Sunny outlook for Taj Hotels

JP Morgan is forecasting sunny skies for the Indian Hotels Company, the parent company of Taj Hotels.

According to Money Control, shares of Indian Hotels jumped 3 percent on Tuesday. Most analysts are bullish on the hotel industry as a whole, too. JP Morgan, for one.

"JP Morgan is positive on the sector stating that the hospitality industry is rebounding from a five-year slowdown. According to the brokerage, Indian Hotels will be a prime beneficiary of this recovery," the article reports. 

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JP Morgan also says that tourist volume and asset divestments are contributing the sector to rise. In a report, JP Morgan says that, "Tourist arrivals have gone up by 10 percent year-on-year in April-June quarter. Local operators are also getting valuations to divest on assets."

The company sold its hotel in Sydney to Hong Kong-based Hind HOtels & Properties Group, which operates hotels and serviced apartments under the Ovolo brand. Samsara Properties divested 100 percent of its shareholding in BLUE Sydney, A Taj Hotel, in favor of Australia Hotels & Properties LImited. 

"The Tata Group company had said that the divestment has been undertaken as part of the Taj Group's strategy to focus on markets which are core to the group's operations, and to create liquidity to fund the company's ongoing expansion in such markets," the article continues.

Indian Hotels has plans to raise Rs 1,000 crore by way of rights issue. JP Morgan states that the government is proposing to introduce e-visas, which will also be a positive for the hospitality sector. 

It also has an eye on China.

India continues to be a hotbed for investment, though in a cautious manner. Carlson Rezidor Hotel Group has big plans for India in the next 10 years. The company is seeking to increase its footprint in the country with an anticipated 130-plus new hotels.

Meanwhile, investors are showing major interest in India as the country's Bharatiya Janata Party (BJP) put forth a manifesto identifying tourism as a sector that has the potential to attract major foreign exchange and create jobs.

According to the Economic Times, India has the lowest tourist inflow among the emerging countries, but this can all change if the BJP's PM-designat Narendra Modi puts his plan in motion. In the last four years, after launching the Gujarat tourism campaign, tourist inflow in the state has grown at 17 percent every year. 

 

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The survey is open through June 17 and results will be published in the August issue of Hotel Management. 

The company has taken “substantial steps” to preserve liquidity and mitigate the impact of the current extremely low levels of demand.

The company believes its long-term focus, disciplined capital allocation strategy and targeted actions will help it weather the storm.