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Hotels
Addition of rooms and rise in occupancy to drive topline
The average revenue growth for the I-direct universe is expected to
be in the range of 24-25% YoY in Q1FY12E. The growth would
mainly be driven by incremental revenue from the addition of hotel
rooms and improvement in occupancy levels. In our coverage
universe, we expect average occupancy and average room rate
(ARR) to increase by ~220 bps and 3-4%, respectively, compared to
last year. However, on a QoQ basis, companies are expected to
report average revenue de-growth of ~19% (except Taj GVK Hotels)
due to seasonality of the hotel business.
Re-opening of major hotels, cost control management to help
expand margins
Due to a sharp rise in topline driven by incremental revenue and
moderate growth in operating costs, we expect operating margins
to expand by ~1010 bps YoY to ~28%. Under our coverage, we
expect the margin of Indian Hotels to improve by 60 bps compared
to last year due to re-opening of Taj Heritage while the margin of
EIH is expected to be better compared to last year due to addition of
new rooms in BKC Mumbai and Hyderabad. However, on a
sequential basis, we expect margins to decline by 520 bps due to
seasonality of the business.
Improved demand and better margins to stimulate profit
Companies under the I-direct universe are expected to report net
profit of | ~88.5 crore in Q1FY12E against loss of | 1.3 crore in
Q1FY11 due to a revival in demand from business destinations.
Indian Hotels is expected to report a sharp growth in net profit due
to re-opening of Taj Heritage Mumbai and improved occupancy
while EIH is expected to report net profit of | 20.5 crore vs. a loss of
| 15.9 crore during the corresponding period last year taking into
account new room additions in BKC and new hotel in Hyderabad.
Business destination to outperform compared to leisure
destination
Due to seasonality of the business, we expect business destinations
to attract more tourists than leisure destinations in Q1FY12E.
Business destinations such as South Mumbai, Chennai, Bengaluru
and Hyderabad showed a 300 bps YoY improvement in average
occupancy levels from 61% to 64% in Q1FY12E, with an increase in
business related travel expenditure. On the other hand, Goa, Jaipur
and Agra (among leisure destinations) are likely to see marginal
improvement of 100 bps YoY in occupancy to around 56%.
Company specific view
Company Remarks
EIH Revenues are expected to grow 26% YoY due to growth in FTAs and incremental
revenue flow from its hotel in Hyderabad and BKC Mumbai. On a QoQ basis, topline
is expected to decline due to the seasonality factor. The company is expected to
report profit compared to loss last year due to better topline growth
Indian Hotels Revenues for the quarter are likely to see healthy revenue growth compared to last
year due to re-opening of its Taj Heritage wing, Mumbai and improvement in foreign
tourists data. We expect average occupancy levels to improve by 380 bps to 68%
whereas ARRs are likely to improve by 2% YoY to | 9600
Kamat Hotel Revenue is expected to grow by 10.5% YoY led by better occupancy & ARR across
Mumbai region compared to last year. However, operating margin is expected to
take a hit of ~600 bps due to higher other expenses and raw material cost. It is
expected to report a profit against loss on a sequential basis
Royal Orchid
Hotel
Revenues are expected to grow 25% YoY due to a rebound in the IT/BFSI segment
and addition of new rooms in the Jaipur and Hyderabad region. The PAT margin is
likely to improve by 200 bps on a sharp rise in topline due to additional inflow from
the launch of two new hotels
Taj GVK Hotel Revenues are expected to grow ~15% YoY due to an improvement in occupancy
level by ~250 bps and ARR by ~5%. Pick-up in occupancy and ARR is in line with a
steady pick-up in the business in Hyderabad region. Operating margins are expected
to increase 60 bps YoY to 38% due to better cost control management
Source: ICICIdirect.com Research
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Hotels
Addition of rooms and rise in occupancy to drive topline
The average revenue growth for the I-direct universe is expected to
be in the range of 24-25% YoY in Q1FY12E. The growth would
mainly be driven by incremental revenue from the addition of hotel
rooms and improvement in occupancy levels. In our coverage
universe, we expect average occupancy and average room rate
(ARR) to increase by ~220 bps and 3-4%, respectively, compared to
last year. However, on a QoQ basis, companies are expected to
report average revenue de-growth of ~19% (except Taj GVK Hotels)
due to seasonality of the hotel business.
Re-opening of major hotels, cost control management to help
expand margins
Due to a sharp rise in topline driven by incremental revenue and
moderate growth in operating costs, we expect operating margins
to expand by ~1010 bps YoY to ~28%. Under our coverage, we
expect the margin of Indian Hotels to improve by 60 bps compared
to last year due to re-opening of Taj Heritage while the margin of
EIH is expected to be better compared to last year due to addition of
new rooms in BKC Mumbai and Hyderabad. However, on a
sequential basis, we expect margins to decline by 520 bps due to
seasonality of the business.
Improved demand and better margins to stimulate profit
Companies under the I-direct universe are expected to report net
profit of | ~88.5 crore in Q1FY12E against loss of | 1.3 crore in
Q1FY11 due to a revival in demand from business destinations.
Indian Hotels is expected to report a sharp growth in net profit due
to re-opening of Taj Heritage Mumbai and improved occupancy
while EIH is expected to report net profit of | 20.5 crore vs. a loss of
| 15.9 crore during the corresponding period last year taking into
account new room additions in BKC and new hotel in Hyderabad.
Business destination to outperform compared to leisure
destination
Due to seasonality of the business, we expect business destinations
to attract more tourists than leisure destinations in Q1FY12E.
Business destinations such as South Mumbai, Chennai, Bengaluru
and Hyderabad showed a 300 bps YoY improvement in average
occupancy levels from 61% to 64% in Q1FY12E, with an increase in
business related travel expenditure. On the other hand, Goa, Jaipur
and Agra (among leisure destinations) are likely to see marginal
improvement of 100 bps YoY in occupancy to around 56%.
Company specific view
Company Remarks
EIH Revenues are expected to grow 26% YoY due to growth in FTAs and incremental
revenue flow from its hotel in Hyderabad and BKC Mumbai. On a QoQ basis, topline
is expected to decline due to the seasonality factor. The company is expected to
report profit compared to loss last year due to better topline growth
Indian Hotels Revenues for the quarter are likely to see healthy revenue growth compared to last
year due to re-opening of its Taj Heritage wing, Mumbai and improvement in foreign
tourists data. We expect average occupancy levels to improve by 380 bps to 68%
whereas ARRs are likely to improve by 2% YoY to | 9600
Kamat Hotel Revenue is expected to grow by 10.5% YoY led by better occupancy & ARR across
Mumbai region compared to last year. However, operating margin is expected to
take a hit of ~600 bps due to higher other expenses and raw material cost. It is
expected to report a profit against loss on a sequential basis
Royal Orchid
Hotel
Revenues are expected to grow 25% YoY due to a rebound in the IT/BFSI segment
and addition of new rooms in the Jaipur and Hyderabad region. The PAT margin is
likely to improve by 200 bps on a sharp rise in topline due to additional inflow from
the launch of two new hotels
Taj GVK Hotel Revenues are expected to grow ~15% YoY due to an improvement in occupancy
level by ~250 bps and ARR by ~5%. Pick-up in occupancy and ARR is in line with a
steady pick-up in the business in Hyderabad region. Operating margins are expected
to increase 60 bps YoY to 38% due to better cost control management
Source: ICICIdirect.com Research
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