Q3 20/21

Feb 3, 2021

Good evening, ladies and gentlemen. At the beginning of this call, I thought first we will show you a picture of a very nice tall boutique property that we officially launched last weekend is the Connaught in Connaught Place in New Delhi, comprising of 104 rooms. Very nice outside area with with the bar and restaurant and a picture of the lot. Redefines what boutique hotel businesses in in India, and will be part of the our selections platform, which takes the selections platform to 30 hotels in operation with another two in develop so not from this or not. Let's of unprecedented challenges for the hospitality and industry. The global pandemic, as we're all aware, had hundred million cases, two million deaths, a complete shutdown of hospitality, almost 70% of the hotels across globe were shut. There was a decline in revenue of $900,000,000,000 or 900,000,000,000 rupees. Sorry. And job losses of almost 40 to 45% of all direct employees in the organized sectors lost their job. Having said that, the pandemic also started reshaping travel behaviors. We saw that the demand, when it started coming back, it came in form of leisure. Some also included some business for making it leisure travel. It was value driven and more experiential, or if you wanna call it cursive. Our short term rentals and home stays are very popular. A lot of focus in and around wellness tourism, sustainable tourism. And when the mice started opening up, that is meetings, incentives, conference, and events, it started initially as digital only and then later on, and as we speak today, moved into a phygital mode. We have announced our reset 2020 strategy already after q one. And just as a reminder, r stands for revenue initiatives, e for excellence, s for spend optimization, effective asset management, and being swift and financially. So all this helped us to get on the very first especially as we are seeing at the '3 in the month of December in January. So this slide is really on the domestic front. You know, April is the month when we almost reached zero revenues, 77% occupancy, and the RevPAR declined to 339. And that has all been 10 x as a as a as a percentage of revenue became also 60% in December and closing to almost 50 in November. So, actually, November, I would say, is really the turning point around Diwali. November when we started seeing more and more pickup in domestic demand and business. There's a little blip which could be misleading in the month of June. That is because of the Vandebarth business that the hotel industry got, and that's why the RevPAR is lower, but the occupancy shows a marginal increase over July or a significant increase from May, but that was really related to Mandeepad. December is the really first month when we saw business, especially on the leisure front, on weddings. From November till December 31, six good weeks for the industry. If we look at the RevPAR versus industry, this is from STR Global. I think the IHCL portfolio, the RevPAR performance has been good. We are noticing this trend across the globe that a lot of brands which are being preferred are the ones which have a lot of history, which have a legacy in that country. So I think we are also benefiting a lot, especially because of the Taj brand. And Taj brand in many markets is seeing a huge premium. Although the demand base is low, but our our market penetration and RevPAR penetration is very, very high. So if you look at the last three months in the quarter, we have gone beyond 1.5 in terms of market share. Our RevPAR for the month of December finished at 3,424. These figures are includes including Ginger. So as you would know that Ginger does a lower rate. So the the the figure that you saw on red part is a blend of all brands that we have in our portfolio. This is an interesting slide which also demonstrates leisure destinations led to the parts of recovery at least in domestic leisure. And and if we compare the three quarters, you see in the third quarter, Goa was absolutely the number one in terms of in terms of the percentage of revenue of last year. Or last year, when we say it's obviously the comparable trend for the q three of the year before. So 80% then followed by Rajasthan, then followed by Calcutta, and then Kerala. And the challenge remains on the right extreme, which we see is Bangalore, Delhi, NCR, and Mumbai. These are three very important cities for domestic corporate, especially for our portfolio as we have significant number of our hotels in Bangalore, Delhi, and Mumbai. And we see that also as an opportunity going forward because at the moment, they're not even back at 50% of the previous year's business in the quarter. Moving on from here to the the signings and the openings, we have tried to maintain our growth momentum even in 2021. We have been very focused, as you all know, on signing of management contracts and and and not owning hotels. So we signed this this year also in the in the nine months of this year, 14 hotels. We opened six hotels. We have also opened five ARMA branded properties. We have we have signed some more ARMA properties, which you'll hear about in the next few days, a a small portfolio of ARMA home stays. So so on the signings and openings, given the fact that the markets were shut down and were undergoing a lockdown for six months, still having opened