Hotel stocks gained on Tuesday amid reports that the hotel sector would be included in the list of sectors defined as infrastructure, which, in turn, would ease lending conditions for companies in the business. Industry players have been demanding inclusion in the list to reduce their cost of borrowing.
Hotel Leela Venture saw its share surge 4.69% to close at Rs 15.85. EIH Associated Hotels closed at Rs 115 or 3.46% higher. The other gainers included Indian Hotels (1.76%), TGB Banquets & Hotels (1.11%) and Sayaji Hotels (0.81%).
However, other stocks within the hospitality sector ended in the red as markets ended their five-day winning streak. Shares of ITC (-0.15%), Mahindra Holidays & Resorts (-1.6%), India Tourism Development (-2%) and Asian Hotels North (-2.88%) declined.
Meanwhile, according to experts, the hospitality sector continues to face headwinds from uncertain demand conditions. ?We expect industry-wide margins for the current quarter (Q2FY14) to ebb down to a five-year low of 7-8% on the back of decline in revenue per available room, seasonally weak July-September quarter and inflation in consumable costs,? Icra said in a recent release.
?With uncertain demand conditions and further supply additions, the outlook for the Indian hotel industry during 2013-14 remains negative,? it added. Last November, the Reserve Bank of India (RBI) revised its infrastructure lending list by including three-star or higher category classified hotels located outside cities with a population of more than one million.
