The COVID-19 pandemic created havoc across sectors of the economy. The Indian hospitality industry was one of the most hit sectors due to the lockdowns and travel bans in 2020. Consequently, the shares of hotel, travel and tourism companies crashed around 40%-50% during the first couple of months of the lockdown.
However, with the ease in lockdown protocols, the hotel industry witnessed increased bookings driven by pent-up demand and more hotel stays in 2022. The industry occupancy that fell below 50% in January 2022 because of the impact of the Omicron variant, recovered to pre-COVID levels of around 65% in April 2022, as per reports.
Moreover, the industry RevPAR, or revenue per available room, in May 2022 improved and was 10% higher than the pre-COVID levels of May 2019. A rise in leisure travel, an increase in revenge travel and the beginning of MICE activities (meetings, incentives, conferences and exhibitions) have been the key drivers behind the industry growth.
The year 2022 has so far seen a sharp surge in enquiries in the long-haul and short-haul international destinations along with many domestic leisure destinations due to pent-up demand after a two-year hiatus. However, with soaring international airfares amid rising inflation and longer waiting times for travel approvals, Indians are likely to continue preferring domestic travel. Additionally, inbound travel to India may also rise on the back of pent-up demand and a weak currency in the coming days.
The growth prospects of the hospitality industry seem high with the hotel market expected to grow at an annual rate of 21% to $125 billion by 2027.
Hotel stocks have so far outperformed the benchmark indices in the year 2022. While the benchmark Nifty50 index has dropped over 7% YTD, hotel stocks have surged up to 84% YTD.
Here’s a list of top hotel & travel stocks with positive returns:
|Sr. No.||Company||Market Capitalisation
|1||Indian Hotels Company||34,600||35%|
|4||Lemon Tree Hotels||5,209||41%|
|5||Mahindra Holidays & Resorts||4,562||22%|
|6||EIH Associated Hotels||1,215||17%|
|8||Taj GVK Hotels & Resorts||898||12%|
|9||Royal Orchid Hotels||419||84%|
Data as of July 12, 2022
Indian Hotels Company
Tata Group’s The Indian Hotels Co. Ltd is the largest hospitality company in India by market capitalisation. The company’s brands include popular hotels like the iconic TAJ and Vivanta. It has a portfolio of hotels, resorts, palaces, jungle safaris, spas and in-flight catering services.
The company’s stock has given more than 35% returns YTD. In one year period, the stock of Indian Hotels Company has surged over 70%.
The company added 1,156 rooms in FY22, taking the total to 20,581 rooms as on March 31, 2022. Under the AHVAAN 2025 strategy introduced by the company, it expects to reach a portfolio of 300 hotels. It comprises Taj (100), Vivanta and SeleQtions (75), and Ginger (125).
EIH Ltd, the flagship company of Oberoi Group, is the second-largest luxury hotel chain in India. The company operates hotels under three renowned names of Oberoi, Trident and Maidens. EIH has a portfolio of 33 hotels and resorts with 4,935 rooms spanning across 15+ locations covering 7 countries.
The company has a strong balance sheet with a low debt-to-equity ratio of 0.11. the stock price of EIH Ltd has risen over 8% YTD, while it commands a market capitalisation of more than Rs 8,400 crore. The company’s prospects look good in the long-term driven by its strategic property locations and India’s tourism growth story.
The shares of Chalet Hotels have seen a robust growth of over 50% YTD and more than 72% in one year period. The stock price hit a 52-week high of Rs 345 apiece on July 05, 2022. It commands a market capitalisation of over Rs 6,600 crore.
Part of the K Raheja Corp Group, Chalet Hotels is the operator of the high-end JW Marriot Group and the Westin chain of hotels in India. The company’s portfolio comprises seven fully operational hotels representing 2,554 keys, across mainstream and luxury segments, and four commercial spaces, representing around 0.9 mn sq. ft. in close proximity to the hospitality assets.
Lemon Tree Hotels
Lemon Tree Hotels is one of the largest mid-priced hotel chains and operates 87 hotels in 54 destinations with ~8,500 rooms and over 8,000 employees. The company’s brand portfolio includes Aurika Hotels & Resorts, Red Fox, Keys Prima, among others.
The stock price has jumped over 40% YTD. The company’s debt-to-equity ratio stands at 0.52, while its P/B ratio is at 5.28. The company has a strong presence in the mid-priced hotel segment and markets with high ARR (Average Room Rate).
Mahindra Holidays & Resorts
Mahindra Holidays & Resorts, a part of the Mahindra Group, operates more than 100 resorts, hotels, vacation facilities, leisure activities and related ancillary activities across India and abroad.
The company’s total revenue in the quarter ended March 2022 was Rs 542.58 crore. Its consolidated net profit during the quarter was Rs 16.25 crore. The stock price has rallied over 22% YTD. It hit a 52-week high of Rs 274.95 on April 19, 2022, and a 52-week low of Rs 185.55 on January 04, 2022.