Stocks in the hospitality sector have been one of the best performers in 2022, thanks to the strong rebound in the domestic economy from the COVID-19 pandemic that brought leisure travel back to normalcy.
Such was the upmove that four hotel stocks turned multibaggers this year, and according to market mavens, there is still a lot of steam left in the sector.
The industry has seen occupancy rates reaching pre-COVID levels. The revenue per available room, or RevPar, a key parameter that assesses a hotel’s ability to fill available rooms at an average rate, for both broader upscale as well as midscale segments have surpassed the pre-pandemic levels in the September quarter.
Companies put up an all-round show in the second quarter, with companies like
, , , (India), The Indian Hotels Company, and & Resorts seeing operating profit growing by 2-4 times on a YoY basis, data by Ace Equity showed.
“Going by the improvement seen in 1HFY2023, we do not see this derailing anytime soon,” said Manish Jeloka, co-head of products and solutions at Sanctum Wealth Management. “Given that Q3 is the strongest in terms of seasonality, we expect the momentum to sustain.”
Not only hotel stocks but travel and tourism services providers have also seen a marquee improvement in business with the comeback of leisure travel. saw sales growing threefold on year in Q2.
“We believe this momentum can sustain even in the future as the spending habits of Indian consumers have changed with greater awareness and enthusiasm towards traveling, and a willingness to spend more for premium services even while traveling within India,” said Nishit Master, a portfolio manager at Axis Securities PMS.
According to analysts, the next leg of growth for the industry will come from the pickup in business meetings, incentives, conferences, and exhibitions (MICE) activities, and a greater flow of foreign tourists to India.
STOCK TALK
The strong outlook for growth is seen driving further interest in the sector, and therefore, analysts have this pack in their pick list in the midcap space.
“We own
as part of our strategies, and we continue to like it due to its strong presence in the leisure market and service offering unmatched at this scale,” Master said.
Axis PMS also likes
given its various bouquet of offerings across wallet sizes and good management.
Infact,
Mutual Fund increased its exposure to Indian Hotels in October, with its weight in the overall portfolio increasing by 15 basis points to 1.19%.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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