Leading Hotels’ Market Capitalization, Impacts of Covid-19, and Future Growth

Leading Hotels’ Market Capitalization, Impacts of Covid-19, and Future Growth

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Here is our hotel industry in India 2021 report with our media analysis. We have tracked the news, observed the industry, and analyzed the topic.

Hotel Industry Overview

The hospitality industry in India has 4 sectors – tourism and travel, food and restaurants, hotels and lodging, and recreation. The industry has been growing moderately for the past few years and has a high potential to grow bigger in the future. The primary sector that attracts revenue for the industry is tourism and travel. India Brand Equity Foundation (IBEF) predicts, by 2029 the sector is expected to grow 6.7% to reach INR 35 trillion (USD 488 billion). This growth is partially due to the expected rise in international tourist arrival as India is a destination for spiritual tourism for tourists all over the world. Also, the middle-class number is increasing in India that would benefit domestic tourism. The consistent growth of the middle class, their rising levels of income, the interest of millennials to travel around their home country, and the new spirit of wanderlust are a few of the reasons for domestic travel.

Tourism and travel account for the growth in the hotels and restaurants industries. Business travels are increasing due to the rapid growth of the IT sector and the emergence of several global companies. The market value of the Indian restaurants in hotels is calculated to be around 116 billion Indian rupees in FY2020. The value of the hotel restaurants is lower in comparison to the growth of the other industries. Statista  expected the market value to be 150 billion by 2025 at this rate of growth.

During the pandemic, the hotel industry records low occupancy in April 2020. The average occupancy range of the sector nationwide is 33- 36%. There is a decline of 31- 33%. To balance out the fall of demand and occupancies of the rooms and services, hotels reduced tariffs significantly expecting to attract business. They decreased Revenue Per Available Room (RevPAR) to the minimal cost of INR 1,500 to 1,800 in 2020. And market leaders and deluxe hotels, previously achieving over INR 7,000 RevPAR, has a decline of 63.7% in occupancy. The average of RevPAR based on 1,200 branded and unbranded hotels is INR 4,598 in FY2021. As per the report of  HVA Anarock, the sector has a revenue loss of INR 900 billion in 2020. There was a steady decrease in revenue in FY2021.
Leading Hotels in India – Market Capitalization 2021

India has both the international players and the domestic players in the hotels and hospitality sectors, which is a dynamic and emerging sector in India. The industry has huge potential for capitalizing and improving the economy of the nation.

Looking into the data, a few of the leading companies are holding better market cap in 2021  than their previous years. Indian Hotels (IHCL) company has a market cap of -17.17% when compared 2020 to 2019; EIH has -35.38% in 2020 in comparison to 2019, and Chalet Hotels has a -47.36% market cap in 2020 in comparison to 2019. Whereas in 2021, Indian Hotels and EIH have increased their market cap by 15.79% and 23.27% respectively; on the other side Chalet Hotels has -11.33% market cap in 2021. There are fluctuations in the market generally year-on-year (YOY), and in a few companies particularly.

As of 27th October 2021, the market capitalization and the share values of the leading hotels and restaurants in India are presented in the table:

Company Name Last Price 52 wk High 52 wk Low Market Cap (Cr INR) Market Cap (Bn INR)
Indian Hotels (IHCL) 203.70 237.50 92.00 24,225.19 242.25
Westlife Development 566.95 683.55 360.00 8,836.25 88.36
EIH 141.00 150.70 72.45 8,817.63 88.17
Chalet Hotels 240.10 269.35 125.05 4,922.62 49.22
Mahindra Holidays and Resorts India Ltd. 236.55 261.40 108.93 4,741.66 47.41
Lemon Tree Hotel 53.75 57.60 26.65 4,258.32 42.58
India Tourism Development Corporation Ltd. 395.15 463.90 217.00 3,389.18 33.89
EIH Association of Hotels 386.80 449.95 207.35 1,178.51 11.78
Taj GVK Hotels 149.45 161.15 102.20 937.07 9.37

Table 1: Market Cap of leading Hotels in India as of 27th October 2021.Source: Money Control – Live

As of January 2021, the market capitalization and the share values of the leading hotels and restaurants in India, presented in the table:

Company Name Market Cap percentage
Indian Hotels (IHCL) 147.7
Westlife Development 70.26
EIH 58.16
Chalet Hotels 33.41
Lemon Tree Hotel 32.24
Mahindra Holidays and Resorts India Ltd. 29.69
India Tourism Development Corporation Ltd. 25.79
EIH Association of Hotels 8.49
Taj GVK Hotels 8.35

Table 2: Market Cap of leading Hotels in India as of January 2021. Source: Statista

The table shows an increase in market capitalization of the leading hotels and restaurants in India, comparing the market cap in January 2021 and October 2021.

