Hotel Sector Check - Leveraging Favorable Demand-Supply Dynamics: Motilal Oswal

Motilal Oswal Report

The hotel industry maintained its healthy performance in Q3 FY24, mainly aided by an increase in the average room rate and an improvement in occupancy. In this report, we present the current demand scenario and key insights based on Q3 FY24 results and management commentaries of our hotels basket, which includes major hotel players such as Indian Hotels Company Ltd., Lemon Tree Hotels Ltd., Chalet Hotels Ltd., EIH, Oberoi Realty Ltd., Brigade Enterprises Ltd., The Phoenix Mills Ltd., and ITC Ltd.

• During Q3 FY24, ARR for our hotels basket (excluding ITC), grew ~13% YoY to Rs 12,981, while OR (excluding ITC) increased by 220bp YoY to 73.2%. Accordingly, the basket reported a strong financial performance as revenue/Ebitda grew ~21%/32% YoY. Chalet Hotels led the pack in terms of revenue growth (29% YoY), while Brigade Enterprises reported the highest Ebitda growth of ~2.1x YoY.

• All the companies registered ARR growth (up ~7-19% YoY), with EIH/Indian Hotels standalone leading the pack with 19%/17% YoY growth. Similarly, almost all the companies (except Lemon Tree) saw OR improvement, with Chalet Hotel/Brigade Enterprises witnessing the highest gain (up 630 bp/500 bp YoY). Lemon Tree’s OR dropped ~170 bp YoY due to the opening of Aurika Mumbai (669 rooms).

• The industry is likely to sustain the healthy traction in Q4 FY24 as well, with some of the major hotel companies indicating the continuation of a healthy demand scenario seen in January/February 2024.

• We believe that growth in FY25 will be driven by favorable demand-supply dynamics in the industry and several demand catalysts, including the opening of new convention centers in NCR and Mumbai, spiritual and religious tourism, increase in weddings (MICE), improved connectivity, and an expected rebound in foreign tourist arrivals. Accordingly, ARR and OR should continue to increase, which will boost revenue per available room.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.