Q1 21/22

Aug 9, 2021

Good day, and welcome to the Indian Hotels Company Limited q one s y twenty one twenty two earnings call being hosted by mister Puneet Jawal, managing director and CEO of the Indian Hotels Company Limited, and mister Giridhar Sanjeevi, EVP and CFO of Indian Hotels Company Limited. As a reminder, all participant lines will be in a listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. At this time, I would like to turn the conference over to Mr. Puneet Chawal. Please go ahead, sir. Good morning, ladies and gentlemen. I'm here with Girikhar Sanjeevi, our CFO. And, let me begin, the evening with, reinforcing the good news which we got a few weeks ago. Taj was rated the world's strongest hotel brand by Brand Finance, Reports scoring 89.7, and that is the highest score any brand, has gotten. Also by brand finance, we were reported as the second strongest brand across all sectors in India and the strongest hospitality brand. So this is a a good endorsement for a brand which is hundred and eighteenth year in operation and and a and a well deserved recognition. Moving on, I think we see some light after darkness. Of course, we saw some light between November 15 till February in the last financial year, but mostly the last nineteen months period or eighteen months have been, full of darkness for the sector, possibly the worst period the sector has ever seen in the last hundred years. However, now the global platform seems to be growing at, and expected to grow at 5.6%. In the second half of this financial year, an acceleration is projected, especially on the global employment, which obviously leads to more disposable income and more discretionary spend. And also on the India front, very recently, the RBI governor or the IMF, projected our growth at 9.5%, and also the unemployment rate, to decline from 11.9, to 9.2%. So, of course, we can see some more light after a long or extended period of darkness. This slide we have taken from HBS. And in the month of June, we have shown that the rates have increased at 14 to 16%, occupancy increases also at 12 to 14%, and there is a RevPAR increase of almost 90 to 95%. And that is very consistent with the results that we report. There is increase in domestic air traffic by 47% in June. And why do we talk here about June, whether it's HBS or us, is because, again, the period of, you know, April and May was completely derailed by the second wave and the aftermath of second wave. So really June was the month, when things started coming back. And thankfully, the period after getting a four x growth in the number of cases, the period to bounce back after second wave was much shorter than what we saw at the outset of the pandemic. There is a month on month increase, therefore, in all parameters, and the q one RevPAR recovery is obviously stronger than last year q one because last year in that q one was a washout with the sector mostly shut, in all the regional markets as well as the international markets. Moving further on on on key performance highlights, I think this graph, the line below is our consolidated revenues and the line above is enterprise revenues. That clearly indicates if you look at the month of May, the dip took us down to as low as July, August of last year. But the upswing is bringing it back to to a period between November and December. So, actually, it would be fair to share here that because July is behind us, we have seen significant growth in July versus what we saw in April, May, June, of course, hampered through the second wave, which which hit us very badly. So I think this trend is expected to continue. I know a lot of you would want to ask this question. As far as visibility is there, which has become shorter, I think in the first eight or ten days of August, we are seeing a similar trend emerging. And that's what this slide also depicts. Last year, q one versus this year q one, the revenues have more than doubled. And the q two revenue of last year was also exceeded by the revenue of q one. And and we believe that just July, ends, you know, like half of August or twenty days of August, would, be good enough to get to these kind of revenue levels going forward. Further, I think it's very interesting to look at RevPAR as a percentage of last year. The RevPAR recovery in Goa was as per SDR 260%, Rajasthan over 200%. Same story in in in most of in most of the cities. And when we look at it from the IFCL perspective, our recovery has been much stronger, which means we've been gaining a lot of market share. So also last year, our base was, you know, it was not as small, as one would have expected. So but when we show doubling, it's coming from a much larger base, and that is very well depicted in these figures that Goa and Rajasthan and also all other markets continue to perform well for us in terms of how we have gained market share vis a vis the industry. On on growing direct to customer that is a non OTA business, we have improved from almost 69% to 74% on the direct channels. And and the same and the same thing we see is because of some of the campaigns that we launched, on cherishing, togetherness, IHCL, world of privileges, our home delivery business with Cumin, our home stays with Arma, our burning your loyalty points. Some of these, things have helped us, get directly to the customer and which has helped us in containing our costs. One thing, and as I said, containing our costs, if you look at our fixed expenses, we've been able to maintain them at 126 crores a month. Pre COVID, they were at 150. Last year, they went down to $1.23. And this year, there is a marginal increase, and there's a minimum increase given the kind of growth we are experiencing in not only different brands, but also on a growth in terms of our hotels and the new openings, that we are having. But when it comes to our staff to room ratio, for I see from 1.3 to one point o nine. Point four eight to 0.34. The from 1.2 to one. Selections from almost two to 1.3, and for the Taj brand from 2.17 to 1.6. So this this has been a good reduction, and I as I said in the last call, I think, was that in Taj brand, we also have the Palaces and Safaris. And to maintain a certain level of service, our ratio should not be compared with the others because others do not have this kind of luxury that we offer in terms of a palace portfolio or a safari portfolio. So that makes the Taj numbers look a bit larger, but that is really also needed because that kind of experience, those kind of rates that we charge are otherwise not possible. Of the. So I think that has more upgrade more than all of that has continued decline. And it's even declining further because we have a new. Normally, we're unlocking value in new brands and businesses. I think, Ginger, reimagine Ginger has done very well for us. It's achieved 60% of pre COVID revenue even in Q1. You would recall last year, the full year Ginger did 63%. So in that is it's off to a good start. Because we are more and more also doing food and beverage on our own, there is a 3x increase in the F and B revenue and a decline in EBITDA losses