE. On comparison, the S&P BSE Sensex was up 0.18% at 34,366 points at 02:01 pm.Revenue per available room (RevPar) across premium hotels inched up by 5% year-on-year (YoY) to Rs 7,400 in February 2018, led by strong growth in demand and higher room rates.RevPar across business destinations like Hyderabad (5% YoY), Delhi & NCR (7% YoY) and Pune (7% YoY) saw strong improvement, backed by strong demand from meetings, incentives, conferences and exhibitions (MICE) segment and increasing number of corporate travelers, Elara Capital said in hotel sector update.Overall, average room rate (ARR) across premium hotels grew by 3% YoY to Rs 8,800 while occupancy (OR) grew by 150bp to 84% in February 2018. This was backed by strong foreign tourist arrivals (FTA) arrivals and increasing domestic & international travelers across leisure destinations, added report.The first evidence of a revival in India’s cyclical hotel industry has hit the shores of tier-I cities, reflected by occupancies crossing the 70% barrier. On an overall market level, occupancies have crossed the 65% threshold after a gap of eight years, analysts at IndiaNivesh Securities said in a report.The occupancy ratios (OR) of hotels are yet to reach the peak levels seen in FY08. Increasing OR would lead to massive operating leverage, and the incremental benefit would directly flow into the bottom line. A narrowing supply-demand gap bodes well for the industry, with a very favorable gap set to emerge in cities such as New Delhi, Jaipur, and Chennai if demand growth sustains added report.
Source: Business Standard