six hotels, and we still plan to open a few more in the next So we'll get to our 12 hotels opened in in the twelve months of the year. So so this is this is what well for us, and we are very much on target in terms of our growth strategy. Moving further from growth to focus on our excellence and well-being, our touchness, commitment restrainted. We talked about it already at the q one results. We have implemented all standards of safety are still staying in our hotels as public transport system is for them to be exposed. So a lot of our associates are still being hosted by us in hotels so that they are in this clean and safe environment. We introduced a zero touch service to transform as minimum contact as possible. And something which we did not talk about so much is we introduced to our Dutch Public Service Welfare Trust certain voluntary salary contributions from the staff, which go into a fund for people within there's a more contractual workers working for a car contractor or for a or for any other contractor who lost job as there was not enough demand for cars, etcetera. They were supported through our Taj public service vendor trust under the promotion of Taj for families, and that means each of the Taj employee was contributing one way or the other towards the other less fortunate ones who may have been in our ecosystem, employed by other employers who own our hotels, but use our franchise or use our brand with us as manager. We stood to the occasion and supported them of that. Moving on further from excellence to paint optimization. So here it is presented in terms of sustained optimization of fixed cost. We had a 27% decline in fixed cost per month. We are more or less at hundred and twenty, and I think that's the figure, which is a good guidance forward versus hundred and sixty four, which used to be in the year. On from sustained optimization of fixed cost when we move further in terms of how did we achieve this, we have achieved this through redeployments of staff in new properties that are opening, redeployment of some of the corporate employees and other card of the company. Multiskilling. We have scaled our people in different areas so they are able to work in different part within an eight hour shift, and that's the new way of working. And that brought our staff to room ratio in April from 1.53 down to 1.14 in December. Of course, this number will increase as the occupancies increase, as the business volume increase, especially as more and more weddings and MICE events start coming. That number will have a certain increase, but there is also a certain permanent reset that we have achieved in terms of the the staff to room ratio. In terms of effective asset management, which has the bottom line in the in the in the quarter, the the contribution to lease cost savings for sale of residential apartments for the nine months is 64 crore. For this quarter, it was marginally less, but we have achieved 64 crores through asset management initiatives, which were launched as with the launch of lease set. Going on further to continuous reduction in corporate overheads, we have savings of 67 crores in the first nine months of the year. That is a 28% reduction. This number is expected to rise as some of the reductions did not commence immediately in the months of April and May. But there is strict prudence in all corporate expenditure, and we continue to use, you know, organizational optimization for redeployments, restructuring, and better utilization of the skill sets and the talents that we have in our system. With that, the nine months, if we look at it on the nine months front, the revenue initiatives on a not like for like initiative, I've got 205 crores in incremental rev Our spend optimization was achieved was 280, 64 crores in asset management, as I just explained. And under Thrift prudent, we got another 67 crore contribution. When we move on further, I think we thought this time we will also say that although we had reset, but two of our other joint ventures, which are pretty important for us, adopted and embraced the strategy we call reap. That's building revenue, containing expenses, managing assets, and that. And when we look into Jingda on the next slide, you will see that Jingda performed quite well and achieved in the nine months fifty seven percent of last year revenue. I think that's coming from where we are coming from, from almost, you know, seven, ten cent in April and 12 in May, and then going on to 18% in June. I think Ginger getting to 57% of last year is a very good number. The nine month RevPAR index of Ginger was at 1.23 x, and they clocked 60% occupancy in December, and we see the same trend in January. EBITDA positive for the nine months. It has achieved 31% cost reduction over the nine months period, and the manning in Ginger has gone down from 0.55 to 0.41. In terms of assets, now Ginger is a 75 hotel portfolio of which 54 are in operation. And and and from the total lease obligation, they got 20% lease rent reduction, and Ginger is still clocking a trip adviser score average across the system of 4.74 and is equally focused on multi skilling. When we move further to that, sorry, based on this, in the similar trend, we also see on touch sets, and we'll narrate more on that in the next next quarterly meeting. As also air traffic is beginning to come