by almost 85%. The TripAdvisor rating for the Ginger brand is at 4.8705, and we were able to sell the Ginger in Mysore. So we entered into sale and managed pack very much in line with our strategy in in becoming asset light and going into a fifty fifty managed versus owned or leased portfolio. Moving on further, as you see on this picture, this project is well under way the flagship Ginger at Santa Cruz. The building there, which was the old flight kitchen building, has been demolished. The basement was on, and this is something which is very exciting. We hope to finish this in an eighteen month period, and we believe this will really make a big difference to the standing, the positioning, and the perception of the brand going forward. In terms of our home delivery business, QMIN, I'm sure you're all intrigued to hear about it. This will be its first full fiscal year. Last year, it had eight eight, eight and a half months of a run. It was launched on the June 25. But today, it is covered in 18 cities, 70 restaurants and on 35 of our properties. Our enterprise revenue alone for first quarter on Q1 exceeded INR 30 crores. We have served 1,250,000 customers till date, and, more than three lakh, app downloads have happened. And very interesting in in a seven or eight, destinations outside of India, you can order through the human app food for your family on various occasions, whether it's a festival or it's a birthday or it's a wedding anniversary, etcetera, as travel on the international level has been restricted. Going forward, I think it would also be nice to show you our first food truck. That Cuban food truck has already started operation, also launched on June 25 to coincide with the launch of the home delivery the year before. And what we are expecting now is around, you know, eight to 10 of these human food trailers. Why trailers instead of trucks? We realized that trucks is not always easy in terms of permissions, but, the trailers built and more like the truck are easy to park anywhere, and, they work in a similar fashion from inside just like the truck would work. So we are very excited. I think, the first few deliveries are expected when and definitely before we do the next quarter call with you. Going forward, also on Arma, our homestay business, which is also relatively young, we already have a portfolio of 44 bungalows of which 30 are in operation in 11 destinations and five states. These bungalows, as and when they're allowed to operate, are always operating at, you know, almost 100% occupancy, and they're in great destinations like the Chikmagalur area or the Munnar or Khandala, Lunabhala. This is a picture of the latest one in Alibag, outside of Mumbai. And the next one you see is our Planters Estate in Monarch. So very excited. We are hoping to grow this brand exponentially, also over the next couple of years, and I'm very excited to have this in our portfolio, especially during the times of the pandemic. In order to achieve all this, we have been still focused on our key enablers and how to keep strengthening them. And one of those things which is, being, important for us is the employee vaccination drive. I would be happy to tell you that almost hundred percent of our employees have got the first dose of vaccine, and those aged above 45 is more than seventy seventy percent who have got both the doses. And the total number of people who have got, two vaccines is north of thirty percent, but we expect to get to hundred on that very soon and as and when people are also eligible. We are also doing videos on responsibility, reliability, and resilience stories of our employees. We are celebrating them as our COVID warriors, and and and recognizing them in an appropriate way for the contribution some of them made in different hotels across the globe. Further, we have launched a four p program of preventing, protecting, you know, providing and preserving, all the help that we can give to all of our stakeholders under the program of COVID care. Our Meals to Smile, which in the first phase, we have delivered 3,000,000 meals. In the second phase, we have again done 1,500,000. Until, today, we were also serving meals, in the state of Maharashtra, which were badly impacted by flooding. All these meals in the second wave have actually been done under the human, branding. And that is a there is a reason for it is that I think human as a new brand from its inception must stand for its service and care to the community. And I think that way, it also we are also able to get the name out and get the force behind it. Of course, we have also been still working in especially in the second wave on the quarantine facilities. You must have all read some of our hotels will convert it into temporary hospital facilities and we are still going ahead with our Task for Family Employee Assistance Program. These are employees of our contractors, who would have possibly lost a job. I always give an example. If a limousine, company has a limousine service contract and if they cannot afford to have drivers as the demand for limousine has dropped, then those drivers have been assisted by the Taj executives and staff by contributing their salary, which went into the Taj Public Service welfare trust. And from there, it was disbursed to almost 7,700 needy people, across the country. At the same time, we have, been driving the vaccination campaign. Not only is it is important for the nation, not only it is important for the society, but it is definitely fundamental to the business of hospitality, travel, and tourism. And that's why we are very strongly advocating, I'm vaccinated, I am safe. At the same time, now you'll see the pictures of all those meals that have been delivered in the second phase of Meals to Smile, and these are the pictures of some of the peoples who are, like, recognized, some of our associates who were recognized under, the COVID warrior program, which I just alluded to. Moving forward, our financial performance, in short, before I hand over to my, my colleague, Giridhar Sanjeevi, Our revenue increased by 111 percent compared to the same quarter last year. Our EBITDA declined, negative EBITDA declined by 47% from minus two three four to minus 123 at the consolidated level. And when we look at, the stand alone, the revenues were up 93 and almost a similar kind of a decline at 44% on the negative EBITDA. With that, I hand over to Gildar Sanjivi. Thank you. Moving on. I think this is a snapshot of the financial performance. So we had a turnover in stand alone of 226 and a 370 crores in consolidated, which is a doubling of the earlier quarter numbers in q q one two thousand twenty. And EBITDA did come down at a consolidated level to 123 crores negative and a PAT of minus $2.77 crores. I think what is worth noting is that in the previous year, we did have an exceptional rate of crores, which contributed to the income in the previous year. That is not there. So on a like for like basis, we improved from something like minus $3.60 crores to minus $2.77 crores. So that is the snapshot of the performance. And as we've always