Hotel and travel-related stocks have been buzzing for the past few sessions on the pace of reopening in India, with reports suggesting that the government is in talks to reopen borders for foreign tourists to revive tourism, hospitality and aviation. Still working. Sectors in the country amid a steady decline in the cases of Kovid.
The second Covid wave delayed the recovery in the hospitality sector by a few quarters. However, “this time the impact was less severe and recovery has been faster than last time,” Motilal Oswal said in a note, adding that the recovery would be further aided by Foreign Tourist Arrivals (FTAs).
With many large corporates asking employees who have completed their vaccinations to return to office, domestic corporate travel is likely to return in a few quarters. The brokerage said that with the government starting the journey, FTAs will provide an additional leg of demand.
Motilal Oswal has rated ‘Buy’ on Indian Hotels Company and Lemon Tree from Hotel Industry Space. It expects recovery for the hospitality industry from domestic and international travellers’ demand.
“We expect the demand for business travel (domestic and international) to come down as it has not happened for ~1.5 years. All of the above will lead to an improvement in demand, which will boost occupancy, leading to an increase in ARR,” the note said.
While earnings were weak in FY21, the brokerage firm expects a gradual/fast recovery in FY2012E/FY2013 on a lower basis, once things get back to normal, ARR improvement, better engagement, FY21 Positivity in cost rationalization efforts, increased F&B earnings in the form of banquet/conference resumes, and higher earnings from management contracts.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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