Ladies and gentlemen, good day and welcome to the Indian Hotels Company Limited's Q2 FY 2026 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and then zero on your touch-tone phone. Please note that this conference is being recorded. On the call, we have with us Mr. Puneet Chhatwal, Managing Director and CEO, IHCL, and Mr. Ankur Dalwani, EVP and CFO, IHCL. I now hand the conference over to Mr. Puneet Chhatwal. Thank you, and over to you, Mr. Chhatwal.
Good evening, everyone, and thank you for joining our global conference call for Q2 2025/2026. We are pleased to inform you that we have continued our record performance for the 14th consecutive quarter, driven by sustained growth and strategic execution despite short-term industry headwinds. Kindly allow me to outline the 10 key highlights of the quarter. Starting at number one, this was a quarter of key milestones. To begin with, we are delighted to share that this has been a quarter marked by significant milestones like Taj Bandstand has received all requisite regulatory approvals to commence construction, and more importantly, excavation work has already started five days ago. Number two, we inaugurated two new greenfield hotels in Ekta Nagar, which are company-owned assets, the 127-key Vivanta and the 151-key Ginger. Both on our balance sheet.
The inauguration took place on the momentous occasion of Rashtriya Ekta Diwas, commemorating the 150th birth anniversary of Sardar Vallabhbhai Patel. We are happy to share that the hotels are off to a good start. Number three, during the quarter, we achieved the milestone of opening our 250th hotel, which is the Gateway in Goa, Palolem. Number four, we also completed a comprehensive renovation of the chambers at our flagship, Taj Mahal Palace, Mumbai. Marking its soft opening a week ago and reinforcing its legacy as India's most exclusive business club. So those were the key summary of key milestones. Number two is accelerated signings and openings. IHCL continues to demonstrate industry-leading growth with 46 hotels signed and 26 hotels opened in H1 2025/2026. This includes 14 hotels onboarded on our sales and distribution platform with the Clarks and Bridge groups.
With 268 operating hotels, 167 in pipeline, IHCL today is India's largest hospitality ecosystem, spanning 200+ unique locations across 33 states and Union Territories of India. We are well on track to achieve our target of opening 30+ new hotels in the current fiscal year. Number three, strategic partnerships. The Clarks transaction is progressing well. We expect to close it within this quarter and have already begun integration activities. Once completed, it will add another 135 hotels to our portfolio. This transaction will make IHCL the clear leader in the mid-scale segment in India with a portfolio of over 240 hotels, giving the Ginger brand significant scale. During the quarter, we also entered into multi-hotel framework agreements with the Ambuja Neotia Group for 15 hotels across the Taj Selections and Tree of Life brands, and with Madison Group for 10 Ginger hotels in South India.
These arrangements follow a capital light model through management contracts and revenue-sharing leases. Number four, asset management o f the portfolio, significant renovations which have been completed. We used the first half of the financial year, typically considered as a slower period. For our industry, to focus on renovations and upgradations across our key hotels. Major upgrades were completed by October across multiple properties, including Taj Palace Hotel in New Delhi, President Hotel in Mumbai, and Taj Fort Aguada. Others that saw renovation include Taj West End and also Taj Bengal in Kolkata. We expect to see the positive impact partially in Q3 and fully in Q4, both in terms of improved guest experiences and higher yields due to the upgraded product. Number five, resilient performance in Q2 despite short-term headwinds. Our consolidated revenue grew 12% year-on-year to INR 2,124 crores.
EBITDA grew 16% year-on-year to INR 653 crores, yielding EBITDA margin of 30.8% and expansion of 90 basis points despite the full consolidation of TajSATS in the financials, as well as asset management initiatives which I just outlined. Our profit after tax grew by 15% to INR 285 crores. Hotel segment revenue and EBITDA grew by 7% and 12% respectively, driven by our tight cost management, leading to a margin expansion of 140 basis points over last year. On standalone basis, revenue grew by 4%, impacted by hotels under renovation and a high base of last year. We continued to deliver strong performance at standalone EBITDA level, with margin expanding by 220 basis points to 40.8%. Our standalone PAT margin stood at a healthy 24.8%. Number six, management fee growth through capital light strategy.