been mentioning, this year's q one has been like last year's q two. In fact, it's been better than last year's q two. And now as we see the performance trending in July, I think we believe that we will probably be once one quarter ahead as we have been mentioning, and that gives us a reason for hope in terms of the entire recovery. Is a snapshot of the enterprise revenue. Enterprise is not consolidated. Enterprise revenue. The top box is the domestic hotels including Ginger, and enterprise means includes the management contract. And the bottom box is the international hotels, once again, enterprise. If I just stick to the bar on the top right, I think what we are saying is that the light blue bar is the turnover last year, which is 15% of 1920. And in the the dark blue bar is the current year q one, which is 38% of q one nineteen twenty. Similarly, at the bottom bar on the international hotels, we grew from 7% of 1920 to 37% of 1920. And qualitatively, this international growth is very significant for us because these are dollar revenues, and it goes a long way in terms of reducing costs and cash losses internationally. So to that extent, it's very nice to see the uptick in performance. Going to the next slide, I think we've we we did speak earlier in the presentation about our performance being better than industry. And now we look at our own performance across the different cities in India. It is you can see for each of the key cities, there has been a significant uplift in the performance, whether it is Bombay or Goa or any of those states, whether it's business counts or the leisure cities, all of them have significantly performed better than last year q one, actually. Moving to the next, I think international hotels as well. You'll see the similar trend in terms of the jump in performance, whether it is US or UK, which are important from from our own consolidation perspective. And if you see Dubai, it's a fantastic performance even though these are all managed contracts. Now if I look at the consolidated performance trend, I think we have given the numbers on a month on month basis, and you can see how the numbers grew. Name was obviously the difficult month with the peak of the pandemic, but we did end the quarter with 370 crores. EBITDA was minus $1.23 crores as compared to $2.34 crores. And in terms of PBT, we were minus 315 crores, and PAT was minus $2.77 crores as compared to minus $2.80. So as I said, there was an 82 crore exception in the previous year. So therefore, the recovery is much better. Moving on on the stand alone, it mirrors the consolidated trend with the top line of $2.26 crores with with the EBITDA of minus 78 crores, with the PBT of minus $2.20 crores, and the PAT of minus $1.90 crores. Now I think moving on, I think, you know, as we kind of spoke about in earlier investor meetings as well, if you look at what are the key narratives on the revenue side, the revenue side, there are really three parts of it, which is the revenue recovery, the continuation of the asset light growth, and the new and the growth of the new and pre managing businesses. I think on the asset light growth, we continue to do it. We expect to open 10 hotels this year. Our portfolio is 221 hotels now. Management fee is about 30 crores in q one, and that recovery, we see a smart recovery happening this year with the revenue recovery. On the revenue recovery, our occupancy grew by 7%. That is 28.5, which is a seven percentage point improvement. That is the previous year was about 21 or so. The area recovery was 45% with the RevPAR recovery of 101% in stand alone. I think that's very important in terms of seeing those numbers go up. And in the new and remanded businesses, I think Ginger has done well. Cumin has as was described earlier. I think they are growing rapidly there, and I'm also at 44 companies. So I think on the key revenue drivers, we continue to work in terms of driving the performance as we have always outlined in our previous meetings. If I go to the next slide, I think cost management to drive operating leverage has constantly be our focus. I think on consolidated basis, our top line grew by 111%, and the cost grew by 20%, mostly variable. Fixed cost, as as was pointed out, was 126 crores, which is just a 3 crore increase from the previous year. We've kind of kept the fixed cost near constant. Stand alone also, we grew by 93 crores in top line with the expense increase of 18. Corporate overheads went down by 12%. As we said, 54 crores has come back to 62 crores. Manpower rationalization to redeployment and risk savings is a major initiative. 254 people have been redeployed till July 21. And lease rental neighbors were there this year as well. We were able to claim about 15 crores of lease rentals during the quarter, excluding what we claimed in The USA. So cost management continues to be a key imperative. As far as the international hotel is concerned, significant improvement. Our top line grew from 18 crores to 57 crores in The US, resulting in a drop of EBITDA from minus INR 42 crores to minus INR 14 crores. Similarly, The UK business has also come back post reopening, and that resulted in a lower EBITDA loss as well. Cost rationalization of the period was very significant, as we've always said, in terms of manpower rationalization, lease renegotiation, and the surrender of the lease volume. And the resultant permanent cost savings in The US is actually more than 5,000,000, approximately 5,000,000 per annum. Moving on, I think exceptional items are reducing. In fact, I think a couple of points to highlight is that the Fed derivative contract, which we referred to here, 6 crores of earnings, that will now disappear because you have repaid the derivative contracts that closed them. So you will not see that happening anymore again. South Africa, there is some small exchange which will keep happening because of the external loans which is there. We didn't sell the Mysore property, 7 crores of profit, 15 crores of top line. We didn't sell any residential flats this quarter. Lease rental concessions are about 15 crores, and it's good to see that the exceptional items are reducing on a consolidated basis. Moving on, stand alone as well, you will see that The US losses have come down from 42 to 13. Cape Town lost one year at about 4 crores. Previously, June, we did not have Cape Town consolidated, and we had lease up to concession of 13 crores. Moving on, I think performance of key subsidies, we have spoken about the first two. That is The US and The UK performance. Key motels also recovered. Of course, it was also impacted during the pandemic, and Bruce Corporation did 30 gross per year EBITDA breakeven. And in July, I think the recovery has been smarter, actually. CapEx focus, as we pointed out in our Capital Market Day, we continue to be selectively focused on CapEx with Ginger, Santa Cruz, the Tata Mile, Mansing, the St. James Court, the Pierre Ballroom. I think and all this has been carefully looked at. We expect to spend in terms of cash outflows, maybe about $2.50 to 300 crores in terms of cash outflows