What is revenge spending and how will it impact these stocks? Check it out

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There’s a high probability that Indians may spend more on leisure and travel activities once the Covid-19 led restrictions are lifted. A survey conducted by SEBI-registered investment advisor Aurum Capital on Twitter also indicates the same. From the 1,022 participants, 71.5% voted that they will travel with family members post-Covid.

Based on the survey, Niteen S Dharmawat, co-founder, Aurum Capital, said: “We might see revenge spending soon.” In general, revenge spending is the phenomenon where consumers spend money on items or other activities that they have felt deprived of during the pandemic.

If COVID is finished today, what is the first thing that you would plan?

— Niteen S Dharmawat (@niteen_india) May 12, 2021

China was the first country to witness the trend of revenge spending after lockdown. In several Chinese cities, consumers flocked the various brand outlets to beat the lockdown blues.

According to ace investor Rakesh Jhunjhunwala, sectors like restaurant, hospitality, and aviation will bounce back with a bang.

“I will change my name, if you get a booking at any resort in November-December,” he said in an interview.

Stock performance

Shares of hotels, entertainment and tour and travel majors have plunged up to 50% since January 2020. With a fall of 49.87%, Chalet Hotels has plunged the most to Rs 171.60 on May 26 from Rs 342.35 on January 1 last year. It was followed by Asian Hotels (down 37%), Lemon Tree Hotels (down 35%), PVR (down 32%), Spice Jet (down 30%) and EIH Ltd (down 24%). On the other hand, players like Advani Hotels, India Tourism Development Corporation, The Byke Hospitality, Kamat Hotels and Royal Orchid Hotels have gained between 10%-30% during the same period.

Stocks to watch

With the fall in daily active Covid cases, there are expectations that states will soon announce the process of unlocking to bring the economy back on track.

Analysts on Dalal Street believes that investors should keep an eye on hotel, resorts and amusement park stocks including Delta Corp, EIH Limited, Indian Hotels, Lemon Tree, Chalet Hotels, Westlife, Burger King, Barbeque-Nation Hospitality and Wonderla Holidays.

“Covid peak has happened and we may see from October-November onwards if everything goes on well, tourism going up significantly,” Dharmawat said.