Our capital light strategy has helped grow our management fees by 21% from 214 crores in H1 last year to 259 crores in H1 2025/2026. With strong visibility on upcoming hotel openings, we expect management fees to continue growing at a healthy pace with strong flow-through to EBITDA. Number seven, new brands and reimagined businesses. IHCL's new businesses vertical comprised of Ginger, Qmin, amã Stays & Trails, and Tree of Life continued to showcase strong growth at 22% year-on-year. This was driven by new additions to the Ginger portfolio and higher F&B revenues from the Qminization of the Ginger brand, which means the all-day dining inclusion of Qmin as the brand in Ginger properties. We expect these numbers to grow from 22% to 30% in the second half of this year. Qmin has now grown to 104 outlets across multiple formats.
amã Stays & Trails has reached a portfolio of 330-plus bungalows, with 115 in operation, and Tree of Life is now a 20+ resorts portfolio with 18 in operation. With that, I move to number eight, strong balance sheet with healthy cash reserves. Our balance sheet continues to be healthy with gross cash reserves of around INR 2,850 crores. This is after investing 480 crores in CapEx in H1. During the year, we opened Ginger Ekta Nagar and Vivanta Ekta Nagar on our balance sheet, which I just mentioned, and this marks another step forward in our strategy of creating new destinations and building a diversified base of owned assets. We are also looking forward to the opening of Taj Frankfurt in the later part of this financial year. Work is also progressing well on the expansion of 100 keys at Taj Ganges, Varanasi, which is expected to open.
Either at the end of December this year or at the latest in Q4 or early Q4 in January next year. Further, 95 keys at Taj Lucknow will also become operational by 2027. Both these hotels are operating already at high occupancies and strong ARR levels and are expected to be value-accretive and margin-enhancing. Our upcoming key projects on balance sheet at Bandstand, Lakshadweep, MOPA, which is the airport in Goa, Agada Plateau in Goa, Shiroda, Ranchi, and Agartala will further enable us to build our competitive advantage and reinforce IHCL's leadership in both established and emerging destinations. All of this growth is expected to be funded from our internal accruals only. Number nine, industry-leading return ratios led by focused investments. Our ROCE, or return on capital employed, has improved by 160 basis points year-on-year to 17.3%, while return on equity has increased by 70 basis points to 15.5%.
This sustained improvement demonstrates the quality of our earnings and the efficiency of our balance sheet, as well as the strength of our investment decisions, which continue to deliver higher returns year- after- year. Finally, number 10 is looking ahead, how we see things going forward. IHCL remains confident of achieving its guidance of double-digit revenue growth for the year, driven by structural tailwinds for the industry. Supply is expected to be constrained and continue to lag demand in the near future. With multiple global events and high-profile diplomatic visits planned in the second half of the year, continued momentum in MICE activity, and a busy wedding season, outlook for H2 remains robust. Some words on Paathyā, our ESG+ Program. Or let's say staying aligned with our ESG++ Initiative, the journey towards our 2030 targets remains on track.
IHCL now uses 41% energy from renewable sources and has installed 382 EV charging stations across 168 locations in India. Continuing our journey of eliminating single-use plastic, IHCL has installed bottling plants at 74 hotels and achieved 51% recycling of water. That is being used. IHCL currently partners in operating 73 skilled centers across 21 states in India. Since 2020, we have trained over 35,000 youth and are well on track to reach our goal of skilling 100,000+ youth by 2030. In summary, despite the transient headwinds of Q2, we feel comfortable with the revenue outlook for the rest of the year. The long-term trajectory for the sector remains intact, and we will continue to invest in our competitive advantages, including physical assets, brandscape, digitization, and our people. Thank you so much for your attention, and we now open the floor for questions.
Thank you very much. We will now begin with the question- and- answer session. Anyone who wishes to ask a question may press star and then one on the touch-tone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Sumant Kumar from Motilal Oswal. Please go ahead.
Yeah, hi, please. So can you talk more about the forward booking, also how the October month already completed, and how is the forward booking for November, December?
The business on the books is strong, Sumant, and that is despite a very high base of Q3. Year-on-year, we remain confident that in the future, both Q3 and Q4 should witness double-digit growth for us on the top line.
Okay and talking about subsidiary performance, we can see the U.K. has been extremely good in H1 FY 2026. Okay and also when you see, particularly in margin front, also the PM hotel has done well. So what about the U.S., and we are hearing about the U.S. entity, what we are planning to dispose. So assuming all the international business, U.S. and U.K., U.K. is doing good. So what is the plan we have for international business?
Yeah, hi, Sumant. I think we give out the U.S. numbers also on the slide. Essentially, the entities, you can see that both hotels have done well, particularly Camden, which has done very well in both Q2 and H1. So as far as your other question about disposal, or. I think we already clarified that, that you see that was speculation. And as of now, it is status quo as far as U.S. assets are concerned.
Okay. Thank you. Thank you.
Thank you. Our next question comes from the line of Karan Khanna from Ambit Capital. Please go ahead.
Yeah, hi. Am I audible?
Yes, yes.