for the end of the year. Only time will tell in terms of how the bills are received, but we at this point in time, we think about $2.50 to 300 crores will be the cash outflow. Go to the next slide, please. I think in terms of management of liquidity and borrowing, we continue to have cash in line exceeding thousand crores at all points of time. Our borrowings, as I said, we have repaid our cost 70 swaps, and no more exchange fluctuations. We maximized that CLGS of $1.44 crores at attractive interest rate. We've also replaced the in July, the increase of 9.95 with much lower cost. And unsecured borrowings, including unrealized, has been about thousand crores. The net debt position in stand alone is about 2,600 crores, and consolidated is 3,603 thousand 600 crores. So that is the so this I think I don't do do I have anything? I think this is broadly the the financials. I have a couple of slides which you can look at, which is really the tables which we normally present. That will be part of the presentation that we will upload in any case. So you can look at it, and we are open for questions. We will pause for just a moment to allow everyone opportunity to signal for question. I would also request everyone to say their name and the company they belong to before asking a question. And we take our first question. Please go ahead, caller. Your line is open. Yes, sir. Thank you so much. Good evening to the management. This is Nehal Jahanir from Edelweiss. So three questions from my side. First, you know, wanted to understand on the q one performance better. The expectation in general was that the quarter was progressing more like, as I said, q two of last year, somewhere similar to September, October. But the performance in June has obviously been much better, and I feel like it exceeded what we achieved in October. So just to understand what components have led to this I will list in June. Is it mainly coming from, again, leisure travel and which other cities also, while you highlighted that in the slide, just a little more sense on the performance in June, if you could, you know, mention that? The other two questions, Nehaan? I'll just mention that. Second question was on the international part that given that they have completed their vaccination program and are progressing much better on recovery, I still see that the recovery for our international operations is similar to the Indian operations. So the divergence there. And third was related to, you know, the analyst meet about the recognition of human revenues that if I look at the business on an overall level, how is it that human incrementally adds value? If I leave a part of part that if if they are servicing or, you know, giving us revenues from our standalone entity, where it is a restaurant which is a part of their own business. So how is it that the revenues of cumin That that's also something I just wanted to get a better view. Hello? Yeah. Okay. So, Nihar, on the growth in June, obviously, the industry is still seeing a lot more leisure travel versus versus business or corporate. But I have to say that business and corporate has also picked up, especially in the mid market or at the ginger level. We saw a lot of growth. I know we saw a lot of staycation in the metros. So whatever growth you've seen in, let's say, Mumbai or Delhi is driven by that, the key destinations remain for our portfolio, I would say, all the resorts, especially Goa, Rajasthan, the palaces, Rishikesh, Shimla, Kurk. But, you know, a lot of this was also not open. So a lot of places were shut, and there are still restrictions in Mumbai for dining out till till 4PM. And and and so so I think the the good news was June picked up. But I think more important is, as I said in the presentation, July has picked up much stronger, and we are seeing a similar trend in August, at least for the first eight days. It is quite strong or even stronger than July. Maybe it is because of the long weekend that is coming from thirteenth to sixteenth, but the trend is positive, and we are seeing business travel. I've seen that also on my own travel experience to the airports that they look much more full than they looked before. Of course, there are certain caveats which don't help us, especially on our flight kitchen business like that sets because for flights up to two hours, you're not allowed to service any, any meals. On the second question, you had the international part in how is the recovery. You know that London was also shut for a large part of q one. So it was it only benefited from maybe the last ten days of of of q one, and so was Cape Town. So both Cape Town and and and London were shut. San Francisco and New York had opened. They performed better than our expectations. They both exceeded more than 40% in occupancy, but at a very good rate. Especially in New York, we are talking about rates, you know, which are the same or higher than pre COVID, pre COVID level. And the demand for suites is much larger, at our property in Pierre. Dubai was very strong, but it is very normal that Dubai in the summer months, it gets very hot and the performance drops for those months. Same is true for for for Maldives. And Sri Lanka is still struggling a bit. It's it'll take some time. So so really on the international front, the recovery is is really driven more by, I would say, US and UK and Dubai, which which these are the three cities that remain very strong for us. On cumin, the revenues are accounted in the properties themselves. Each of the properties pays a fee to Cumin that is participating, and that entity is housed in our at our corporate level. And unless, Gideon, you want to add something on that? That is fine. I think 30 crores is what we said is the total revenue. I think some part of the revenue was actually the. But I would say that the 22% income comes to. See, maybe, Nehal, it will help you that 30 crores includes also cumin meals done through Anuka, which is a a brand under Tad Sats, which is flight kitchen business, and some of that is also done through Ginger, through the cafe, etcetera. That's the brand of the Ginger Cafe. So so there is a the when we say 30 crores for q one, it is the enterprise level. It's not all accounted for directly. And at that level, we do expect this trend to continue even if some of the other things were to slow down given that three months was 30. For the full year, enterprise revenue of anything north of 75 or even 200 is quite realistic. Sure, mister Chattol. This is helpful. I'll come back in the queue and maybe take on the queuing part offline also. Thank you so much. Thank you. Thank you. We take our next question. Please go ahead, caller. Yeah. Hi, sir. Suman here from. So with the rising policy issues currently in US, do you think the momentum the business momentum is going to sustain? Yes. In in which place, Roman? Your question is the digital service. Yeah. So I'm talking about The US that year. COVID cases are on the rising trend, and we have seen a significant improvement in this quarter, the q one. So do you think that we in q two and q three, maybe in