Return on Equity and DuPont Analysis for Hotel Companies in India
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Resources – Hotel Industry
Industry Resources for Hotel Industry List of Resources to understand the Industry in detail. These reports together give a great start to understand the industry…
Return on Equity and DuPont Analysis for Companies in AMC industry in India
HDFC AMC – FY 20 ROE = 59% x 0.63 x x 1.07 = 31%
Nippon Life AMC – FY20 ROE = 35% x 0.41 x 1.11 = 19%
UTI AMC – FY20 ROE = 37% x 0.28 x 1.13 = 12%
AMC is a high margin, low asset turnover and negligible leverage industry.
Return on Equity and DuPont for Companies in QSR Industry
Jubilant Foodworks (FY2020) – ROE = 7.1% x 1.2x x 3.0 = 24.6%
Westlife Developments (FY2020) – ROE = -0.5% x 0.9x x 3.1 = -1.2%
Burger King India (FY2020) – ROE = -9.2% x 0.7x x 4.3 = -27.9%
Not a lot can be said about margins and asset turnover for the industry.
Regulations to operate in the Industry
To operate in Hotel Industry, each player needs a variety of approvals and licenses. Companies end up spending between 2-3% of their revenues to obtain and maintain such licenses.
Trends in Hotel Industry in India
Major Trends that exist in QSR Industry-
1. Increase in the share of Organized Players post COVID19.
2. Increasing Participation from Online Travel Agents and Increase in Commissions charged by them.
3. Asset Light model gaining market share with Management and Franchised Contracts
4. Disruptive Models – Oyo, AirBnB, Hostels, Coliving gaining market share.
Major Risks faced by Companies in Hotel Industry in India
Major Risks faced by the Industry includes –
1. Disruptive Business models gaining market share – Oyo, AirBnb, Hostels, Co-living.
2. Cyclical movements within the Industry.
3. Increased Competition within the Industry.
4. COVID related factors that may put many hotel companies out of business.
5. Risk of excessive debt on books.
Products and Services Offered by Hotel Industry
Major Products and Services offered by Hotel industry are-
1. Accommodation
2. Food & Beverages
3. Banquets
4. Amenities like Swimming Pool, Club House, Gaming and so on.
5. Loyalty Programs
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