Yeah. Yeah. Thanks for the opportunity. Please firstly, just a clarification. So in the last call, you mentioned that when a hotel reaches the 80% occupancy mark, typically you tend to see a lot of pricing power for that hotel. But if we look at slide number 29 of your presentation, where Mumbai H1 occupancy stood at 84%, but despite that, the RevPAR growth was only 2%. So help us reconcile this because if I look at Kolkata again at 83%, you've seen about 17% growth. So what's the outlook for Mumbai, let's say, for the second half of the year? And more importantly, how should we read this data, comparing it to what you said in the last call?
See, what I said last call holds true even today. Last year, we had a one-off event which created higher rates in Mumbai because of a very famous wedding. A lot of rooms were blocked, and that really assisted. Those one-off events will always have some impact. Same thing happened in Delhi with the UAE delegation that we had at the Taj Mahal Hotel, or popularly known as Taj Mansingh. So those one-offs will be there, but as long as they are positive, it's fine, and more important is that we are able to maintain both a high occupancy and a high rate, despite not having any such event and having had all the possible headwinds that I spoke about. The first half of this year has seen everything possible, from a Pahalgam to an Operation Sindoor, to an Iran-Israel conflict, to flooding, landslides, airline accident, etc., etc.
So I think all in all, that shows the resilience of the sector, driven mainly by the key markets of Mumbai, Delhi, Bengaluru, and even Goa is coming back. So I think the outlook remains robust, and that's how you should look at it.
So just continuing on this slide, if we look at Rajasthan, Goa, and Kerala, and with increasing outbound travel and perhaps many international destinations that are offering cheaper stays, do you expect some pressures on RevPARs to continue, particularly for leisure destinations going ahead, or you see the high single-digit RevPAR growth continuing for leisure part of the portfolio as well?
I don't see anything that would suggest why that growth should slow down because there is not so much new supply coming in, and demand remains strong. There is another thing which we have this in the IHCL enterprise RevPAR. Going back to your previous question. As we are growing with different brands, now every brand doesn't attract that kind of RevPAR growth, so I think some of that we will have to look in different markets going forward, that what is the RevPAR for a Taj-branded property? What is the RevPAR for a Ginger-branded property? Now, when we'll add after completion of the Pride and the ANK Group, we could get to 250 Ginger hotels, so we'll have to also, as I mentioned in the previous and the quarter before that, we will give more importance and lay more stress on doing some of this growth by brands.
Because the Ginger RevPAR will not be anywhere close to the Taj RevPAR.
Sure. This is helpful. Now, my second question to you, Puneet, now with the integration of Clarks to your portfolio, are you now seeing more inquiries or perhaps more opportunities that could emerge, let's say, other smaller brands that want to partner with Taj going forward? Are you seeing more discussions or perhaps more inquiries from these brands?
We have not yet completed the ANK and Pride transaction. It should happen definitely before the end of this quarter. I think that's when. We will start seeing that kind of traction, but very importantly, once that happens and with the other hotels that we have in pipeline, which was a part of the narrative I gave, we will see very soon. Over the next 12 months, 250 Ginger hotels in operation, making it the largest mid-scale brand in India.
Sure. And my last question, when we look at some of the recent industry reports, they seem to suggest that Tier 2 and Tier 3 markets are seeing higher supply. I think FY 2025 growth was about 13%, 14%. This seems like a very high number, given that it would be difficult for demand to grow at perhaps a similar number. Could you share your thoughts about this, considering you have a lot of opportunities and perhaps growth both on your greenfield as well as the pipeline that's coming in the Tier 2, 3 markets?
See, I'll let Ankur answer, but I'll just say one thing, that if your base is small, the percentage of supply growth looks very large. If Mumbai had 12%, 14% supply growth, I would be worried. If Delhi had that kind of supply growth, I could get worried. But Tier 2, Tier 3 cities almost had nothing. So if you're coming from nothing and experiencing that kind of growth, it's very normal. This is how emerging markets grow, whether from an economic point of view or from a RevPAR point of view. That's how the nature is. For example, if we say we'll do a top-line growth of 10%, 12%, and some other company, we have 268 hotels in operation, and somebody else has maybe 20 hotels in operation, and they say they are growing at double-digit, then it's not big.
If some small company adds one new hotel, suddenly the revenue goes up a lot. Right? So that's how one has to differentiate whether it is markets or it is portfolio. At what base are you looking? The base is the decisive factor. Ankur?
