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Hotels
To report average revenue growth of ~15% YoY in Q4FY11E
Average revenue growth for the I-direct universe is expected to be
in the range of 14-15% in Q4FY11E. The growth in revenues would
be mainly driven by improvement in occupancy levels, which we
expect will improve by 320 bps YoY to 75% in Q4FY11. Average
room rates (ARRs) are expected to improve by ~4% during the
same period. On a QoQ basis, companies are expected to report
average revenue growth of ~5%.
Operating margins to remain muted
Due to moderate growth in sales and rise in operating costs,
especially F&B and other operating costs, we expect operating
margins to decline by 20 bps YoY to 32%. As per our observation,
during the quarter the companies under the I-direct coverage
universe have not entirely passed on the rising cost burden and new
service tax burden to consumers. As a result, on a sequential basis
also, we expect its OPM to decline by 120 bps.
Flat margins, exceptional items to impact profitability
Net profit for the I-direct universe is expected to decline by 1.1%
YoY to | 114.3 crore on flat margins and higher interest costs. Hotel
Leela and Royal Orchid Hotels are expected to report net profit
growth of 179% and 38% YoY, respectively. EIH is expected to
report a 56% YoY decline in net profit due to accounting of one-time
insurance claim loss of ~| 31 crore in Q4FY11.
Leisure, select business destinations to see strong traction
Due to strong foreign tourist arrivals data during the quarter (growth
of 13.8% YoY), leisure destinations would continue to outperform
compared to business destinations in Q4FY11. Leisure destinations
such as Goa, Kovalam, Jaipur and Kerala showed sharp
improvements in occupancy levels to over 79% from 73% last year
on account of rise in foreign tourist arrivals. On the other hand,
Mumbai, Chennai and Bangalore (among business destinations) also
witnessed an increase in occupancy levels of over 80% due to largescale
events like the Cricket World Cup and Aero India show
Company specific view
Company Remarks
EIH Revenues for the quarter are expected to grow 15.1% YoY due to growth in foreign
tourist arrivals (FTAs) and incremental revenue flow from its new five star hotel in
Mumbai BKC. However, its net profit is likely to decline by 57% YoY due to shortfall
of receipt of | 31crore from an insurance company
Hotel Leela On the revenue front, Leela is expected to benefit from both a rebound in corporate
travel and a strong pick-up in demand from tourist destinations Goa and Kovalam.
PAT is also likely to improve compared to last year on better operating margins (up
970 bps YoY) and lower interest outgo
Indian Hotels Revenues for the quarter are expected to improve due to re-opening of its Taj
Heritage wing, Mumbai and improvement in foreign tourists data. We expect
average occupancy levels to improve by 650 bps to 68% whereas ARRs are likely to
improve by 3-4% YoY to | 9720
Kamat Hotel Operating margins will improve by 300 bps QoQ led by better cost controls and 5%
YoY increase in revenues. At the PAT level, the company would report sequentially
better results. However, on a YoY basis, it is likely to witness a decline in its
profitability mainly led by higher interest outgo
Royal Orchid
Hotel
Revenues would grow 17% YoY, 4.9% QoQ on a rebound in the IT/BFSI segment.
However, margins are likely to get impacted by 200 bps on account of incurring of
additional costs related to the launch of two new hotels, which are expected to start
operations shortly
Taj GVK Hotel The growth in revenues would improve by only 3.5% QoQ due to a steady pick-up in
the business and additional supply of hotel rooms in the Hyderabad region.
