Hotel and restaurant stocks under selling pressure amid new Covid-19 restrictions on Omicron

Inventories of hotels and restaurants fell on Monday as new restrictions were imposed in many parts of the country to curb the spread of COVID-19 amid growing concerns over the Omicron variant. Stocks like Chalet Hotels, Lemon Tree, EIH, Barbeque Nation, Burger King and Cafe Coffee Day (CCD) were among the biggest losers.

Restrictions have been imposed in a number of parts of the country, including Delhi, Uttar Pradesh, Madhya Pradesh, Karnataka, Tamil Nadu, West Bengal and Gujarat.

Among hotel stocks, Chalet Hotels, EIH, Hotel Rugby, Asian Hotels, Country Club, Lemon Tree, Byke Hospitality and Mahindra Holiday – closing between 0.5% and 2.4% lower – were the biggest losers. However, Indian hotels and Oriental hotels were among the few stocks in the basket to turn the tide, rising as much as 1%.

Lemon Tree Hotels deputy general manager Rattan Keswani said during an interaction with CNBC-TV18 that the company is hoping for a strong fourth quarter, but that it is in “wait and watch” mode on the COVID situation.

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“The hospitality industry is trying to recover from the challenges it faced as a result of the first and second waves of the pandemic … Over the past six months, we’ve seen some revenge travel. The hospitality industry is trying to go back to normal, but again this third wave may affect it… The nighttime curfew restrictions will not have a major impact on the hospitality industry, but a major lockdown will, ”said Yash Gupta , equity research analyst at Angel One. CNBCTV18.com.

Nighttime curfews in some states will have a slight impact on restaurant catering activities, he said.

Among restaurant stocks, Coffee Day, Devyani International, Barbeque Nation, Specialty Restaurants, Burger King and Vidli Restaurants fell between 0.5% and 4.3%. In contrast, Jubilant FoodWorks, Westlife and Sapphire Foods rose 0.5-2.5%.

Angel One’s Gupta believes a third wave of the pandemic in India could have a slight impact on the hotel and restaurant industry due to nightly curfews or weekend closures.

Here is the performance of some hotel and restaurant titles over the past year:

StoreTo return to (%)
Indian hotels46.9
IEH32.1
Mahindra Holidays41
Taj GVK-6.3
Chalet16
Lemon11.8
Royal orchid10.2
Asian hotels-5.1
Specialty restaurants85.6
Westlife Development31.6
Jubilant FoodWorks30
Burger King-21.2

“We take a neutral view of the hospitality industry and do not recommend any new buy positions in hotel stocks,” said Gupta of Angel One.

Anjan Chatterjee, president and CEO of Specialty Restaurants, told CNBC-TV18 that the current COVID-19 restrictions have been a drag. The business was hit this month, he said.

First publication: STI

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