Hotel Stocks Rally on the First Day of We Travel Together, Phase 3

Hotel stocks are rising in the morning session of Friday, October 8, 2021, as the government today launched phase three of “We travel together.”

As of 11:20 local time in Thailand, the share price of the Erawan Group Public Company Limited (ERW) rose ฿0.06/share or 1.89% to ฿3.24/share with a trading value of 21

The share price of S Hotels and Resorts Public Company Limited (SHR) rose ฿0.06/share or 1.63% to ฿3.74/share with a trading value of 113 million baht.

The share price of Minor International Public Company Limited (MINT) rose ฿0.50/share or 1.52% to ฿33.50/share with a trading value of 255 million baht.

The share price of Central Plaza Hotel Public Company Limited (CENTEL) rose ฿0.50/share or 1.38% to ฿36.75/share with a trading value of 49 million baht.

Today (October 8) is the first day for reservations for “We Travel Together, Phase 3,” a tourism incentive program aimed at reviving the COVID-hit economy, totaling 2 million rights. 

Whoever registers for the “We Travel Together” scheme will receive a 40% discount on hotel accommodations per night, a 600-baht e-voucher for food and beverage for each night booked, and another 40% discount on plane tickets. The scheme is scheduled to run from October 8, 2021 to January 31, 2022.

KTBST Securities is positive on the tourism sector, despite the fact that We Travel Together, Phase 3 is limited to only 2 million rights, compared to 5 million rights in the first round and 1 million rights in the second round.

The stocks that will benefit the most and gain positive sentiment from this scheme include ERW, CENTEL , MINT and SHR.

However, KTBST maintains an “Outperform” rating on the tourism sector, with SHR (TP: 4.50 baht) and MINT (TP: 38.00 baht) as its top picks because both 2 stocks are more reliable at the recovery of overseas tourism rather than Thailand.

KGI Securities expects tourism stocks under its coverage to report a combined 3Q21F normalized loss of 4.4 billion baht  (+33% YoY, +17% QoQ), propelled by the performances of Minor International (MINT) and S Hotels & Resorts (SHR.). The 3Q21F earnings of stocks that have revenue intensity in Thailand are expected to deteriorate both YoY and QoQ due to the escalation of COVID-19 during the quarter. KGI expects tourism sentiment to have hit bottom in 3Q21 and positive news over Molnupiravir could further propel confidence in the tourism sector from 4Q21F onwards, maintaining a rating of Overweight on the sector.  KGI’s top picks are MINT (TP: 42.00 baht) and SHR (TP: 5.20 baht).