Sector View on Indian Hotel Industry

ICICI Securities on EAST INDIA HOTELS (EIH)
EIH recorded 7.8% growth in its revenues, which is in line with our expected revenue of Rs 241.5 crore for Q2FY09, led by better performance of its Mumbai (Trident and Oberoi) and Delhi properties. Combined together, these two properties account for nearly 71% of its owned room base. We expect EIH’s revenues to continue to grow in FY09E and FY10E once its BKC project starts operation by Q3FY09 end.

Indiabulls Securities on INDIAN HOTELS

IHCL has hotels across various segments and geographies. However, there is a growing trend towards mid- and lower-priced hotels, which are comparatively less susceptible to the fall in the occupancy rate and the ARRs. It has planned aggressive capacity expansions for its Ginger Hotels chain, and has launched the Gateway brand, which is positioned between Ginger and ICHL’s luxury chain.

PINC Research on TAJGVK HOTELS & RESORTS

While we like TajGVK Hotels and Resorts’ business model on account of its diverse product portfolio and ability to leverage its offerings to maximise revenues, we believe that the ongoing turmoil in the global economy will lead to a clampdown in discretionary spending, by both corporates and individuals. This has the potential to impact revenues and profits.

ICICI Securities on HOTEL LEELA

Hotel Leela currently operates 1,115 rooms. The company has plans to add a further 1,486 rooms over the next four years. This expansion involves a project cost of around Rs 2,000cr. However, due to the current global financial market turmoil, liquidity crunch and expected sluggish demand for premium rooms, its project execution may get delayed in cities like Pune, Hyderabad and Chennai.

KRChoksey Shares and Securities on KAMAT HOTELS

It is one of the major mid-sized players in the Indian hotel industry. It is charting an expansion plan in the western regions of the country. It is expected to increase its owned and managed room base from 755 in FY08 to around 2,500 in FY10E. With an expected EPS of Rs 27 in FY10E, the stock is available at a P/E of 1.55 and a P/B of less than 0.4.

KRChoksey Shares and Securities on VICEROY HOTELS

The stock shows promise due to its advanced project pipeline. The room base is expected to triple by FY10. It has franchisee agreement with Marriot International. The company is expanding its geographical reach. It is also successfully tapping the huge opportunity in the F&B space though its restaurant business. Viceroy Hotels currently trades at 4x FY10E Rs 6.45 EPS. It looks attractive at a P/B of 0.48.