back. We all read that the air traffic on the domestic front is almost 6% previous year. I think at the end of the full year, this will become interesting to talk also about our flight kitchen business. Our improvement in the revenue, you know, coming from a small base of from q one to q two, we saw a jump of 85%. From q two to q three of 90%, which is just a just a consequence of unlock one, unlock two, and unlock three. And, you know, as slowly the pools and the spas and the banqueting facilities start to open up, we hope to get more and more revenues also on the food and beverage side. So, obviously, q '1 being the worst quarter coming from a minus 02/1934, we were able to finish q three positive in a positive territory, all of it at a very small amount of 38 crores. So the negative and the drop was significant from q one to q two. And from q two to q three, we had a 121 crore improvement to get to a positive EBITDA. Moving further, trend and comparison with the previous year, as we can see, it's still a long way to go in q three because q three of last year, we had a system wide revenue of 1,400 crores. But very important here is that, unfortunately, for our portfolio, London, New York, San Francisco, these contributions have come to almost zero as these cities went into a lockdown. In the months of, you know, The US, it kept getting worse. And, unfortunately, London also went into a lockdown. So the revenue revenue drop is is that's why very high. And also on the EBITDA front, from a 462 EBITDA, we were able to do only 38. Otherwise, q three and q four get significant contributions from all of our international operation. We were able to narrow the gap on our path or or the loss after tax was coming from two in q one, 02/2002. We ended up close to one twenty, to be precise, 119 in this course. Going further after this slide, I think it is very important and interesting that the significant portfolio EBITDA was positive in December. So 86% of our domestic hotels turned EBITDA positive in the month of December. We think that is kind of base going forward. Of course, there is a Christmas and a newer impact. But, also, as business begins to open up, we are looking for having that as a a kind of a moving average going forward in the short term. Moving on to the to the next slide, I think I will hand over to my colleague, mister Giridhar Sanjeevi, who's our EVP and Chief Financial Officer. Over to you, Giridhar. Thank you. Taking off from where the managing director summarized, I think I go into a little more of detail. As you can see in q three, the total revenue at 615 crores was minus 56%. And as compared to the nine months where we were thousand 113 crores, which was about minus 68%. So clearly, Q3 was a soft recovery led by leisure. On the cost reduction side, we were able to save minus 39% as compared to minus 47% in the nine months. And fundamentally, with the did come back in terms of, like, in terms of the admin expenses and others. The manpower cost definitely was continued to be at the same minus 38% as compared to the nine months number. In terms of the finance cost, the finance cost reflected the incremental borrowings and was in line with that. Exceptionals, we had INR28 crores of exceptionals in Q3 and INR135 crores in over the nine months, and I'll come to the details of it in the next slide, leaving us with an overall loss after tax of INR119 crores for Q3 and INR629 crores for the period of nine months. Moving to the next slide, I think in terms of exceptionals, we had derivative contract changes because of a favorable rupee of about INR 6 crores in the quarter and about INR 23 crores in the nine months. We had an exchange gain loss in relation to the bank loans in South Africa 30 crores for nine months. And in terms of operating and nonoperating revenue, we had gain and sale of flats of about 9 crores during the quarter and about 15 for the nine months. Lease rental concessions under accounting standards comes under the revenue line. That's about INR 5 crores and INR 34 crores for the nine months. We were able to get and this is a good development in Vivanta, Guwahati, which is a hotel that we opened in 02/2015. We have received two kinds of concessions. One is a capital subsidy of 42 crores, which was received in March 2020. On top of it, there's an indirect tax subsidy where indirect taxes minus input credits start reimbursed. So for the five years, we were able to get a confirmation recently that we will get a refund of 13 crores, which has not yet come, but we should get it shortly. And this benefit will continue for five more years. We also had a foreign currency on restatement of some loans given to one of the subsidiaries of 24 crores exceptional items and operating and nonoperating revenue inclusions, actually. Moving on to the stand alone reported P and L, we had a top line of four thirty two crores. The overall pattern mirrors the consolidated. It was minus 51% in terms of the revenue as compared to the last year and minus 64% for the nine months at a total revenue of $7.66. In terms of cost reduction, we had a minus 33% in Q3 and a minus 41% for the nine months. So we continue to focus on the cost savings in the quarter. In terms of finance costs, once again, it reflected the the in borrowing. On exceptional gainloss items, we did have a loss of INR 56 