Operating margins are expected to decline by 140 bps QoQ to 38.2%. There were no
new room additions by the company during the quarter
Viceroy
Hotels
Revenues would grow 19% YoY backed by a 300 bps improvement in average
occupancy to 63% and incremental revenue flow from Courtyard Marriott that
opened last year. However, operating margins are likely to decline by 270 bps to
31.5% due to higher operating costs and lower pick-up in average room rates
Source: ICICIdirect.com Research
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Hotels
To report average revenue growth of ~15% YoY in Q4FY11E
Average revenue growth for the I-direct universe is expected to be
in the range of 14-15% in Q4FY11E. The growth in revenues would
be mainly driven by improvement in occupancy levels, which we
expect will improve by 320 bps YoY to 75% in Q4FY11. Average
room rates (ARRs) are expected to improve by ~4% during the
same period. On a QoQ basis, companies are expected to report
average revenue growth of ~5%.
Operating margins to remain muted
Due to moderate growth in sales and rise in operating costs,
especially F&B and other operating costs, we expect operating
margins to decline by 20 bps YoY to 32%. As per our observation,
during the quarter the companies under the I-direct coverage
universe have not entirely passed on the rising cost burden and new
service tax burden to consumers. As a result, on a sequential basis
also, we expect its OPM to decline by 120 bps.
Flat margins, exceptional items to impact profitability
Net profit for the I-direct universe is expected to decline by 1.1%
YoY to | 114.3 crore on flat margins and higher interest costs. Hotel
Leela and Royal Orchid Hotels are expected to report net profit
growth of 179% and 38% YoY, respectively. EIH is expected to
report a 56% YoY decline in net profit due to accounting of one-time
insurance claim loss of ~| 31 crore in Q4FY11.
Leisure, select business destinations to see strong traction
Due to strong foreign tourist arrivals data during the quarter (growth
of 13.8% YoY), leisure destinations would continue to outperform
compared to business destinations in Q4FY11. Leisure destinations
such as Goa, Kovalam, Jaipur and Kerala showed sharp
improvements in occupancy levels to over 79% from 73% last year
on account of rise in foreign tourist arrivals. On the other hand,
Mumbai, Chennai and Bangalore (among business destinations) also
witnessed an increase in occupancy levels of over 80% due to largescale
events like the Cricket World Cup and Aero India show
Company specific view
Company Remarks
EIH Revenues for the quarter are expected to grow 15.1% YoY due to growth in foreign
tourist arrivals (FTAs) and incremental revenue flow from its new five star hotel in
Mumbai BKC. However, its net profit is likely to decline by 57% YoY due to shortfall
of receipt of | 31crore from an insurance company
Hotel Leela On the revenue front, Leela is expected to benefit from both a rebound in corporate
travel and a strong pick-up in demand from tourist destinations Goa and Kovalam.
PAT is also likely to improve compared to last year on better operating margins (up
970 bps YoY) and lower interest outgo
Indian Hotels Revenues for the quarter are expected to improve due to re-opening of its Taj
Heritage wing, Mumbai and improvement in foreign tourists data. We expect
average occupancy levels to improve by 650 bps to 68% whereas ARRs are likely to
improve by 3-4% YoY to | 9720
Kamat Hotel Operating margins will improve by 300 bps QoQ led by better cost controls and 5%
YoY increase in revenues. At the PAT level, the company would report sequentially
better results. However, on a YoY basis, it is likely to witness a decline in its
profitability mainly led by higher interest outgo
Royal Orchid
Hotel
Revenues would grow 17% YoY, 4.9% QoQ on a rebound in the IT/BFSI segment.
However, margins are likely to get impacted by 200 bps on account of incurring of
additional costs related to the launch of two new hotels, which are expected to start
operations shortly
Taj GVK Hotel The growth in revenues would improve by only 3.5% QoQ due to a steady pick-up in
the business and additional supply of hotel rooms in the Hyderabad region.
Operating margins are expected to decline by 140 bps QoQ to 38.2%. There were no
new room additions by the company during the quarter
Viceroy
Hotels
Revenues would grow 19% YoY backed by a 300 bps improvement in average
occupancy to 63% and incremental revenue flow from Courtyard Marriott that
opened last year. However, operating margins are likely to decline by 270 bps to
31.5% due to higher operating costs and lower pick-up in average room rates
Source: ICICIdirect.com Research
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