The Hindu Business Line : Hotel stocks attract interest

WITH the peak tourist season to begin soon, hotel companies' shares have started attracting the interest of market players on expectation of hike in room rentals and higher occupancy of rooms.

In today's trading, there was across-the-board buying in hotel stocks including Indian Hotels (up 5.49 per cent at Rs 752.90), EIH (up 3.49 per cent at Rs 412.05), Kamat Hotels (up 20 per cent at Rs 109.85) and Jaiprakash Hotel (up 10.38 per cent at Rs 69.15). Other stocks to attract buying interest were Gujarat Hotel (up 20 per cent at Rs 57.75) and Asian Hotels (up 2.80 per cent at Rs 386.10).

Brokers and analysts attribute the interest in this sector to the good room occupancy even in the slack season and hike in room rentals for the peak season.

The room occupancy in the last quarter (April-June) was more than 80 per cent on an average, while the occupancy in the metro cities was even better, analysts said.

There is possibility of even much higher occupancy in the peak season.

"The boom in real estate is also being factored now while valuing the hotel stocks," said an analyst with a domestic broking firm.

He said there is possibility of hike in room rentals from October.

"Hike in rentals of around 20 per cent is expected and this would add to the bottomline for the second half."

Most of the hotels stocks too have not participated in the current bull rally and are undervalued compared to other stocks, he added.

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