crores during the quarter and INR 110 crores for the nine months, and I'll come to it in a minute, leaving with a loss after tax of INR 95 crores for Q3 and INR 475 crores for items. I think the change in fair value of derivatives we saw in the consolidated, that is INR 6 crores. As you know that, when I met, there is a period loss since we fund from India, we cannot provide for that in the stand alone. So that was INR 62 crores during the quarter. In terms of operating and nonoperating revenue inclusions, we have the gain and sale of flats that we saw. Lease rental concessions, the 4 crores, and the Vibanta Gawati subsidy of 13 crores. So these were the fundamental exceptional and operating and nonoperating inclusions. For some metrics in terms of sales stand alone, I think what is good to see on the right hand side is that the occupancy jumped 32.3% to 47.4%. And the ARR jump was was 5,400 to 8,300, which is a very significant jump. And as was described in the earlier section, we had a significant premium in the RevPAR as well, which was $3,009.36 as compared to thousand $7.51. And breakup of revenues, where room revenue was about one sixty crores, F and B revenue, $1.61 crores and other revenue, 113 crores constituting the 434 crores of q three revenue as compared to q two. Moving to the domestic network revenue metrics, it reflected the same underlying trend where the occupancy went up from 28% to 45%, with ARR going up to 5,643 and RevPAR going to more than doubling to $2,005.73 and room revenue at 815 crores in term between room revenue, F and B and other revenue. The final slide we have is really the debt position. In terms of the debt position, the consolidated net debt was INR 3,079 crores, and I think the stand alone net debt position was INR 2,175 crores. And I think one of the things to note is that the substantial increase in the debt position actually when the net debt position was something like INR 1,900 crores. So I think in September, the consolidated net debt was 2,900. So while the bulk of the increase happened up to September, from September to December, the increase was was marginal. So as you can see that both in terms of stand alone and in consolidated, That that clearly demonstrates that the with the resurgence of business in q three, the the the need to take incremental debt has kind of dropped. The interest cost, we continue to be competitive in terms of what we are borrowing. The net debt to equity still is at point seven one for the consolidated and point five two for standalone. And, of course, net debt to EBITDA 12 trailing will essentially be, you know, reflecting the underlying losses. So that's broadly it in terms of the debt position. So I don't think we have any other slides, and we open up for questions. Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may click on the q a q and a tab and submit request. Your name will be announced when you are promoted in the question queue. Please accept the prompt on your screen and proceed with your question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Nehal Jam from Edelweiss. Please go ahead. Yes. Thank you so much, and good evening, Puneet and Gary. My question is that, you know, the recovery I see from q to q three is little bit. But even now, if I look at, you know, the long term estimates that the consultants and credit rating agencies give up, no one's expecting the power to come back before f y twenty three, what we achieved in f y twenty. How I the vaccine will progress and how to normalize for other segments is known. So what I wanted, your comment Something that could take trajectory of, you know, their past coming back to big moment. I can answer that. I think we are living in a very eleven months now on the domestic front and on the international, it will include China's. I personally feel that should start improving in eight to nine months. As we certainly saw improvement in December, one thing which of this virus, we are in second or a third or a fourth wave. I don't know if we've already had a second wave. Like, he says they had a second wave. So if that does not I think given that 85% of our portfolios of the good until FY '23. However, having said that, I don't get to predict what is this to see. This what we showed you, that month on month and quarter on quarter, there is it comes to domestic measures or it comes to I'm so sorry, Puneet. I'm not able to hear you. Hello? You're not able to hear me? I'm disturbed in the some traffic. Is everybody muted? May we need to take off the video, Puneet. I think we will take off the video, and that may just help in terms of improving bandwidth, actually. Can you hear me now? Is it better? Yes. Absolute yes, sir. But in there is some traffic noise behind. Okay. So the the main thing is I don't think anybody is in a position to give any prediction today in terms of visibility of the the virus. The the the news definitely is that in India, the flattening of the curve has happened with a clear downward trend from the ninety five thousand cases we are coming to now averaging around ten, eleven, twelve, and it it even went to eight thousand six hundred. There is no new wave coming this way. The recovery on the domestic front could be faster, and I think the rollout of the vaccine in in the international markets would be a key for the for the RevPAR