Hotel sector looks exciting: Rajesh Jain

Rajesh Jain, Market Strategist in an interview with ET Now talks about hotel sector.

What do you make out of the hotel business? Is there anything you like in the hotel sector at all?

You have to look at the hotel space from a twin perspective. The first is the large city focus and the large chain focus and pretty much aside of Indian Hotels, one should stick with Hotel Leela because they have been able to quickly ramp up their properties, the room inventory and have been able to roll out their products very well.

So going forward over the next three years, we see exciting prospects in terms of margin expansion as well as volume growth but there would be greater action in the tier 2 or the budget segment and particularly, you get away from the top five metro cities, you go to Baroda, Jalandhar, Ludhiana which is where you are seeing these smaller chains coming up and we are also seeing the arrival of global majors like Quality Inn and best investment into the country.

So even though there was some suspension of the construction activity that was largely because of the debt issue which was facing most of the smaller chains but largely we have seen the government create some special windows in the banking industry to allow easy credit to the hotel sector. Secondly the room occupancies have been on the northwest side and third is the tremendous pickup both in business travel as well as the tourism cult within the Indian middle class, that is acting very well for the smaller midcap stocks. So I would personally prefer Leela the best in the entire pack.