Yeah. I think, Karan, we've always maintained that the key business cities or the key markets, the supply growth is actually even less than 5%, and I think that's playing out even in this year, and I think even for the long-term forecast of the next four, five years, you pick up any report or look at the data, it'll kind of substantiate that. I think that's what really matters from a demand-supply perspective. The upcoming supply or potential supply in, let's say, Tier 2 or Tier 3 markets will also pull a lot of demand from unbranded chains or which are not part of a chain affiliate, so that's sort of an underlying trend which we see.
Also, as far as IHCL strategy is concerned, our focus on adding assets is more towards locations we feel where there is a sustained level of demand-supply gap, and as far as the new markets are concerned, we have also hedged that by saying that we look at managed hotels as an option in those markets.
Sure. It is helpful. Thank you. I'll come back in the queue. Thank you and all the best.
Thank you, Karan.
Thank you. Our next question comes from the line of Shaleen from UBS. Please go ahead.
Yeah. Hi, hi. Good evening, everyone. Thanks for the opportunity. So I could see your RevPAR is very strong. Is it fair to assume that because of the big wedding, F&B revenue was pretty high in the base, and that's the reason. Top-line growth looks a little softer? And to continue the part. Is it possible to give a, let's say, execess Mumbai what kind of a growth we have seen?
No, Shaleen, as I mentioned. There is a significant number of hotels which were undergoing renovations, which had an impact. But we preferred to do that in the first half, especially, let's say, Taj Palace had an impact of 150 rooms. But to get, although the renovated ones are 120, but the ones above and below, the disruption starts happening because of noise. So having for seven months 150 rooms out of operation does have an impact in a large property like Taj Palace. But the important thing is they're all back. They are in operation now with a renewed product which is as good as absolute brand new, done to the latest style and class. So it keeps you competitive and gets you a higher rate going forward. So that's a conscious call we took. That is reflected in the INR 250 crores of investment in our own business.
That includes 44 rooms in Aguada. It's a lot of rooms in a single asset.
I think if you were to also take into account the high base in both Mumbai and Delhi, I think if you adjusted for that, you would be in double digits on RevPAR then.
Double-digit on RevPAR on a like-for-like basis, right?
On a like-to-like. Actually, the previous question I forgot to mention because Mumbai was questioned with the 2% growth, but we also had 76 rooms of President under renovation.
Okay. Got it. That explains. And if I can, a bit of elaboration on this Ambuja Neotia, it will be a pure-play management contract, or there is something more to it?
It's pure-play management contract or leases. Essentially, this is a partnership with an existing owner, and it only deepens the relationship with them, so this is the framework in which we will end up doing either leases or management contracts, depending on the brand.
So any sense on what kind of revenue/profitability we can expect from all these properties? Ballpark number is also good.
So as you know, management contracts are very high throughput.
Correct.
Businesses with profitabilities north of 70%, and this will open, I mean, this will get added as we speak, so it's part of the pipeline as we speak. Whatever is getting signed gets added to the pipeline, but I think the point, the bigger picture here is that this is the preferred partnership model continues to sort of grow, not only with acquisition, but also on a non-equity investment model. I think that's the point we were trying to make here.
No, no. Absolutely. Absolutely. We have seen some very successful properties from this group. I believe there are some properties in Darjeeling and Eastside and Kolkata as well from this group. Yeah. Yeah. So just okay. All right. If we can get. On a CapEx side, what is your CapEx plan for next six months or maybe beyond if you can tell us?
So I think we originally guided to INR 1,000 crores-INR 1,200 crore CapEx number. I think we are on track for that. As you know, H1, we have done about close to INR 480 crore, which includes CapEx spent on renovations and also on the greenfield assets, which is basically what we spend on Bandstand in securing the FSI as well as completing Ekta Nagar, the Frankfurt asset, and some of the other projects which are sort of at the early stage. So if you look at the overall CapEx numbers for there, it will be in the, I think it'll probably be in the INR 1,000 crore, INR 1,200 crore range, which is what we had originally sort of planned for. And there could be plus minus 5% depending on when the sort of projects sort of get to completion or if there's any delay in approvals.
Got it. Got it. Just last one, Ankur, just last one. Among the hotels which are renovated, how many have come back in terms of the number of the rooms in Tier 1 market, and how many will be coming back in this quarter?
I think all of them have come back with the exception of a few rooms at Taj Palace, which is expected to come back in November, so that's why when we talked about the impact of renovations, it'll be fully felt in Q4 in terms of fully sort of renovated portfolio, and there'll be some minor impact in Q3 since October also had some renovations getting done.
Right. Possible to summarize what all have been renovated in the past six months or nine months?
No, no, no. So it's with the exception of 20 or 30 rooms out of 120 rooms in Taj Palace. Everything else is in operation. [crosstalk] For Aguada, the inventory came back absolutely in time. All presidential 76 rooms are also done. One presidential suite is left in Taj West. And so there's some small, but that is always there, Shaleen. There's some little things always keep happening.
