Room Rate Rises

Investor interest in the hospitaity sector is on the rise amid improving travel demand and increasing room fares. Those factor are expected to result in a stronger earning growth for the sector over the past next year. According to the latest research by the hospitality research firm HVS Anarock , revenue per available room (RevPAR) was between Rs 3,696 and Rs 3,944 in october, which was around 60% higher than the year-ago range. On the Valuation front, on a one year forward basis, the stock of Indian Hotels trades are a price book ( P/B) multiple of 5.2 . This look attractive when compared with its 3 year average P/B of 9.6. The stock of Lemon Tree hotel is available at a forward P/B of 6.6 compared with the 3 year average valuation of 7.7. The ET Hospitality Index, which covers prominent hotels has gained 9% compared with a 4.8% jump in the benchmark Nifty 50 over the past three month.