Hotel industry ‘s fortunes are closely related with the growth in Tourism and Business Travel. After many years of lackluster performance, due to recession in western countries which reduces the chance of higher spending for vacations in one side and limited chances for business travel on the other side,now this industry started to show some early signs of revival. Royal orchid Hotels (ROH) is a Bangalore based hotel chain running around 15 hotel properties across the country. Royal Orchid having presence in major Indian Cities includes Bangalore,Mysore,Mumbai,Ahmedabad,Jaipur,Pune,Goa,Hyderabad and Hospet.
Company is now adding new properties in cities like Mumbai and entering into new locations like Shimoga , Mussoorie ..etc either directly or through joint ventures.It is planning to raise the inventory of rooms to 2000 by this FY and 4000 by 2015.Almost 70% income of ROH is generated from business travelers and balance from tourists.It is a point to note that ,major properties of the company is located around IT hubs like Bangalore ,Hyderabad and Pune. Any revival in IT Sector will positively impact the business fortunes of the company. For the financial year ended March 2010 ,on a consolidated basis ROH posted a turnover of Rs.120 Cr and a net profit of Rs.7 Cr which was one of the worst performance in recent past .For the half year ended Sep 2010 ,ROH doubled its net profit compared with last year. Company’s well known brand, good repute ,pan India presence ,revival both in tourism and mainly in IT sector related business travel ..etc are expected to make it an industry out performer going forward. At CMP of Rs.73/- .it is a value BUY.
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