Sure, sure, sure.
But the major block was Taj Palace.
Taj Palace, yeah. Because Taj Palace not only impacts the floor under renovation, it also impacts the floor above, the floor below. And it's a very busy hotel. And therefore, the impact in H1 was quite magnified because of that.
Yeah, yeah, yeah. Yeah. No, sure. We know the P&L is huge of that hotel. Sure.
All right, sir.
That's it from my side. Thank you so much and best of luck.
Thank you, Shaleen.
Thank you.
Our next question comes from the line of Achal Kumar from HSBC. Please go ahead.
Yeah. Hi. Thank you so much for the opportunity. First of all, just want to understand. Puneet. So now we have got so many listed hotels, and everybody's sort of trying to sort of grow by any model. I mean, some of them are sort of taking hotels on lease and subleasing. Some of them are sort of owning the hotels. So in all this scenario. I mean, how do you see the competition, especially. When it comes to the growth? I mean, if you go to the market and you want to grow, do you think you'll get a deal at a favorable. Price or favorable terms, or do you think the challenges are growing and. You might really find it difficult to get the hotels? I mean, how do you see the market and overall competition, please?
See, the market is never easy. There's nothing which is easy. So the proof is in the pudding. And. I think what we have done. And demonstrated how when we first met Achal almost seven, eight years ago, from 130 hotels, we have gone to a portfolio of the size that we have today. Right? So I think. We keep signing up. Properties. We have signed almost 32 without the onboarding of Clarks and Bridge. Properties in the first half of this year. I mean, that's. Like five hotels a month, more than. A contract a week. We have opened two hotels a month without the Clarks and. Bridge. If we add that. We have opened almost.
One hotel a week.
One hotel a week. There's 26 hotels open. So there are 52 weeks, and the first half is 26 weeks, I think. That we have achieved not only because you go and you give favorable terms. It's also the power of your brands. It's the power of the group we belong to. It's the kind of level of ethics we maintain. I mean, there are so many compelling reasons. And also our ability to also use our capital if need be, many times. We can do many things which others may not be able to do. We're also sitting on almost INR 3,000 crore cash as we speak. So there is a lot of opportunity. This is how we were able to do an M&A activity where you don't have to take on debt.
And all the properties that we are opening, all the renovations we are doing is all from internal accruals.
I think it's fair to say that, Achal just to add to that, that when we announced the ANK and Pride transaction, I think we did make a statement that in a way, it's the beginning of an organic journey, which I don't think is stopping at this transaction. It'll sort of go from here and hopefully do more stuff in the coming quarters, and I mean, there are opportunities even in this market which are interesting and make sense for us to do.
Right. No, fair enough. Sorry. Okay. No, that's fine. At this point, I'm not sure if you can give any color. While we are talking about the Clarks and this deal to close in this quarter. Sort of what kind of revenue in a big lump or what kind of profitability, if you can, any line. What are you expecting for, say, for example, full year next year?
I think we did give some color when we announced the transaction. I think nothing has changed since then because since we mentioned that transaction is not yet closed, we are in the early stages of figuring out the integration plan, and we have identified hotels which will migrate to Ginger and then figuring out the best time to initiate the conversations with owners. I think the right year to look at this will probably be FY 2028 because next year will really go under integration. And I think also it's a function of how many hotels we can migrate from management contracts to revenue share model, which is one of the things we talked about. I think medium term, we're looking at about INR 100 crores getting added from this portfolio without doing too much heavy lifting.
And if we are able to swing a few of the hotels into revenue share model, then that could actually get that could be on top of the INR 100 crore number I mentioned.
Okay. Fair enough. And then coming back to slide 29, I think. Puneet has explained enough. But. Just to take a bit of deep dive here, I mean, so Mumbai, you're at 84%. Kolkata, you're at 83%. And in most of the cities, you are close to 78% or 80%. So now you mentioned that when hotels reach at this level, I think there is significant growth potential for the ADRs. And now just now, Puneet said last year was exceptional because we had a wedding in Mumbai. So I guess. I mean, since the rates were so sort of since the occupancy was high, the rates must have been high. So now if your rates for last year was high, I'm assuming, then your RevPAR growth goes to 2%. So should. We assume that.
Since the rates were already very high, we should not expect significant growth in ADR from here on? And then secondly, because all these properties are all these cities in this chart showing 76%, 78%, 80%. So how should we think about it? I mean, going forward, do you think you can take these occupancies to 100%, 95%, or do you think occupancies might not grow significantly, but we have the strong potential for ADRs to grow maybe 25% or something like that? So how should we sort of think about the economic share piece?
