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Sector Focus : Hotels

Hotels: State of the industry (2000-01)

• Foreign tourist arrivals (including arrivals from Bangladesh and Pakistan) are expected to increase by 8 per cent. However, growth in foreign tourist arrivals, excluding Pakistan and Bangladesh, would be lower.
• In Mumbai and Chennai, demand for rooms is expected to increase by 15-20 per cent; and in Delhi and Calcutta, by 4 per cent each. Growth in demand in Mumbai and Chennai would be largely due to an increase in the number of business travellers, opening of new sectors, such as insurance, and continued development of the IT sector.
• By March 2001, in the metros, room availability in the premium segment is expected to increase by 1,847 rooms, as compared with that in 1999-2000.
• In the metros (except in Delhi), occupancy rates are expected to increase. However, average room revenues are not expected to increase.
• Operating profit margins are expected to either remain unchanged or increase marginally.

Hotels: Budget impact

Impact factors

Company name	Impact	Impact factors
Asian Hotels	Pos	A,B
(94.75, 94.55)
Bharat Hotels	Neut	A,B
(30.00, 30.00)
EIH	Pos	A,B
(205.50, 206.50)
ITC Hotels	Pos	A,B
(80.50, 80.10)
Indian Hotels	Pos	A,B
(291.15, 292.35)

Notes:
Figures in brackets indicate the closing share prices, on February 27, 2001 and February 28, 2001, respectively.
pos= positive neg= negative neut= neutral

Source: CRIS INFAC

A: The incidence of a countervailing duty (CVD) on imported liquor is not expected to have an impact on hotel companies. On an average, wine and liquor accounts for 5 per cent of the total hotel income. However, any increase in liquor prices is likely to be passed on to the consumer.

B: The reduction of surcharge on corporate tax, from 13 per cent to 2 per cent and the expected decline in interest rates, is expected to have a positive impact on companies. However, companies having a lower corporate tax incidence, such as Bharat Hotels, are not expected to benefit.

Rediff-CRISIL Budget Impact Analysis
Budget 2001

Disclaimer: CRISIL has taken due care and caution in compiling this report. Information has been obtained by CRISIL from sources which it considers reliable. However, CRISIL does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. CRISIL is also not responsible for any errors in transmission and especially states that it has no financial liability whatsoever to the subscribers/ users/ transmitters/ distributors of its web site.

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