What Happened to Your Indonesian Hotel Stock Investment When others Decreased by 32%?. Hotels all over the world are struggling to survive. The stocks of hotel operating companies are dropping like flies. How about your Indonesian hotel stocks? Let’s see.
Indonesian Hotel Stock Price
Indonesia capital market is a home of quite a number of hotel equity stocks. Many of them have healthy portfolio and financial performance just before Covid 19 took part. But today, as of 23 September 2020, the average hotel stock price decreased by 32% as compared to the end of 2019.
One of the hotel companies that took a major toll in its share price was PT Menteng Heritage Realty Tbk. It went down by 94% to IDR 50 per share, the minimum price set by the market authority. It swept out almost the entire value that it had built since its IPO in 2019. At the end of June 2020, it reported revenues loss of half of what it achieved in the same period last year. Its loss just in 1 semester of 2020 was IDR15 billion.
Looking at the table below, it is fair to mention that the fall was more significantly felt by upscale and newer hotels. The Hermitage is one of the high-end hotels in Indonesia. It prides itself of being a redefine, boutique luxury hotel in Indonesia.
Another was PT Ayana Land International Tbk with its Ayana brand hotels. Its website claims that it is a luxurious hotel and resort in Indonesia. Its share price was down by 86% to IDR104 per share. Its revenues in the first semester of 2020 was down by more than 60% of its previous revenues.
Other luxurious hotels experiencing major blows were PT Bukit Uluwatu Villa Tbk with its Alila brand, by 31% and PT Eastparc Hotel Tbk with its Eastparc brand, by 45%
On the other hand, companies operating budget hotels such as PT Dafam Property Indonesia Tbk with its Dafam hotels took less than 20% of stock decreasing price. Most of Dafam hotels target midscale, business-oriented visitors. Dafam also took a major blow in its revenues stream. It saw a decrease of 56%, but the market sees these hotels would recover faster than the luxurious ones.
Fitra hotels, managed by PT Hotel Fitra International Tbk also saw a decrease of 20% in its stock price even as its revenues was cut in half. Fitra hotels targets budget tourists mostly in Majalengka and its surrounding areas.
Other hotels that were not seeing significant decrease are those with older buildings such as Garden Palace in Surabaya managed by PT Mas Murni Indonesia tbk. Garden Palace was built in 1986 making it celebrated the 34th anniversary this year. The company with IDX code MAMI did not budge from its IDR50 per share. One obvious reason is because it cannot go down further. The fun part was that its revenues was stable at least until the first quarter of 2020, while others had experience shrinkage it their room sales.
Sahid Jaya Hotels managed by PT Hotel Sahid Jaya International Tbk even saw an increase in its share price. Its share price at the end of 2019 was IDR3,450 per share. Now it was IDR3,600 per share. Its revenues were also cut into half, but its investors were comfortable enough with the company they did not salvage their portfolio.
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Should You Buy, Sell or Hold Indonesian Hotel Stocks?
This is a very interesting question. The question is asked not only for hotel industry, but also to all sectors in the capital market. Should you buy when the price is obviously low, making advantage of buy low sell high? But is it low enough? And when can you sell high? Should you sell, given you have already had the stock in your portfolio, and cut your losses before it gets to the gigantic proportion? Or should you hold, and believe that the pandemic will surpass and you will have the fair value back?
This is very much related to which crisis recovery scenario you are believing. There are currently two general patterns of U-shape and L-shape. U-shape is that the recession period will be short and the recovery will be quick. L-shape is that we do not know when the recession will end and how the recovery period will proceed.
If you believe in U-shape, then do buy and hold your Indonesian hotel stocks. Otherwise, maybe holding to cash is a wiser choice, as in recession, cash is king.
Whatever your decision will be, just remember, keep watching the stock market especially Indonesian hotel stocks. It still has potential as Indonesia is still going to be one of the most attractive tourist and business destination in the world.
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