growth also out there. What we can say is what we have witnessed. What we have witnessed is that there has been a 10 x increase between April and December for us in terms of RevPAR. Now coming from a low base, that 10 x was maybe maybe much easier to achieve than to do 10 x from where we stand today. Right? So so but the jump month on month and quarter on quarter is there. I I definitely see no reason as we speak today why February should not be as good as December. You know, we all know that January, there is a slight dip back. But even January, the on the domestic front have been positive. So so I think the major part where the industry was missing is the RevPAR for our portfolio is 52 to 55% of pre COVID total revenue. Right? The rooms revenue was fifth and 45% is nonrooms. Then what we have been missing is the nonrooms revenue and all the restaurants opening up, with the wedding segment opening up, with the conference segment slowly opening up, that is an equally important segment, so we should not ignore that. So I think the instead of RevPAR, I would call it the traffic revenue per day. What we should look at. And I think the best then the recovery could be faster. If that somehow for some today changes, then RevPAR recovery to pre COVID could go until f y twenty three as you mentioned in your quest. Thanks, Puneet. Just one last question from my side, specifically for Gidi. Gidi, if I saw the presentation, I think we've our cost by around INR 40 crores on a quarterly basis, and I think that trend has continued. Now with eight, nine months and you mentioned about the staff to room rate, so what is the amount you think will continue forward in '22 and that will be the rate at least going forward? So I think on cost, as we saw on the slide, I think the the costs are now fixed costs are approximately about $1.20 crores a month, and that is the kind of number that we are kind of saying that we would like to maintain. Because if you see the fixed cost savings in every quarter, I think q one, the fixed cost savings was about 8 crores. Q two was about 38 crores a month. And overall, we have been maintaining about 44 crores a month. And now the whole attempt in terms of redeployment of manpower, in terms of corporate overhead reductions, in terms of other initiatives, I think we are trying to make sure that we kind of stay around the INR120 crores a month in terms of fixed cost. So that's what we are attempting actually. Thanks, Kiri and Puneet. Thank Thank you. You. The next question is from the line of Sumant Kumar from Motilal Oswal Financial Services. Please go ahead. Suman, come on. Please accept the prompt on your screen and proceed with your question. Yeah. Yeah. Hi, Regarding the corporate is can you discuss more more about how the corporate negotiation going on? Excuse me. This is the operator. I'm sorry to interrupt. Suman Kumar, your voice is not audible. Hello? Yes. Yes. It is better. It is better now, Sumit. Yeah. So my question is about the corporate rate and negotiation. How how is the now how is the scenario currently if we are going to negotiate with the corporate? Is the they are they are asking a more discount from the preco precovid level? Can you elaborate more about that? So so what is happening so at this point of time is that the corporate renewals, more or less, most corporates are now essentially asking us to renew the existing contracts on the same basis as the previous That is now is yet to pick up. So we have not gotten to any serious discussions in terms of discounting of price negotiations. It is just getting renewed as per the previous year. And as the business style picks up, then I think we will get a better sense, actually. Because if you see the mix of business, we are still dependent on the transient business at this point of time. So I would simply say that renewals are happening based on previous year rates. Okay. And when talking about the overall the q three, we have seen a decent recovery. Talking about the current quarter, January, you have you have seen some some dip. And February has some wedding season, and FNB segment is going to recover. Assuming all this scenario and what's what is your view on the q four number q four scenario compared to q three? Yeah. No. I think you wanted to answer that, Puneet? I can, and then you can add your thing. We are, at this point of time, based on the business on the books, plus our daily pickup that we are seeing on a daily basis, q four will definitely be stronger than q q three. As I as I've said always, if there is no new sudden wave of virus coming or there is no lockdown, if the business goes on as it is like for the last two, three months, then definitely q four will be better. There is no reason that we know today, as I said before, why February should not do as well as December or March should not do as well as as well as February. So it's an important month. January, there's always a slow start, but January has done well and has been in line with our expectations on the domestic front. The only place where we are missing in January is is, as I said before, London, New York, and get the count to add? No. I think that's right. I think I think very clearly, we expect, you know, if you if you look at the q three numbers where the top line was 615 crores, I think all we're talking about is about 200 