short term, three, four months, is do you think there will be an impact of the business in US market? So difficult for us to say anything about the pandemic. All I can say is that we have all experienced I'm sure everyone has seen that that in the first wave, let's say, or US, but let's say India, we had ninety thousand cases, and we were shut for five months, and it took us five months to recover. In the second wave, we had four hundred thousand cases, and it took us five weeks to recover. So nobody knows the third wave and what's happening or not. But, yes, people are getting used to living with this pandemic or COVID and then moving on with life, with the exception of, I would say, you know, a state in the South and one in Maharashtra where we are based. Almost everything has more or less opened up with certain restrictions here or there in the number of people and wedding or events. But more or less, it has opened up, and we are still at almost 40,000 cases on an average for the last week. So that's all we can say. If that is a trend, then then things will stay open, because our presence in US, because your initial question was US focused, is in New York and San Francisco. We think that cities like those will be far more resilient than the suburbs. Yeah. Or the secondary and tertiary markets also within US. I think I think I'll just add to that, which is to say that in The US, the pandemic is one of the unvaccinated. And if you see so far, the demand has been domestic. And countries like The US will open up international travel for those who are fully vaccinated, which means what we see is that while there is the pandemic, it's in in terms of unvaccinated. And if international travel comes, that should help compensate as well, actually. So I think that's that's where the world is moving to in terms of allowing fully vaccinated people to travel. Sir, you can you talk about the business guest in key business distribution hotel? How the mix is changing? Are are the key big clients are traveling to our hotel, staying in our hotel? Business leisure. I think I think I think you talked about the mix. I think leisure business, you know, I think was the big area in in Q1. And the city hotels, we saw staycations happen actually. So I think so we did see recovery in the cities based on staycations, and and and leisure destinations did well. Yeah. So I'm talking about the our big client are have started traveling. Overall, how is the mix in the business distance? Business destinations is still large. Mean, and you have seen one chart in the slide which talks about the citywide performance, and that is something that, you know, we have put up a citywide jump for all the key cities actually, so which we have put. If you if you talk of the I mean, leisure, non leisure, I think what I will say is that in q one, our occupancy did go up by, you know, 18.9%. And in non leisure, it went up by 29.3%, actually, on the occupancy side. And on this on on the rate side, there was a significant jump. The leisure era actually increased to 09/1995 from May, and we'll give you these numbers offline. I think we can always talk offline on this. And non leisure also improved from '4 up to 4500 from March. So there was a jump both in terms of leisure and non leisure occupancies and the area. They can talk offline, Sumant, in terms of specific numbers. Yeah. Yeah. Yeah. I'm I'm asking how is the business travel in the key cities, and how is the how is the mix of guest? Say, especially, say, percent, and or our key clients of the HP or Infosys is traveling, and the overall the over the month, it is has increased or over the quarter, it has increased. I'm talking about that. I think I think it's evolving. I think the fully vaccinated people slowly, business travel is beginning. I think it'll take some time before the business travel goes back. I think it's gradually picking up is what I would say. Oh, thank you. Thank you. We take our next question. Please go ahead. My question has been answered. Thank you. Thank you. We move to our next question. Please go ahead caller. Your line is open. Hello? Yes. Can you Yes. Hear Yes. So this is regards to Manti. I have a couple of questions. First, you know, just sorry for harping back on the, you know, the data around US and UK. So, clearly, you know, our revenue this quarter is down 65% compared to pre COVID. So we used to do a run rate of thousand crores, but now this quarter, we did around $3.50 crores. And, obviously, for for all the reasons related to lockdown and wave wave two and a lot. But, you know, what are the learnings or maybe, you know, the data we are getting from US and UK especially, you know, their things are opening up. Although, there there there has been a third wave, but the mortality there is very, very low. So maybe for us, if you can share maybe for US, where do we stand in terms of revenues compared to pre COVID? And and what are the learnings? Maybe if we say that we in they've recorded income. So how should we look, I mean, look look about modeling the revenues going forward? I think I think if I talk about US very clearly, you know, there were always two parts to The US recovery, because one was, of course, the banquet revenue, which always constituted around 30,000,000 or so in a pre pandemic year on a total top line of 80,000,000 or so. This year, of course, this banquet opening may not happen because of the renovations which are there. And that's a good decision also because banquets, without adequate level of business, we will lose money. So hence, I think more 99%, we will not open the bank with 13. So that 30,000,000 will not be there because of a decision that we are taking and the renovations that are happening. So now that leads what is the the nonbanquet business revenue. So if you take the peak pre pandemic revenue is around 80,000,000, and 30,000,000 is banquet. It comes up 50. I think my own sense is that given the recovery, my own sense is that the business should come back to 50% plus in terms of occupancies very quickly, actually. And, hence, I won't be surprised if US ends up climbing a top line exceeding 30 to $35,000,000. I think that's the kind of range that we are thinking about on The US regard, actually. And similarly on The UK as well, the run rate is now a million pounds a month, actually, and that should only improve. So my sense is, again, on The UK, I think we did wrong. We did Yeah. The first quarter. We did a 112 pro a 112 pro. Yeah. 24 pro so far. Yeah. So far. Yeah. That's right. But I think that with the million pound kind of recovery happening now, I think my sense is that US, UK has always been something like a £40,000,000 market. Now the question for us is that will we achieve something like 20,000,000 this year? I think we'll see how it goes. We'll see how it goes, actually. Because I will add, I think we are beginning to see a lot of pickup in London. Pickup doesn't mean it you cannot get cancellations and things were to go back. But if I look at just the trend of the last one week, the pickup in for us in Buckingham Gate and St. James as