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In the hospitality sector, hotel companies are on the cusp of significant growth, with robust revenue anticipated in the upcoming July-September quarter (Q2) of the fiscal year 2023-24 (FY24). This growth is expected to continue into the second half (H2) of FY24, propelled not only by short-term factors but also by an ongoing structural uptrend, according to industry analysts.
Larger players in the listed hotel sector are gearing up to report substantial growth in Q2, ranging from 15-30 per cent compared to the previous year. This surge is primarily driven by heightened demand from the business segment. Antique Stock Broking predicts record-high Q2 earnings in the hospitality industry, fuelled by strong average room rates and an expected improvement in occupancies by 200-400 basis points (bps), supported by robust demand.
Among key players, Chalet Hotels, renowned for its business hotels, is expected to lead with a remarkable revenue growth of 30 per cent. This optimism is rooted in Chalet's ability to maintain rates above Rs 10,000 per night, reflecting a substantial 29 per cent increase year-on-year (Y-o-Y). The demand surge in Q2 can be attributed to factors such as meetings, incentives, conferences, and exhibitions (MICE) events, the G20 and cricket tournaments, all contributing significantly to industry growth.
Indian Hotels Company is poised to achieve an impressive revenue growth of 17 per cent, supported by a 12 per cent increase in room rates and a 400-bp rise in occupancies. This surge is expected to drive the company's operating profit margins up by 280 bps to 26.7 per cent. Similarly, Lemon Tree Hotels could experience an 8 per cent Y-o-Y rise in average room rates to Rs 25,310, coupled with a 71 per cent occupancy rate.
In conclusion, the hotel industry is poised for growth, with a promising outlook in the coming quarters. Investors are advised to consider market fluctuations as potential buying opportunities, given the sector's optimistic trajectory.
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