The hotel stocks are out of flavour on the bourses and are either trading close to their 52-week lows or well below the yearly highs. It's been more than two years that the fund managers have stayed away from the hotel sector.EIH Ltd's stock at Rs 170 is trading close to its 52-week low of Rs 155 and well below its 52-week high of Rs 330. The stock is trading at a price earning multiple of just 9.2. Indian Hotels at Rs 330 is also close to its 52-week low of Rs 280 and is trading at a PE of 12.5.

The other hotel stocks, too, are trading at very attractive discountings, but these stocks are unlikely to pick up soon unless the tourist inflow picks up. As a result of the low occupancy levels,most of the companies were not able to revise the tariffs upward in September-October last year, which hurt them badly. In such a scenario coupled with intense competition, the tourist inflow alone can help these companies make a comeback.

In 1998-99, the hotel majors failed to sustain the last year's profitability levels. The latest victim is EIH Ltd (formerly East India Hotels), who in the back of huge other income has failed to sustain the last year's figures.

Others like EIH Associated, Indian Hotels, Asian Hotels and Hotel Leela Venture have all succumbed to the low occupancy levels and have reported a negative or a negligible growth in their business income.

Despite a fall in the business and bottomline, the two biggest players in the industry, Indian Hotels and EIH Ltd, have maintained the dividend level of last year and have recommended high dividends of Rs 8.5 per share and Rs 5 per share.

Indian Hotels reported a turnover of Rs 588.3 crore against Rs 595.65 crore, a marginal fall of just 1.3per cent. Despite a high other income of Rs 34.04 crore, net profit has dropped from Rs 137.96 crore to Rs 129.14 crore. A provision for tax of Rs 10 crore for earlier years further pulled down the bottomline to Rs 119.14 crore. On an equity base of Rs 45.12 crore, the earning per share works out to Rs 26.4.

EIH on the other hand has also put up a similar performance and the stagnant revenue has affected the bottomline. The profitability margins have been under severe pressure. Other income of Rs 3518 crore failed to prop up the net profit. Turnover at Rs 440.51 crore was more or less stagnant at the last years figure of Rs 434.42 crore. Net profit, however, dropped from Rs 123.25 crore to Rs 96.41 crore. On an equity of Rs 52.39 crore, EPS works to around Rs 18.4.

Earlier, Asian Hotels, too, succumbed to the industry problems and reported a 33.6 per cent drop in its net profit from Rs 70.29 crore in 1997-98 to Rs 46.69 crore in 1998-99. The falling business and occupancy is visible in the 10 per centdrop in turnover from Rs 150.22 crore to Rs 135.8 crore.

Although the company's bottomline dropped substantially, the company has managed to pay a high dividend of 80 per cent. This, however, was lower than the last year's pay out at 90 per cent.