crores a month, and there's no reason why we should not do it. And the other thing is that London also, the current news is that the lockdown should end by March, actually. So which means we are likely to see, hopefully, some reduction of business, and that's the turnover that we have been missing. So I think we continue to be optimistic as far as q four is concerned. So any new trend post this q three or you are like q three, we have seen a good wedding season and overall FNB segment has recovered. So for the q four and maybe the coming quarter. I think if if I answer that, I think one of the things worth noting, I suppose, is that if you have noticed the news in Delhi, Sumant, I think weddings are now allowed for 200 people in in in in inside and and unlimited in the outside. So that is definitely helping us for sure. So I think so that is a trend which will definitely help. So the wedding business, there is still some wedding business which is happening. Then the other things are the basically, the you know, we are seeing some sports segments also opening up at this point of time with the BCCI India England series. So that should also potentially help. And wellness retreats are also we are seeing happening, especially in addition to wedding, some of these other trends are slowly kind of opening up is what I would say. Okay. And lastly, the business destination, we have seen a very strong recovery in the leisure destination. Any new trend are you see are you have you seen in the business destination? And how the how the key destination recovery is going to be, like, Mumbai, New Delhi, and Bangalore, and Hyderabad in the coming couple of quarter. So ma'am, if I may ask that Yes. The the RevPAR growth globally and historically has a direct correlation with the GDP growth. If the GDP keeps growing the way it is expected to grow, the RevPAR should close, especially in the business destinations. The leisure markets, the RevPAR growth has been very people wanting to to move and take a holiday. So so the business destination, I am hoping with the kind of optimism we are seeing on the markets should also help drive demand in the hospitality sector and also in the aviation sector. Anything to do with hotel sector, restaurant sector, and I think that is that is positive, and we are reasonably optimistic that we will continue to see improvement. Now how strong that growth will be? Over two quarters to describe is very difficult, but definitely this quarter, the total revenue with all possible mathematics looks better than the previous quarter. Thank you so much, sir. Thank you. Achal Kumar from HSBC. Please go ahead. Achal Kumar, please go ahead with your question. Achal Kumar from HSBC, please unmute the line from your side and proceed with your question. As there's no response, we take the next question from the line of Viktor Tajuja from Antik Stock Broking. Please go ahead. Hello. Hi. Am I audible? Yes. Yes. I am. Sure. Hi, Gideon. How can hope you're doing well, and thanks for the opportunity. So my first question is I about travel costs partially coming back in next fiscal year. Just want to know what your views around that, you know, what your large corporate customers are telling you around the lines and all because, you know, they have also started unlocking a bit. That that's my first question. And the second question is to Gary. Sir, kind of margin savings we have seen in in this pandemic. Can you please highlight what cost savings will come back when growth is back, and what are actually the structure that will that will stay stay even when when whenever we'll reach to pre COVID levels? And and, also, if you can give some color on, you know, where you see the margins of FY 2223 going. I know it's it's hard to, you know, estimate, you know, whatever whatever you are, you know, working with internally. Puneet, can you answer the first question? So on the first Yeah. Can you can you just repeat the Sure. You want it? So so the first question is around, you know, all these tech consulting bank companies are talking about the travel cost coming back Yeah. In next gradually, obviously. For example, if you take an example of TCS one four also, 3% of their revenue is travel cost, which includes hotel travel, everything. And they are saying that around 152% might come back in FY 2223. So what are we hearing from our large customer? Any timelines they are Not anything really to that extent. We are seeing, you know, there were two kinds of people few months. All who are traveling are getting good bulk because everybody in places goes for the occupancy. If you look at thirty, forty years of STR charts, you will see that the first occupancy drop, the crisis comes and then the it follows. And then the occupancy comes back, and then there is a lag of three to six months before the rate starts coming back. Well, I think that's one of the things. But definitely, what we have seen is on the bottom of the pyramid, the the junior corporate executive, the travel has commenced and plan. But what we are really missing is, to be very precise on your question, is, you know, events with a meeting for a 100 people, 150. These are very rare. We have had a few with Goa, a few with but, you know, it's 50 people because only 50 were allowed. God knows no. If 200 are allowed, will will an event happen for 200 