Company Name Market Cap (Bn INR)
Indian Hotels (IHCL) 64.01%
Mahindra Holidays and Resorts India Ltd. 56.68%
EIH 51.6%
Chalet Hotels 47.32%
EIH Association of Hotels 38.75%
Lemon Tree Hotel 32.07%
India Tourism Development Corporation Ltd. 31.41%
Westlife Development 25.76%
Taj GVK Hotels 12.22%

Table 3: Percentage Increase of Market Capitalization

Comparing the data in these tables, it is evident, the hospitality industry is reviving from the impact of the covid-19. The increased market capitalization of the leaders indicates the demand for the service and gradual growth of the companies. The increased market cap allows companies to widen their business. Despite the fluctuations seeing YOY basis, the leading hotels performed well in market cap in these 10 months, due to relaxed restrictions, vaccination drive, and business openings, as mentioned earlier.

Impact of the Pandemic and the Lockdowns

The hotel industry is one of the first industries affected by the outbreak of the pandemic. As travel is stopped for a big part of the year, the industry had suffered huge losses during the lockdown to control the first wave. Hotels all over India have undergone historical low occupancies.

Since October 2020, the struggles of the sector gradually started to move away. The unforeseen crisis showed the signs of recovery, which is again hit by the second wave. This one is severe than the first one. After which the hotel booking was gone down. And revenue per available room (RevPAR) come down to INR 1,582 in FY2021 (May 2020- April 2021).

The hotel industry had a growth of 84.7% in RevPAR during Q2 2021 (April to June) when compared to Q2 2020. Despite the growth, there has been a decline in RevPAR by 53.9% in Q2 2021 when compared to Q1 2021. There is a clear sign of the impact of the lockdown during the second wave.

The decline of RevPAR in 2020 on a YOY basis is due to the lockdown during the first wave in Q2 2020 and similarly in Q2 2021. During May and June of 2021, the restrictions are eased which includes a sharp recovery of the sector driven by the leisure segment.

Hotelivate says BusinessLine,  the hospitality industry will recover in two phases. The first is leisure travel because of the “locked-up” lockdowns. Secondly, the corporates are expected to resume business travels. Data shows in Q2 2021, in a study of 20 hotels, the number of rooms signed is three times more than Q2 2020, including leisure and corporate travels. Lost revenue and business in 2020 are showing hope in 2021 for the industry.

Beyond Pandemic: The Future

In a press release, ICRA  has predicted a gradual but most part slow growth of Hotel Industry in India, post the covid second wave. The industry is expected to make 45-50% of pre-covid revenue in FY2022. In addition to this, the industry, overall, has raised equity for INR 660 crore in FY2021 and has announced equity rising plans for INR 3,300 Crore. All these funds would support the industry to thrive and improve the capital structure.

During August 2021 premium hotels across India had an occupancy rate of 44-46%. For the first five months (5M) of FY2022, the occupancy rate of the premium hotels is expected to be ~32-34%, which is higher than 5M FY2021 (~13-15%). Average Room Rates (ARR) of 5M FY2022 is estimated to be approximately between INR 3,850- 3,950, which remains at the same discount, 25-30%, as before covid. A few of the high-end hotels have met the pre-covid levels of ARR during August and September 2021. This is owed to the lower restrictions and vaccination drive during the Q2 FY 2021. However, after the second wave, the demand for stays at the hotels has been increased considerably

Despite the demand, ICRA’s Assistant Vice President, Ms. Vinutaa, estimates that pre-covid revenue and profits are likely to be attained only by FY2024. The hotels are likely to be reporting 85-90% of pre-covid revenue margins meanwhile. Though, the estimates are contingent on the effects of the pandemic, possibility of third wave, and the efficacy of the vaccines.

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