Radhakishan Damani backs Sterling Holiday Resorts, Professor Sanjay Bakshi backs Thomas cook. Few years back there were big hype about cox and kings but these stocks never picked up. This is one sector where I have found experts go wrong so terribly . What can be the cause ?
Disclosure: Not invested in any yet
Sterling has moved from 70 to 250 in 4 years… RK Damani bought around 90, Thomas cook moved from 45 to 200 in 4 years… So experts going terribly wrong is a incorrect statement… There will always be winners and losers in a sector
Ishan
the entire dynamics of this sector are getting upeneded by players like airbnb, stayzilla etc. which
a. are incerasing the number of rooms available for a lay traveller. A decade back, home stays were unthinkable - now they are a preferred mode, cheaper, better and perhaps more convenient. Think of what uber did to 'taxi owning companies like meru etc.
b.with websites like tripadvisor etc. becoming a preferred rforum (viz., review led booking compared to the blind booking done through make mytrip etc.), its no longer about big names. For eg., its’ no longer a given that one needs to stay at taj or oberoi for the best service - if you want to go to goa, you can google out the hotel with the best customer service that fits your needs (for eg., veg foods, elder friendly) and go there. So demand has become a “long tail”
Said all of these the older guys are re-inventing themselves - for eg., cox and kings is very strong on the student space, thomas cook is very strong on MICE/forex and they are trying to lookat ancillary spaces in taht core to improve margins and yields.
I completely agree with @varadharajanr. In last one year, whenever I checked with my friends and family about their holiday plans, I heard almost all of them have done their booking themselves, whether domestic or overseas.
With more money coming into this sector with starts-ups like OYO etc. trying to go one step ahead by standardizing the customer experience, competition has gone up quite a bit in last one year. So I would expect margin pressure for all older players like Sterling Holidays, Mahindra Holidays etc in the short to medium term.
I think standardizing is the game changer - OYO and ZO rooms are in this business. So you exactly know what to expect - AC, 32" TV, Wifi, standard room size, free breakfast etc. OYO rooms specially is affordable and quality(from personal experience), fantastic 22 years young CEO with backing from Softbank (japan). Already between 1-5 million app downloads, 40K rooms in 140 cities, 90% occupancy.
