Hotels: No respite from external events - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Hotels: No respite from external events

Aug 19, 2009

Well all is still not well for the hotel sector. The June quarter results clearly indicate that the sector continues to reel under pressure. Sluggish demand coupled with decline in occupancy and room rates has impacted the profits of hotel majors across the country. As per HVS Consulting & Valuation Services, a global hotel consulting and valuation firm, there was a sharp 25-35% decline in room rates of deluxe upmarket hotels and around 10-20% YoY fall in the mid-market segment rates. Room rates have seen a sharp decline during the quarter, as the effort was on to fill empty rooms. With the quarter being an off season, the performance suffered further.

Premium Hotels' Performance
City RevPAR* (Rs) Change
June June  
2009 2008  
Bengaluru 6,076 10,046 -39.5%
North Mumbai 4,827 7,534 -35.9%
Delhi 4,501 6,144 -26.7%
South Mumbai 4,404 6,771 -35.0%
Chennai 3,622 5,354 -32.3%
Kolkata 3,581 4,898 -26.9%
Goa 3,069 3,048 0.7%
Hyderabad 2,938 4,653 -36.9%
Ahmedabad 2,767 3,687 -25.0%
Pune 2,754 5,388 -48.9%
Agra 1,833 1,874 -2.2%
Jaipur 1,572 1,391 13.0%
Source: Business daily

Some cheer but...

Post the terror attacks late last year, growth in foreign tourist arrivals remained negative till May 2009. However, some pick up was seen in June and July. The foreign tourist arrivals grew minutely by 0.3% and 0.7% respectively, on a year-on-year basis. This we believe is because during the same time last year, the financial crisis had deepened which affected the travel. Also as per Crisil, leisure destinations like Goa and Jaipur have shown some growth in room rates. Occupancy in Goa went up to 61% in June 2009, as compared to 56% in the same month last year. However, while the leisure destinations saw a rise in occupancy, business destinations (generally the cash cows) witnessed a decline, which is worrying for the hotel players.

Now swine flu looms large

Even as the sector was hoping for better days ahead, the swine flu scare struck in the last few weeks, which further added to the existing woes. The hotel companies have seen cancellation of 10-15% in the inbound tourists segment. Besides, in the short term, domestic tourism will be affected in states like Maharashtra and Karnataka where incidents of flu have been reported. This coupled with the second quarter also being a traditionally a low-season period, near term outlook for the sector does not look bright.

Economic slowdown and terror attacks had hit the sector last year, while this year, the ongoing slowdown and now swine flu continue to haunt the industry. The hotel companies are therefore now banking on the Commonwealth Games (CWG) 2010 to be played in Delhi. With more than 100,000 visitors expected for the games, hotel chains and travel agents are expecting a 25% increase in room rentals.

While the long term fundamentals remain strong, as seen earlier, the sector is highly dependent on external factors which could possibly mar its performance.

Equitymaster requests your view! Post a comment on "Hotels: No respite from external events". Click here!

  

More Views on News

TAJ GVK 2019-20 Annual Report Analysis (Annual Result Update)

Dec 11, 2020 | Updated on Dec 11, 2020

Here's an analysis of the annual report of TAJ GVK for 2019-20. It includes a full income statement, balance sheet and cash flow analysis of TAJ GVK. Also includes updates on the valuation of TAJ GVK.

THE INDIAN HOTELS 2019-20 Annual Report Analysis (Annual Result Update)

Dec 1, 2020 | Updated on Dec 1, 2020

Here's an analysis of the annual report of THE INDIAN HOTELS for 2019-20. It includes a full income statement, balance sheet and cash flow analysis of THE INDIAN HOTELS. Also includes updates on the valuation of THE INDIAN HOTELS.

MAHINDRA HOLIDAYS Announces Quarterly Results (1QFY21); Net Profit Up 47.4% (Quarterly Result Update)

Aug 24, 2020 | Updated on Aug 24, 2020

For the quarter ended June 2020, MAHINDRA HOLIDAYS has posted a net profit of Rs 268 m (up 47.4% YoY). Sales on the other hand came in at Rs 2 bn (down 29.4% YoY). Read on for a complete analysis of MAHINDRA HOLIDAYS's quarterly results.

THE INDIAN HOTELS Announces Quarterly Results (4QFY20); Net Profit Down 42.9% (Quarterly Result Update)

Jun 11, 2020 | Updated on Jun 11, 2020

For the quarter ended March 2020, THE INDIAN HOTELS has posted a net profit of Rs 668 m (down 42.9% YoY). Sales on the other hand came in at Rs 11 bn (down 14.6% YoY). Read on for a complete analysis of THE INDIAN HOTELS's quarterly results.

More Views on News

Most Popular

It's the Beginning of a New Bull Phase in Smallcaps (Profit Hunter)

Feb 24, 2021

Last time the smallcap index crossed 19k a big correction followed. Here's what makes it different this time.

Top 5 Stocks Mutual Funds Bought and Sold in January 2021 (Sector Info)

Feb 16, 2021

A look at what India's top equity mutual funds bought and sold in January 2021.

I Would Recommend this Small-cap Stock Over Tesla (Profit Hunter)

Feb 16, 2021

Do you enjoy reading Tesla and Bitcoin stories? Here's a not so famous small-cap stock to profit from the rise of EVs.

Make Rs 5,000 Per Day Trading the Market (Fast Profits Daily)

Feb 25, 2021

In this video, I'll show you how to get started on the path to daily trading profits.

More

India's #1 Trader
Reveals His Secrets

Secret To Increasing Your Trading Profits Today
Get this Special Report,
The Secret to Increasing Your Trading Profits Today, Now!
We will never sell or rent your email id.
Please read our Terms

5-YR ANALYSIS

COMPARE COMPANY

MARKET STATS