I mean, without getting into specifics of each city, I think if you think about the demand-supply situation, particularly in the larger cities, and you're well aware of the upcoming supply in Mumbai, Delhi, Bengaluru, or Kolkata, Chennai. You can actually see the demand-supply dynamics in these markets, which will point to the fact that ADR pricing power continues to be there. Given the background, what we have, right? So I think that's the key backdrop to think about. And even I think in this quarter, I think we made a note somewhere in the H1 which went away. It was basically the weaker MICE segment which impacted the RevPAR. Adjusted for those, actually, it was almost a 9%-10% growth. So I think it's also the quality of business which you sometimes get, and that does get impacted by wedding dates moving from Q1 to Q2 or Q2 to Q1.
And that's why looking at this on a little bit of a longer time period makes sense. And in that time frame, in a little bit of a longer time frame for a full year or the next 12 months, we don't think there's any pressure on ADRs coming up in these markets. They continue to be resilient. And it's a question of some of the headwinds sort of getting behind us, which is already, I think we are seeing the business on books and the numbers a re being very strong. And I mean, October had the Diwali and Dussehra both out of the way, so that's in a way out of the window. And then November looks very clean and looks very strong.
Perfect. My last question is around the CapEx. So. You mentioned that you are investing INR 250 crore in renovations. Now, how much have you already completed? How much have you invested in H1, and how much are you going to invest in H2 on renovations? But apart from the renovations, what is your total CapEx you're expecting for full year this year, current financial year FY 2026, and maybe FY 2027, if you please guide?
So H1, we've said we've done about close to INR 475 crores, which included money spent on greenfield as well as money spent on what we call routine renovations and special projects, which are basically IT-led projects. So it's about INR 230 croresc, 240 crores which is spent on renovations, roughly equal between the two categories. And in that category, if you look at renovations, that would be again like half of that number. So that's the broad picture for H1. And for the full year, we are expecting, like I said, between INR 1,000 crores-INR 1,200 crores to be spent on CapEx because a lot of the greenfield projects will also step up now in H2.
Right. And any guidance for FY 2027, please?
FY 2027 is a little early, but I think in general, we've said over the next few years, we would spend about INR 1,000 crores on average, and I think that is pretty much the guidance because when we get down to budgeting, because it will be very specific to the greenfield projects, if Bandstand is to go full steam, then we may end up spending slightly more in FY 2027, but you should assume anywhere between INR 1,000 crores and INR 1,200 crores for next year as well.
Okay. Perfect. Thank you so much.
But the good part is that even with those CapEx, our free cash flow is strong enough. The annual free cash flow is actually strong enough to take care of that. So we don't see any stress as far as the balance sheet is concerned.
Right. Right. Okay. Perfect. Thank you. Thank you so much.
Thank you. Our next question comes from the line of Sameet Sinha from Macquarie. Please go ahead.
Yes, thank you. So renovations obviously is a big part of the commentary this quarter. Can you give us a sense of, once the rooms are renovated, put that into the market? What sort of ARR and occupancy uplift do you see in those properties? Second question is around amã and Tree of Life. If you look at your portfolio, these are the ones which look, in theory, subscale. Can you talk about the structure around them? I'm trying to figure out what the margins can get to. Your standalone margins, obviously, very nice at 40%. But these two, do they need to become much bigger to get to those sort of margin levels because of pricing power, or do you have shared resources so you can get those margins also up to the similar levels? And then I'll have a third question later.
Very good comment because, yes, they have shared resources. They all sit in a vertical called new business, and scale is critical. We had a little slowdown in the growth of amã a few quarters ago, but the last six months have been very good, but we need to get to minimum INR 1,000 crores to really say that this is like a good contribution because it's all on a fee-based capital-light model. We take 15% + 3% marketing and 15% of the top line. So that's about the amã, and Tree of Life, we will scale it up to 100 hotels. That's the guidance we have given. We stand by it, but our current focus has been more on Ginger, getting it to 250, and Gateway 200. Gateway has reached 40, but Tree of Life will keep going, and then suddenly it will accelerate.
We cannot accelerate on all brands at the same time.
Sure. My first question was about renovations. Can you talk about that? How much ARR?
Renovations, you can easily assume that any renovations like the one in Taj Palace should give you an uplift in ADR. In the second half, the Taj Palace versus second half last year should do over all the rooms, not just the renovated rooms. An ADR which is minimum 12%-15% higher than last year.
Oh, that's interesting. And how about occupancy? I mean, these are popular hotels to begin with.
It's at the same level. There is no drop in the Same level, right?
Yeah.
