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Season begins on a positive note
FY12 season begins with 9.6% growth in foreign tourist arrivals
Foreign tourist arrivals in Oct-Dec ‘11 were strong, up by 9.6% to
1.9mn. Although the hospitality business is very sensitive to the overall
economic well being, the sector sees strong demand coming from
overall buoyant tourist arrivals, up 10% for the year to 6.1mn. INR
depreciation of 11.6% in Q3FY12 has been another positive with India
emerging as more affordable. During the quarter the average
occupancy rate (OR) in six major destinations (Mumbai, Delhi, Kolkata,
Chennai, Bengaluru and Goa) remained flattish at 70% YoY while the
average room rates (ARRs) dropped 9%YoY to INR9100. Consequently,
the average RevPAR (revenue per adjusted room) for premium
segment hotels was down by 8% to INR6400. We expect Q4FY12 to
ring in better occupancies and thereby improvement in ARRs. The
hospitality sector has slowly but surely recovered in FY12, although
the global economic sentiment would determine the speed of
recovery going forward.
Coverage universe to report 13.8% sales growth in Q3FY12
We expect our hospitality universe to register sales growth of ~13.8%
YoY in Q3FY12, driven by improved ARR and OR. Both Indian Hotels
and EIH are expected to benefit from the robust demand by reporting
topline growth of 13% and 15% respectively. We expect EBIDTA
margins of our coverage spectrum to expand marginally by ~2bps YoY
to 31.7% in Q3FY12.
Valuations compelling for IHCL
We expect the hospitality sector to maintain the demand momentum
with an improvement in global macros. The ARR and OR are expected
to retain their expansion in H2FY12. The focus in FY12 and H1FY13
would clearly be on new properties be it Pierre for IHCL and Trident
BKC, Oberoi Mumbai for EIH. We are positive on the sector, as it
revives with strong macro support, and maintain IHCL as our top pick
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Season begins on a positive note
FY12 season begins with 9.6% growth in foreign tourist arrivals
Foreign tourist arrivals in Oct-Dec ‘11 were strong, up by 9.6% to
1.9mn. Although the hospitality business is very sensitive to the overall
economic well being, the sector sees strong demand coming from
overall buoyant tourist arrivals, up 10% for the year to 6.1mn. INR
depreciation of 11.6% in Q3FY12 has been another positive with India
emerging as more affordable. During the quarter the average
occupancy rate (OR) in six major destinations (Mumbai, Delhi, Kolkata,
Chennai, Bengaluru and Goa) remained flattish at 70% YoY while the
average room rates (ARRs) dropped 9%YoY to INR9100. Consequently,
the average RevPAR (revenue per adjusted room) for premium
segment hotels was down by 8% to INR6400. We expect Q4FY12 to
ring in better occupancies and thereby improvement in ARRs. The
hospitality sector has slowly but surely recovered in FY12, although
the global economic sentiment would determine the speed of
recovery going forward.
Coverage universe to report 13.8% sales growth in Q3FY12
We expect our hospitality universe to register sales growth of ~13.8%
YoY in Q3FY12, driven by improved ARR and OR. Both Indian Hotels
and EIH are expected to benefit from the robust demand by reporting
topline growth of 13% and 15% respectively. We expect EBIDTA
margins of our coverage spectrum to expand marginally by ~2bps YoY
to 31.7% in Q3FY12.
Valuations compelling for IHCL
We expect the hospitality sector to maintain the demand momentum
with an improvement in global macros. The ARR and OR are expected
to retain their expansion in H2FY12. The focus in FY12 and H1FY13
would clearly be on new properties be it Pierre for IHCL and Trident
BKC, Oberoi Mumbai for EIH. We are positive on the sector, as it
revives with strong macro support, and maintain IHCL as our top pick
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