well as at the pier is is quite you know, it stands out because we we don't go through every hotel. When we get our reports on a daily basis, we get the top five, the top 10, you know, on cancellations on this. So London is beginning to feature constantly on it. And and this whole amber, the color code change to the countries also will help in terms of travel happening. Does that answer your question, Yes. Yes. It does. And secondly, the question is to Gary, sir. There is a so this quarter, the employee cost increased by 41 per road. And, sequentially, obviously, this is a the revenues are going down maybe around 45% q on q, but employee cost went up by around 5%. So if you can explain that. That's about it. Thank you. Yeah. Yeah. No. The employee cost went up because I think last year, we had the benefit of the salary reduction which happened, the payroll cost which happened. This year, we we have not implemented a payroll cut in India. I think that's been the fund one fundamental reason, actually. I think and, of course, the subsidies and, of course, the subsidies, actually, because the subsidies are now reducing in places like The UK. So, therefore, both both taken both together, I think, gives us the four or 5% increase in employee cost. Thank you. Did you get that, Yes, sir. Thank you. Alright. There's a significant contribution last year from the subsidies for under the furlough scheme of the government in the Western Hemisphere, which is gone. So, actually, we have become more efficient as we showed both on the corporate overhead as well as on the properties because these figures are not diluted to any subsidies anymore. So so largely, it's on the employee side. They have taken out subsidies or or because they have given you other subsidies as well during the the lockdown and all. No. No other subsidies. That was sub subsidy. Subsidy was mainly on the employed front. And you get those in that part of the world because you have your unemployment insurance, so it's better to give subsidy than to us so many people unemployed. That's the kind of practice Europe has followed. And also US was very generous, I think, in terms of distributing checks to the employees directly, but also to businesses. And those are following things. I Property tax. Thank you. We move to our next question. Please go ahead caller. Your line is open. Please go ahead caller. Your line is now open. Can you hear me? Yes. This is Amit Agarwal from Libervant. My first question is if you can give some idea of the cash flow from operations less interest intact for the quarter, and how will it compare to last year and last quarter? And secondly, just a question on the fact that most of the growth which I've seen in June, July, including the sharp increase in ARR, including the business cities like Bombay, etcetera, the ARR seem to be somewhere near Jan, Feb level. So in a longer term, given the fact that, of course, this is a this if COVID goes away, then, of course, we're back on track. But if it doesn't, do you say do you expect this to be sustainable? What I'm saying is is the venture isn't sustainable in a bit of a longer term? So cash flow then the venture isn't. These are the. Thank you. Yeah. So on the let me answer the second part, and then we gather the figures on the on the cash flow. I think there is you rightly pointed out, we are seeing a significant increase in the metros in terms of average rates. They've actually almost doubled coming from a very low base. So that is positive. We expect this trend to continue. I I see no reason unless there is another lockdown complete lockdown where you cannot move that the rates should go back. This pat this is a pattern of behavior in the industry for several decades that first occupancy comes back and then the rate follows. When you get into a downturn, first, also, the occupancy drops and then the rates drop in panic. So I think the, the industry has done quite well. And, actually, it would be fair to say that almost all of our leisure destinations are outperforming, their pre COVID level numbers. Almost all of those that were there, they are doing better than they did in pre COVID in on the RevPAR level. So F and B still is subdued in most of the places. But but wherever we are open, for example, as we said, Goa, it's doing better than than it did in pre COVID at the same date and the same month in in the in the period before COVID. So that and that also showed in the slide that I showed that we are we saw a 1000% increase versus what the market saw. So we think this trend is there to stay, and there will be no change on this Yeah. In the short term. You know, in the mid and long term, things will change. Did you want to answer on cash flow? Yeah. And I'll answer on cash flow. I think what has happened is that between CapEx, dividend, and interest, it's approximately 150 crores. And on the operating cash losses, it's been about 185 crores. So so net net between the two, it's about 330 crores, and that would reconcile with your increase in net debt as well. 3,100 crores of the net debt in the month of March. That went up to 3,600. So $3.50, the difference of $1.50 is the derivative payment, actually. So that's what we had in terms of the way the cash was on. Sure. Sure. So this this quarter, this last question, quarter, have been doing that you would be at least cash flow positive looking at the way things are right now. July, August, would you be? That that that that's what we believe. I think this quarter should be good in terms of cash flows. The cash burn should effectively disappear is what we believe, actually. Yes. And we don't have any major repayments also coming. So yeah. Thank you. We take our next question. Please go ahead caller. Your line is open. Thanks for the opportunity. This is Amandeep Singh from Ambit Capital. I have two questions. Firstly, sir, you mentioned about reducing staff to room ratio now to around 1.09 versus, say, 1.53 x in March 20 on overall ISB level. While you believe that a part of this cost control initiative would be sustainable, can you help us understand what could be the stable ratio once the business reaches normalized level given the type of service and experience that IFC will provide? And secondly, my second question is on the supply side. So we have seen large hotel chains and even industry reports talking about permanent reduction in supply over and above near term deferment in supply. So in that context, can you help us understand your thoughts on the thing? And also if any of your managed hotel partners or temporary or a permanent closure amid liquidity issues. Thank you. Okay. So let me start with the last one first that we at this point on the call today, we are not aware of any partner where we have a temporary or a permanent closure. We have one closure in Bhutan, but that is more mandatory as by that government and the law. And sometimes certain things are seasonal, but it is not because of any kind of financial distress or any such thing. The second question is on staff to room ratio. We are very confident of maintaining these as business