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Hotel, restaurant stocks under selling pressure amid fresh COVID-19 restrictions over Omicron

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Most hotel stocks succumbed to negative territory on Monday amid concerns over the Omicron variant of COVID-19, which has led to many states announcing fresh restrictions. Chalet Hotels, Lemon Tree, EIH, Barbeque Nation, Burger King and Cafe Coffee Day (CCD) were among the top laggards.

Hotel, restaurant stocks under selling pressure amid fresh COVID-19 restrictions over Omicron
Hotel and restaurant stocks fell on Monday as fresh restrictions were imposed in many parts of the country to curb the spread of COVID-19 amid rising concerns over the Omicron variant. Stocks like Chalet Hotels, Lemon Tree, EIH, Barbeque Nation, Burger King and Cafe Coffee Day (CCD) were among the top losers.
Restrictions have been imposed in a number of regions in the country including Delhi, Uttar Pradesh, Madhya Pradesh, Karnataka, Tamil Nadu, West Bengal and Gujarat.
Among hotel stocks, Chalet Hotels, EIH, Hotel Rugby, Asian Hotels, Country Club, Lemon Tree, Byke Hospitality and Mahindra Holiday -- closing between 0.5 percent and 2.4 percent lower -- were the top losers. However, Indian Hotels and Oriental Hotels were among the few stocks in the basket that bucked the trend, rising up to one percent.
Lemon Tree Hotels Deputy Managing Director Rattan Keswani said in an interaction with CNBC-TV18 that the company is hoping for a strong Q4, but is in a 'wait and watch' mode over the COVID situation.
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"The hotel industry is trying to recover from the challenges it has faced on account of the first and second waves of the pandemic... In the last six months, we have seen some revenge traveling. The hotel industry is trying to get back to normal but again this third wave may impact it... Night curfew restrictions will not majorly impact the hotel industry but a major lockdown will," Yash Gupta, Equity Research Analyst at Angel One, told CNBCTV18.com.
Night curfews in some states will slightly impact restaurants' dine-in business, he said.
Among restaurant stocks, Coffee Day, Devyani International, Barbeque Nation, Speciality Restaurants, Burger King and Vidli Restaurants fell between 0.5 percent and 4.3 percent. On the other hand, Jubilant FoodWorks, Westlife and Sapphire Foods rose between 0.5 percent and 2.5 percent.
Gupta of Angel One believes a third wave of the pandemic in India may cause a slight impact on the the hotel and restaurant industry due to the night curfews or weekend lockdowns.
Here's how some of the hotel and restaurant stocks have performed in the last one year:
StockReturn (%)
Indian Hotels46.9
EIH32.1
Mahindra Holidays41
Taj GVK-6.3
Chalet16
Lemon Tree11.8
Royal Orchid10.2
Asian Hotels-5.1
Speciality Restaurants85.6
Westlife Development31.6
Jubilant FoodWorks30
Burger King-21.2
"We have a neutral view on the hotel industry and are not recommending any fresh buy positions in hotel stocks," said Angel One's Gupta.
Anjan Chatterjee, Chairman and Managing Director of Speciality Restaurants, told CNBC-TV18 the current COVID-19 restrictions have been a dampener. The company has been impacted this month, he said.
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