 "Investors check into hotel stocks")
The increasing interest in hotel stocks has driven the share price of Indian Hotels, the company that operates the Taj Group of hotels, to a 52-week high in the last few trading sessions. Rival EIH Associated Hotels, an associate company of the Oberoi Group's flagship company EIH Ltd, has also hit a 52-week high.
Occupancy and room rates in Delhi, Mumbai and other cities have improved. Hotels attribute this to rising corporate and leisure travel, and a rise in foreign tourist arrivals.
"There was an increase in occupancy across the country in the fourth quarter of 2015, and the trend has continued since. The sector is seeing early signs of revival. Excess inventory is being absorbed in an orderly manner," said Raj Rana, chief executive officer (South Asia) at international hotel company Carlson Rezidor, which operates 76 hotels in India under brands like Radisson and Park Plaza.
The change is reflected in the improving financial performance of key players. Indian Hotels reported a standalone profit of Rs 88 crore for the quarter ended March 31, 2016, against a loss of Rs 119 crore in the same quarter of the previous year. On the BSE, Indian Hotels' share price has appreciated 35 per cent in the last three months.
EIH Associated Hotels saw a rise of 68 per cent in its standalone profit to Rs 18.27 crore for the quarter ended March 31, 2016. The company's stock hit a 52-week high of Rs 339 on Friday, up 88 per cent from its 52-week low of Rs 180 last August.
According to data from hotel consulting and research firm HVS, the average rate for a Mumbai hotel increased 3 per cent in 2015 and is expected to rise 10 per cent in 2016. Occupancy could improve from 72 per cent in 2015 to 73 per cent this year.
Other leading cities like Bengaluru and Hyderabad are also projected to see better occupancy.
Foreign tourist arrivals during January-May 2016 grew 9.1 per cent to 3.63 million. The corresponding growth in 2015 (over 2014) was 4 per cent. The period saw foreign exchange earnings from tourism grow 6.5 per cent to $9.27 billion. Domestic travel is also growing, complemented by low air fares.
An expert said the improved outlook and occupancy would drive investments. "Demand could outstrip supply in five years. Companies will look at expanding now because setting up a new hotel takes four years," he said. Rana said his company had a target of signing 14 new hotels in 2016 in addition to the 42 that were in the pipeline.