comes back. You are aware, and we have also communicated that we have not taken out any permanent staff in our hotels. We have carried everyone with us, and that is in line with the philosophy and of of of our founder. We don't take such short term decisions and that too during a pandemic. On the contrary, as we presented, we have supported with north of 20 crores collected from our executives and our staff in a fund which we call Daj for Families by providing people a financial help, those who were indirectly associated with us or had some kind of a contractual relationship and and were not able to to make money. On the supply side, yes, when the market goes through what it has gone through, the likelihood that some form of balance comes in demand and supply is a very normal consequence or outcome of the situation. So a lot of projects might get delayed and may not get built as fast as we thought they would. And and this am talking about the industry part of it and not specifically to us. And and this is where this would be very normal that projects would get delayed. Fundings would get delayed with the banks. There'll be construction delays when your migrant workers go away, you know, your site is empty. If you have lockdowns, there is any way that delay built in because you're not allowed to work, on-site. We had that delay also in our, hotel that we are building ourselves, the Ginger, the flagship Ginger in Santa Cruz. But certain hotels, as you have read, would also have a permanent closure. They don't have to be necessarily big names or big brands. There will be a kind of an erosion in supply. To what extent we will get to know in another six to eight months time after your ECLG as you know, emergency credit line guarantee scheme, and the moratoriums, which were offered, once they are gone, then we have to say how many of those businesses can still stand on their own feet. So so that, but a rebalance of demand and supply will happen whether the demand increases more or the supply decreases, and that's where demand increases that some some rebalance in some form will happen. And it's actually happening as we speak. Thank you, and all the very best. Yes, sir. You. We take our next question. Please go ahead, caller. Yeah. Hi. Am I audible? Yes. You are. Yeah. Hi. Hi. Hi, Giri. Hi, Puneet. This is Achal from HSBC. So I had I had three questions, if I may. First of all, on the on the expense side, so you actually, you explained about the rise in employee cost quarter on quarter sequentially. But but there was a 62 crores decline in other costs quarter on quarter. So what what is going there? And and on the on the same line, what how should we expect the employee cost and other cost going into the next quarter? So that's my first question. Secondly, you just talked about the the closures and and and all those sort of things. So so what sort of what is your expectation in terms of in terms of capacity? I mean, do you do you think more and more auto is going down and then that will create an opportunity for you to sort of to grab grab more assets on the right price? And and but but but that also means that you might not you might not succeed in in asset monetization with your plan. So so that is my second question. My third question is that what sort of what sort of booking trend are you are you seeing at the moment? Because, you know, so recently, I I actually just by channel check, and and, you know, I found that that many of the leisure leisure passengers, leisure traffic, are actually booking for the for the longer duration now. I mean, you know, so if if somebody is going I mean, previously, they used to go for two nights and three nights and all. So now they are taking sort of packages which are probably, you know, more and more comfortable, probably six nights, seven nights and all. I mean and and and and so what sort of what sort of do do you do you I I didn't see any any changes in the in the sort of the media stay in terms of, you know, the the the kind of duration of pay and and the booking trend. Thank you. Yes. So I think the reduction in cost, Sachin, was more variable cost, actually, which is stores and some of the other variable costs, actually. And that really depends on the level of activity in the hotels, channel, actually. That is number one. The other question you had was on asset monetization. I think we should now see asset monetizations getting kick started again because the pricing has definitely improved. So while we're not talking about those numbers, and and now I think we will fix that that to help to sort of help actually. Absolutely. So on to to add to what Giri just mentioned is also the price correction is happening because of the fear of inflation. So now it would make sense to monetize on assets. We we don't want to monetize on thirty, forty, 50% of replacement value. So I think it it gets it gets more interesting now. On the third one, which is the booking trend Yes. The booking trend is in the month of July has been positive, and also the first eight days of August is very positive. We are trending at the moment ahead of July for the month of August. The booking window has become shorter, so it is difficult to say what will happen in September, October, whether this trend continues. On your second part of the question was people are staying longer. That is absolutely right. Especially also because the mode of travel might have changed to by route. Yeah. But nobody's going to go and stay for two nights and keep driving for two days, one day to go, one day to come back. So, obviously, that has become longer. People are combining business and leisure. Now whether you call it leisure or vacation, that that's just a a kind of a vocabulary thing. But, yes, this trend is, because of digital meetings is happening more than it happened, in the pre COVID level. So the length of stay has increased. And, also, some of the demand in the domestic leisure, especially in the high paying segment, is being driven by the 25,000,000 people who used to travel outside of India. I've recently started traveling again as some countries like Switzerland, etcetera, opened up. But it's still complicated. It's still you have to have had two vaccines. So that is that is an important source of business on the leisure front definitely in the current year. Perfect. Thank you, sir. Sorry. Last question. I mean, still on the on the Capital Markets Day, you mentioned that you will update on the capital restructuring plan during the first quarter results. Is there any update to share at the moment or is it slightly still early? Yeah. No. No. No. I think I think I can say that we were waiting for the peaks the third secondary of pandemic to sort of kind of end. And today, we did discuss with the board, and I think the board has now asked us to proceed in terms of discussions. And now I think in the next two, three weeks, hopefully, we should have a proper board meeting, but you wait for us to announce. But fundamentally today, there was a full alignment in terms of doing that capital raise. I think now the next few