Hospitality has been one of the worst impacted sectors post the Covid-19 outbreak and the same is reflected in the stock prices. Even as the market recovered in April, the BS Hotel Index, which measures the performance of top hotel stocks, has been lagging way behind. While the Sensex gained 21 per cent since March 23, the BS Hotel index fell 7 per cent over the same period.
The reason for the underperformance of the sector is the expectation that recovery time could stretch to two years, one of the highest across all sectors. The delay is on account of gradual recovery from zero occupancy at present, the high fixed costs involved in the business and the rise in leverage, which was showing signs of coming down over the last couple of years. Nihal Mahesh Jham of Edelweiss Securities believes that the slowdown is much deeper