people? So the one thing is for for sure, if the numbers keep going down and on the new COVID cases, if the vaccination keeps rolling the way it is expected to roll, people will start traveling and travel costs will, as you rightly said, and all such companies start going up again because travel is not just in a domestic leisure or human need. Certain businesses, you can do digitally, but not forever. And the reason is because what we have done in the last ten, twelve months, we have been digging into our relationship capital of the past and using that to do business build a capital for future. And I personally feel within our own group that travel is expected to pick up as people have the need to meet physically. Everything cannot be done on a on a on a screen. If you don't know each other and you have to build new businesses, you have to build new contacts, have to build new client base, you have to build new products. So so that way, the travel is expected to come back as things are opening up also. And as we can see, you know, airports, I came back on Sunday from Delhi after the formal opening of the. I never saw Mumbai Airport as full as I saw it on Sunday evening. So that means people are traveling. Now how many of those were leisure and how many of those were corporate or part of leisure as we said, you know, combining business and leisure? That's we will get to know in a few months the statistics, but but travel has started. Also want to start it. Sure. And that's Yeah. And I think you might take on the second question, because you were asking about sustainable cost savings. So, obviously, I I think what I what we said is that, clearly, have had a lot of success so far. And I think the attempt now is to make sure that we continue to maintain and sustain the cost savings. Essentially, there are a number of steps that we are taking, which we have highlighted before as well. The most important cost line for us clearly is manpower. In addition to in addition to what was highlighted in terms of relooking at the mining ratios where I think significant work has happened, redeployment is a very important part of our strategy. As our growth continues, we are kind of working in terms of redeploying people to different hotels. Secondly, that we also highlighted reskilling. There's a project a one which has been introduced and is being gradually rolled across all to do different jobs, actually. That's a very big part of it. I think we continue our work on shared services that is continuing. Digitization is one area where we spend to make sure that we can increasingly digitize, you know, and you get already able to see some changes not just to the front end, but also in the back end. Both ways, we are kind of working on digitization. So I think there is all around effort happening in terms of making sure that we can sustain the cost savings. And we will be able to probably provide more clarity as the quarters go forward and as our plans in terms of changing some of the fundamental structure of our operating model kind of happens actually. I think so we will talk about it, but the you you you are able to see q one, q two, q three, q what the kind of sustained cost actions that we have kind of implemented. Sure. Sure. Also, we have not seen, you know, it it was expecting November, December. There would be some deals around it, you know, smaller deals which are struggling. There there would be some consolidation around it. Do you think we have cusp of, you know, the acceleration here or or or somehow, you know, the cash flow versus the other valuation doesn't match, so consolidation is very, very hard in this market? And and secondly, if if you can just give some more color on Ginger because, you know, the strategy of having Ginger with larger rooms and all, what kind of potential we are seeing in top of, you know, the revenues or or or the margins maybe in in the medium term? That that's about it. So thank you. Yeah. So I think Oh, sorry. Go ahead. Go ahead. You Go ahead. Go ahead. I will I will. No. I was just saying, you're very right. You already answered the question yourself because your question included the answer. In this, the expectation of a seller and the and the price that a buyer is willing to pay, the delta is is pretty big, and it's very difficult to narrow the gap. That's why you're not seeing a lot of consolidation efforts. And also from the from the banks who've given monies and, you know, people are still got benefited from the moratorium. They are in discussions. So I think you'll see some of that activity coming back maybe in six months. It will not take longer than six months. I think it will start coming back in six months time, and some consolidation will definitely happen. That's one thing which I see, and that's likely even best value of if one analyst ask, do you think we'll get to pre COVID level f y twenty three? Somebody thinks it's f y seller will all say, listen. I am in lesser destination. You're already back at the normal level, and COVID is as good as over. So that's that's where the gap is there. So so I expect that to change in the next maximum six months time. Yeah. Sure. That's that's it. Then on ginger? On ginger, ginger is a is is is very good brand. It's a leader in its segment, which we call the LeanLux or the value driven proposition that we