Basically looking at a top line increase. That's how it works.
Got it.
For hotels like that, whether it's that one or it's President in Mumbai or West End in Bengaluru or in all the major metros or key destinations. Renovations have a direct correlation with the average achieved rate annual leadership position in the market.
That makes sense. Final question. Can you give me the ARR and occupancy rates for the quarter? I think what you have in the deck is primarily first half. So I just wanted to be sure I have the right numbers for the second quarter.
Yeah. I think like I mentioned, Sumit, H1 is more representative of the performance, but we can figure out from the numbers. On the overall RevPAR numbers, what would be for the Q2. For consolidated, it's about 9%, which you see for H1, and. It was mid-single digits for Q2. That's what would be for Q2.
Got it. Thank you very much.
Thank you. Our next question comes from the line of Prashant Biyani from Ilara Capital. Please go ahead.
Yeah, thank you for the opportunity. Sir, for the hotels mentioned in slide 21. What would be the year of opening for those?
20 or 21? 21.
I mean. These are all long with Shiroda and all.
Yeah. The first one that will open will be MOPA. That's 275 keys. And the rest is more than three years away.
Yeah.
Right. And sir, for the corporate bookings. The pricing right now is still at fixed price for a few hotels, or it is entirely based on BAR minus certain discount?
It's based on BAR.
With the exception of a few very large accounts, we move largely to dynamic pricing. And that's been the ongoing journey with the smaller corporate accounts or the mid-sized corporate accounts.
Right. Sir, since it is on par now, so what kind of RevPAR growth do you envisage for key hotels next calendar year?
We have been saying that almost 10% is the right way to look at it, and anything which is north of 10% is what we would like to see.
Sure. That is from my side. Thank you so much.
Thank you.
Thank you. Our next question comes from the line of Sumit Kumar from JM Financial Institutional Securities. Please go ahead.
Hi. Good evening. And thanks for the opportunity. My question is also on slide number 28. Or 29 of the PDF. If I look at the first quarter numbers, the RevPAR growth was in healthy double digits for even Chennai and Hyderabad. But it seems like they too have sort of slowed down in the second quarter. Is it the general slowdown, or is there anything specific to these cities? And also for Rajasthan, the occupancy is 45%. So is there something in that as well?
This is Rajasthan, and this is basically what it is in H1 typically. So. There's nothing unusual about that occupancy level. It's H2 when they really shoot up on occupancies. And. As far as Chennai and Hyderabad market go, I think they were even Q2 was pretty strong for them. I think with the exception of Bombay, Delhi, which were the two markets where we did have. Comp challenges and renovation projects both in these two markets. I think with these two exceptions, I think everything else was. Pretty much to mid-single digit to double digit markets. Like Bengaluru was healthy double digit, so was Hyderabad, and. So was Kerala. And some of the other markets were high single digits, which you talked about, Chennai, Kolkata.
Okay. On the standalone numbers for H1, room revenue grew by 2%, but the RevPAR was up by 5%. I guess that's the impact of renovations?
That is right.
Yeah. Okay. So that's all from my side. Thank you. That's all.
Thank you.
Thank you. Our next question comes from the line of Sreetika Ray Mohapatra from JP Morgan. Please go ahead.
Thank you for the opportunity. I just wanted to understand. So all of the renovations that were planned for the year have concluded as of now. You already mentioned a couple of properties which would eventually come into the operation. So apart from those, there's nothing else pending that we need to think of in the standalone business when it comes to being out of the base?
Yeah. I think, like we said, with the exception of 25-30 rooms at Taj Palace, which are expected to get delivered in the next few weeks, next couple of weeks, and everything else is sort of out of the picture as far as the domestic market is concerned.
Second question. Not related to earnings, is there's a bit of news flow around the JW Marriott Bengaluru being up for sale and IHCL's involvement as part of it. So is there any activity that you are looking at in the context of picking up such assets? Is this being considered?
We look at all opportunities that are available because, of course, we have the means. We have the cash. We have no debt. If anything is value-accretive, we will look at it not just this asset in Bengaluru. It could be anywhere, and it could be even a new line of business. We have got used to working on a multi-brand strategy. Our brand scale is very diverse today. So people have become very experienced in doing this. So if you're adding something to a Taj brand, it's very easy. If you're adding something to Ginger, it's very easy. If you have to also start something new. Totally out of the box like a Qmin or an amã is also possible. So there's a lot of confidence. And fortunately, since we started all these businesses, there is not even one where we have burnt cash.