weeks, we'll just work through the quantums and and ask for a separate board meeting. That's what we will do. Perfect. Thank you so much, and and good luck. Yeah. Thank you. We take our next question. Please go ahead, caller. Hi. Hi, Puneet. Giri, Shahriin Desai from UBS. Hi. Hi, Shahriin. Hi. Hi. So most of my cons most of my questions are already answered. Just maybe a bit on recovery. So how will you compare this July versus a normal normal July? Any any any color? Green. It's not amber. It's green. See, Shalim Shalim, you know, we we are not having certain things like events are not happening. Weddings are restricted in numbers. There is no international travel at all. So if you look at it that way, it is definitely even dark green. Okay. Okay. Okay. So See, your potential is only to grow 70% of the possible business. The question is how much are you doing out of it? Yep. Yep. Yep. So you're doing most of it? Yeah. Oh, okay. Okay. Okay. Greet, again, many parties may have asked this question, but just to help us model this, your employee cost was $2.50 crore ballpark this quarter. And let's say you hit a a full quarter of 1,200 crore revenue, then how should we build this employee cost going forward? Like, there's a obviously, there's some variable in it. So should it go to $303.50, 400? Like, any ballpark range, can you help us with? Can we can we take this offline in terms of talking about the specific model related questions? Can we do that, Shaili? Is that okay with you? Yeah. Yeah. Absolutely. Absolutely. Absolutely. Absolutely. Absolutely. Yeah. Thank you. Thank you so much. That that's it from my side. Thank you. We take our next question. Please go ahead, caller. Hi, sir. This is Deepika from JPMorgan. Thanks for the opportunity. So just a couple of things from my side. If at what kind of occupancy given the current environment do you see rates, you know, going back to pre ADR going back to pre COVID levels? I think it's because it's a function of location and the market that you are in. It's not any more a function of occupancy levels. So if you can travel easy see, I'm going to Bangalore tomorrow. I have double vaccine, but I still have to get a RT PCR test done, which I got done because I have to go. But if somebody has a choice, let's say, okay. Let me avoid this, and let's go somewhere else. So there are a lot of implications, and then comes the full issue of leisure versus business. Now if the family wants to go to the hills or they want to go to a beach, then you're going there. It's, it's going to happen. Whereas, if you have to do I I have to do certain travels to certain metros, I can put them in a different list of variety depending on the ease of travel and the urgency of it. So during this pandemic, the benchmark is not at what level of occupancy the rates come. And as I said, there are certain markets and a significant number of hotels that we have. Almost more than 40 hotels in our system did in July better than they did in July pre COVID. In terms of ARR? In terms of both ARR and occupancy. Because of ARR only comes if occupancy level goes higher than 65, 70%. Otherwise, the ARR recovery is not as fast as it should be. Right? Got it. So your rent would be that cost will be higher in most of the like for like assets, which are especially driven by leisure. Okay. And so secondly, given the fact that you're, you know, you're expecting large events, etcetera, to take longer to recover, is there a more change in, you know, strategy in terms of, you know, utilizing the assets in a different way to be able to capture, you know, some of that lost revenue? For sure. Some of these initiatives like human are born out of that. Right? That revenue, that how you sweat your assets, how you utilize the kitchens that were empty, how you utilize the staff which is there, the the chefs, the cooks, etcetera. This is how a human was born. This is how the homestay has been working with the same staffing. So the homestays are usually close to another property that we are running. So it's the same people. It's not additional or incremental staffing on it. Of course, you cannot, you know, suddenly convert large banquet halls into to warehouses or something like that. That part is missing, but to the extent possible and to the extent practical and to the extent it's a fit with the brand and the location and is a sound financial decision. Such decisions we take every day. Got it. And just the last thing, given that you're expecting, you know, to return cash flow positive, pretty soon, should we expect debt to start reducing from these levels by year end? I think as Giri mentioned, there are other discussions which we have in terms of restructuring that are going on. And, yes, I would say it is a fair expectation to have that we will need to do something. We were unsure, and that's why we could not give any guidance because the magnitude of second wave was such that got us all a bit on the defensive, but the recovery post second wave has come faster. Now we are concerned about the third wave, whether it comes or it doesn't come. So I think the good good thing is that experience is showing that the we would even if they evolve the third wave, the rebound will not take as long as it took when the pandemic started. So we are considering various options, and we'll be in a position to communicate something very soon. Okay, sir. Thank you so much, and all the best. Thank you. Once again, ladies and gentlemen, that's star one to ask a question. And we take our next question. Please go ahead, caller. Hello. Hi. This is Doruk. I'm an individual investor. And I just had one I I just had one observation to make in terms of customer experience at the car's properties. The car experiences are hard. Apparently, it can't be burned or redeemed for a lot of new features that you have, like human I'm not sure if this can use a ginger. So is there a is there any idea behind introducing the large experiences card for all these other, like, Khazana? I don't think we can burn this at Khazana. So is there any plan for that? I think you made a good suggestion whether we use experience card or something else. Maybe we should consider doing one card across all verticals so you can use it anywhere. I think we've been we've been discussing that, but on a different platform, on the loyalty platform. So thank you, Gaurav, for the suggestion, and we will very seriously consider and execute without delay. Thank you. Can we have the last couple of questions? Can we have the last couple of questions here? Thank you. It appears there are no further questions at this time. But as a final reminder, ladies and gentlemen, that There are no additional questions at this time. I would like to turn the call back to our host for any additional or closing remarks. Well, thank you everyone for joining the call. We appreciate your engagement and support and also the questions that you raised. We look forward to our next interaction after the q two. Thank you very much, and have a very good evening. Thank you. Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.