Another point according to me could be the fact that they are adding new hotels but all under managed hotel bucket except Mumbai which will be on Revenue share basis. Usually if one is bullish on hotel and tourism industries, operating leverage play is the most important trigger for your bottom line, for which managed hotel is not the best way I believe. It is kind of safe bet that is in downturn Royal Orchid doesnt stand to lose much due to low fixed cost and in upturn it does not get that multiplier effect in its bottom line either. A hotel player like Lemon Tree operating in a similar segment has lot of triggers left in its financials which are yet to perform whereas, a player like Royal Orchid who depends largely on increasing hotel under management and boost from large Mumbai Hotel (which should start meaningfully somewhere in Q4). This I will is one of the reason of why re-rating looks difficult unless investors turn head to toe and buy everything in hospitality industry.
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