Kamat Hotels: Merlin Marketing checks in

Kamat Hotels share price surged 12% after Merlin Marketing acquired stake in the company.
Merlin Marketing has acquired 3.5 lakh equity shares of Kamat Hotels India (representing 1.48% of its total paid-up equity capital) at Rs 34.76 per share.
Share price of Kamat Hotels have gained second straight session amid heightened investor interest. The timing of stake buy coincides with the government announcing unlock 02, to restart COVID-19 pandemic impacted economy.
Further easing the lockdown, the Maharashtra government on Monday allowed hotels and other entities providing accommodation services outside containment zones to resume operations at 33% of their capacity from July 8. The hotel segment witnessed brisk activity post announcement.

The government notification also covers lodges and guest houses. The permission has been granted on conditions of these entities adhering to social distancing norms and other protocols to avoid spread of the infection.
It is to be noted here that the fixed costs for any restaurant such as labour, power, raw materials, and rentals remains quite high and getting the desired footfalls to maximise cost benefit from operations currently looks unlikely.

In case of Hotels, with limited domestic airlines operating, demand is expected to remain low. Also, people are expected to avoid travel without purpose. Demand in Q1 and Q2 FY21 is expected to continue remain negligible despite services being operational while some traction can be expected post September-October 2020.

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