Sales at Indian Hotels Co. Ltd, which runs the Taj chain of hotels, went up by around 15% in the three months to 31 December compared with a year earlier on improved occupancy and higher rates.
Analysts said the impressive performance of Indian Hotels and some other listed hospitality companies signals that the sector has finally recovered from the after-effects of the 2008-09 economic slowdown.
Indian Hotels reported sales at Rs.485.34 crore for the December quarter, compared with Rs.437.88 crore in the year-ago period. Net profit, at Rs.50.29 crore, declined 22.48% from a year ago.
The company had then received Rs.15.57 crore as other operating income from an insurance claim for business interruption caused to Taj Mahal Palace and Tower during the 26-28 November 2009 terror attack in Mumbai, boosting net profit to Rs.64.88 crore.
“The third quarter witnessed growth in occupancies for the segment across all key markets despite increase in room inventory in select markets,” said Raymond Bickson, managing director, Indian Hotels. “The rates also improved though the behavioural pattern of all markets was not consistent as would typically be seen during the peak season.”
Bickson said his firm soon plans to launch a new property, Vivanta by Taj Hotels, in Bangalore. The Taj group also opened Taj Falaknuma Palace in Hyderabad in November and is building more properties in Dwaraka, Coimbatore, Chennai, Hyderabad and Bekal in Kerala.
Most, though not all, listed hospitality firms posted impressive figures for the December quarter, when the tourism season peaks.
EIH Ltd, which runs the Oberoi group of hotels, showed a net profit of Rs.28.39 crore, up 27.13% from a year earlier on a revenue of Rs.301.11 crore. Royal Orchid Hotels Ltd posted a 55.71% jump in net profit to Rs.3.27 crore on sales of Rs.28.84 crore.
But Hotel Leelaventure Ltd, which runs the Leela Kempinski luxury hotels, reported a Rs.23.63 crore decline in net profit for the December quarter on a revenue of Rs.142.25 crore.
Analysts said these performances indicate the revival of India’s hospitality industry in the current fiscal and paint a positive outlook for the next fiscal as well.
“There is an upsurge in inbound tourists to India. There is no immediate threat of oversupply while demand is picking up strongly,” said a hospitality industry analyst, asking not to be named.
Foreign tourist arrivals in India rose 9.3% to 5.58 million in 2010 compared with 5.11 million in 2009, when they had declined 3.3% because of the slowdown, according to the tourism ministry. Foreign exchange earnings from tourism in 2010 touched $14,193 million (Rs.65,288 crore), up 24.56%.
Rashesh Shah, analyst at ICICI Securities Ltd, said Indian Hotels has beaten expectations in revenue terms, though net profit has dipped.
“The operating cost of the company has gone up. But largely, Indian Hotels is on the right track. There is no major concern and the sector is also picking up,” he said.
Investors are yet to buy the growth story. Shares of EIH lost 15.94% during the December quarter. Hotel Leelaventure lost 10.42% and Indian Hotels lost 2.13%, while Royal Orchid Hotels gained 2.8% on the Bombay Stock Exchange. The benchmark index, Sensex, gained 2.19% in the same period.
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