Newstrack

Hotel stocks appreciate 32%

EH Staff - Mumbai

It's been a good year for leading hotel chains in India and appreciating the scenario, the market has been bullish on hotel stocks. While Indian Hotels stocks rose 32 per cent between January 3, 2006 and January 2, 2007, EIH (Oberoi) went up 56 per cent and Hotel Leela Ventures was up 13 per cent.

In the same period, the BSE Sensex was up 46 per cent, from 9,539 to 13,942. The current expansion in the hospitality industry appears set to continue at least till 2009, when a mass of new rooms will enter the market in all the major centres like Mumbai, Delhi and Bangalore. This is expected to cause a drop in the sky rocketing average room realisations (ARR) that the hotels have enjoyed for most of 2006-07. However, with the economy expanding at eight to nine per cent each year and every city developing into a centre for diverse industries like IT, ITES, BPO, pharmaceuticals and tourism, the industry remains hopeful that over-capacity, and consequent pains of dipping room revenues, won't occur.