Christmas, New Year help hospitality firms' Q3 earnings as Covid curbs ease

Most hospitality firms, particularly the ones that have a strong presence in the leisure locations, report year-on-year growth.

Christmas and New Year holidays after a strong month-on-month recovery cheered the pandemic-battered hospitality sector, shows an earnings report for listed hotel companies for the third quarter of FY22. A higher vaccination rate coupled with the ease of travel restrictions was a confidence booster for travellers.

It was the best among the last seven quarters in which the hotel industry recorded the highest monthly room rates since the onset of the pandemic, companies said in investor presentations.

According to JLL’s Hotel Momentum India (HMI) released on Monday, the sector clocked a RevPAR growth of 100.3 per cent YoY in Q4, 2021 also advancing 41.9 per cent quarter-on-quarter.

An improved occupancy in the domestic market led to an uptick in the average daily rates (ADRs) in Q3. Most hospitality firms, particularly the ones that have a strong presence in the leisure locations, saw a year-on-year (y-o-y) growth in the revenue per available room (RevPar).

Cumulative consolidated net sales of the hospitality firms—including Indian Hotels Co Ltd (IHCL), EIH, Mahindra Holidays, Chalet Hotels, Oriental Hotels, among others, increased y-o-y to Rs2485.8 crore from Rs1461.4 crore.

Higher revenue helped them get back in black, reporting a cumulative net profit of Rs156.3 crore (including overseas operations) against a cumulative loss of Rs217.3 crore in the corresponding period a year ago.

IHCL, South Asia’s biggest hotel chain, led the recovery reporting an (earnings before interest tax, depreciation and amortisation) Ebitda of 30.4 per cent--the highest in a decade. Its ADR and occupancy at the end of the third quarter stood at 95 percent and 89 per cent respectively. Its Q3 RevPar (all India) reached 89 per cent.  

The Tata Group hospitality arm saw its net sales (consolidated) jump 98 per cent to Rs1111 crore in the three months to December from Rs560 crore a year ago. The owner of the Taj and Ginger brand of hotels reported a net profit of Rs76 crore during the quarter against a loss of Rs 119 crore.

It was an equally impressive quarter for others including Chalet Hotels, EIH, Mahindra Holidays & Resorts (MHRL). Most of these firms saw a sharp uptick in the occupancy and ADRs in their leisure properties.  

Oberoi Leisure, for instance, outperformed the company’s expectations with its average room rates (ARR) touching Rs35000 per room night as compared to Rs25000 in the same quarter a year ago, the company said in an investor presentation.

A robust demand for vacation ownership reflected in member additions at Mahindra Holidays & Resorts. It grew by 13 per cent in the December quarter to 3701 from 3291 in the year ago quarter. Occupancy at resorts touched 80 per cent during the quarter leading to a record income of Rs70 crore, the highest reported by the firm in any quarter.  

Even the hotels in cities saw a recovery. K Raheja Group’s Chalet Hotels--the asset owner of Marriott, Renaissance, Novotel, among other brands in Mumbai and Pune--saw its hospitality portfolio cross the 60 per cent occupancy mark for the first time since the beginning of the pandemic.

The average room rates for the portfolio at Rs 5078 for Q3 was up 26 per cent from Q2 and the rate of Rs5558 for December was up 33 per cent from three months earlier indicating a robust recovery, Sanjay Sethi, MD and CEO, said at an investor call last week.

Even as the latter part of the quarter saw some impact of the Omicron wave, it was the best performing period of the last calendar year. It was bolstered by long weekends, holidays during festivals, and social gatherings. Business travel also resumed albeit in low numbers in some markets. The last quarter also saw a significant pick up in international arrivals as compared to the same time in the previous year, said JLL.

Improved road infrastructure particularly to hill destinations has given impetus to road travel, Jaideep Dang, Managing Director, Hotels and Hospitality Group, South Asia, JLL said in the statement. The hospitality sector is likely to recover well in 2022 even as uncertainty around different Covid variants and waves continue, he said.