They have all been positive from day one. And we would look at any possible opportunities, whether single asset, multi-asset, small chain, medium-sized chain. That's what we did with the NK and Pride also. So we would look at every possibility. But it has to come. It has to integrate either with us under one of our existing brands or something new that we may start. We are not interested in owning other brands or other assets run by other people.
Thank you for that. Just to also follow up on that, in terms of the brand growth, you did speak about Ginger being a major focus area. So is there going to be more activity like we saw with the Clarks portfolio happen more for a particular brand, say for a Ginger, since that is a portfolio that you intend to grow quite sharply, or you have ongoing thoughts for other brands which are not as scaled up at the moment but can get an incremental growth?
The way to look at it. The way to look at it is a bit different. Scale is critical to brands in the positioning of Ginger. Scale is not that critical in luxury at that level. So we have 137 hotel portfolio, if you look on slide 9 under Taj. Now, as a luxury brand, I don't know of many brands in the world today, maybe with the exception of two other brands which would get to 100+ in luxury segmentation. But in order to become a very strong player in the positioning of a Ginger or a Gateway, you need to have scale. So scale's relevance comes driven by the positioning of the brands. We will always focus on a Taj. One good Taj property can give us so much more in fees and so much more in operating leverage if it was owned versus a Ginger.
But we have also seen that one Ginger Mumbai Airport can turn the fortune of a Ginger brand completely. So growth is an art and a science which is driven by geography, by brand, and by contract type. And that's what we try to do. There is not like today, now we wake up and we say we'll focus on Ginger for one week, and then next week we go to Taj. It's not done like that.
Yeah. And I think for Ginger also, I think for the moment, we have to integrate the incoming acquisitions. So I think that's the focus for the moment.
Thank you. That's all from my side.
Thank you. We will take the last question from the line of [Weber] from [audio distortion] Securities. Please go ahead.
Hi, team. Thanks for the opportunity. My first question was on our recent openings. We recently opened Ginger and Vivanta in Ekta Nagar. So I just wanted to check how have been the early trends in terms of demand and where do you see the scaling up over the next two quarters. Secondly, related to that, for the Clarks portfolio, where we have opened around 649 keys, we have tied it up with the Selections brand. While we had earlier mentioned that most of the portfolio would be rebranded under Ginger portfolio. So I just wanted to get clarity on that front. And regarding the Frankfurt property that's planned to be opened in Q4. What kind of revenue or EBITDA contribution do you expect from this property?
See, the Frankfurt property will open around in March. So we'll have the in the January call, we can give you more detail after the Q3 meeting. As we'll get closer to the opening. On the Clarks part, the Clarks, the four Clarks branded hotels which are part of UP Hotels, it's in slide 41. It says these are UP Hotels is a listed entity which runs these four Clarks hotels as an upper upscale brand. They are not mid-scale. These are traditional Clarks, Amer, Clarks Shiraz. Clarks Avadh. These are very iconic assets in those markets for several days. With them, we have done a separate distribution sales and marketing agreement, and that's why they are under Selections brand. The NK and Pride portfolio, that has Clarks Inns, Clarks Suites, Clarks Resorts.
They will be the majority of those, 80%-90% of those will be the ones which will migrate to Ginger upon the completion of that deal, which is expected to happen before the end of this quarter. Is that answer you?
Yes, yes. That makes it clear. Just regarding the Ekta Nagar properties, how has been the early demand trend?
Nagar, it is too early. Because it's been open for a few weeks. And in that there were five, six very good days because of the hype around Ekta Diwas. But then there were two not-so-good days because of the VIP visits for the Ekta Diwas. The hotels are very good locations, so not everybody could get there unless you had an absolute security clearance and a special color on the car. So you could not get there. So then on the 30th and 31st and 1st, the occupancy dropped there significantly. But the general expectation from that market is that both these hotels will do very well from a leisure perspective, as almost 50,000-100,000 people are expected every day to visit Ekta Nagar. I've been there twice, and on both occasions, I saw these kinds of numbers and the queues to go up in the Statue of Unity.
And there is more to do. It's not just the Statue of Unity. They made a zoo. They made a butterfly garden. They have many, many other things, a spice garden. So it's not just that there is a statue out there. They are building the whole infrastructure so that people have other things to do in it . So normally, given the size of the properties, given the positioning, it's not luxury. It's a Vivanta and a Ginger, not very large. So I think they should do very well. Hello?
Thank you. The line for the current participant has been dropped from the queue.
Okay.
So I now hand the conference over to Mr. Puneet Chhatwal for closing comments.
Thank you, everyone, for joining the global conference call today. We look forward to speaking and interacting with you with the next quarter results in the month of January. Thank you, and have a very good evening.
Thank you. On behalf of Indian. Yes. On behalf of Indian Hotels Company Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.