have. Ginger's repositioning has worked very well for us. Ginger is actually doing very well, especially, as I said, in the last few months. And one of the things which we want to change for, you know, large properties as we do have some land bank and one which we had announced in our one of our Capital Market Day and where we have got the intimation of disapproval is the on the land in Santa Cruz on Old Flight Kitchen, where we had the Old Flight Kitchen of Tad Sats. And we own the land as IHCL. So there, we have got permission to build a 371 room. Similarly, other such markets where you are, like, one or two kilometers at the most from the airport, if not directly at the airport, and very close to business areas, I think those large boxes could be big brand builders for Ginger, and that was needed. So I think the the idea was always great, and a boom came in the way of Ginger when it was launched. You know, the boom of 02/1967 then you know, it was history. So so I think all the efforts that are delivering very, very positive results, and our MD and CEO there is doing a great job with the entire team. And we are looking at a rapid expansion of Ginger. And as we have done, I think we can expand it very fast. We have 54 in operation. And for a long time, this number was at a very low level, and our pipeline is more than 20 hotels. So so that's 40% of the hotels in operation are in pipeline. And when we do the big So therefore, successful repositioning of this brand will only happen through big box gingers in key markets, and that will drive really the margins because it's north of percent as as gross margin in any key destination. Sure. That's very helpful. Thanks a lot, and best of luck for the next quarter. Thank you. The next question is from the line of Jignesh Kamani from GMO. Please go ahead. Jignesh Kamani, please go ahead with the question. Hello? Yeah. Hi. Yes. Speaking. Hi, Gary. And I just want to know about our our office operation, particularly for the peers. There, our cost structure was very high because we are another part of community in which we Has COVID given any opportunity to rationalize manpower and bring down the cost of Yes. No. Yes, Jignesh. I think, very clearly, we have done a number of efforts in the peer in terms of the overall cost rationalization. I think I think there are three parts to it. I think one part is related to the lease rental renegotiation that we were able to effect in in Pierre. That's number one. Number two was that in terms of manpower, there were two kinds of manpower. One is the the union manpower, and the second is the nonunion manpower. On the union manpower, under the local New York union regulations, we were able to, you know, have a temporary furlough of employees for a period of six months. And after after October, we have gradually opened the hotel and taken back some of the people bases need. So therefore, that's clearly helped so breakeven in here is reduced to what level right now versus pre COVID? Breakeven. You you said breakeven? Yeah. Yeah. So if you would revenue level we see here? No. I think, Scott, I think if you look at the revenue that we've always had in Pierre, it has been approximately about 80 to $85,000,000 actually on an annualized basis. Obviously, at this point of time, but with the pandemic, it has been significantly impacted. Our belief is that with I I mean, I'm I'm not able to talk in terms of what is the breakeven level of top line, but definitely with the lease reductions achieved. And with the resumption of hopefully, post the pandemic, I think we should be able to get back very quickly. The first target is to get back very quickly to the level of performance and then drive it down even further. So I think we need to see how this year, the new year progresses in terms of recovery. Because this year, as you've seen, even in the stand alone, we have kind of taken a provision for cash losses in peer. So now we need to see how the next step improves. Next step, we definitely see an improvement, but you'll probably see a much better impact in the year 'twenty two, 'twenty three is what I would say. Okay. Next question on the trend. You mentioned that January were weaker than the December. But if you take about from Y o Y basis, December was 60% of last year. So still January is better than 60 percentage? January is we haven't we have not yet closed the month unless you have that figure. Right? I think we don't have the exact percentage, but should be around that number. There is no softness in that. Fair to assume. Sorry? Because I think The momentum which we see saw in the December has continued with January also. Right? Apart, leaving aside seasonality. Yes. You can say that if you compare January with January of the previous year, but we can't compare January with December. Yes. I mean, completely. Thanks a lot. Yeah. Thank you. Thank you. The next question is from the line of Himanshu Padhyay from PGIM. Please go ahead. Mister Upanye, please accept the prompt on your screen and proceed with your question. Please unmute and from your side. Mister Himanshu Pade, please unmute the line from your side and proceed with your question. As there's no response, we take the next question from the line of G Mehta from an individual investor. Please go ahead. Jim Mehta, an individual investor, please accept the prompt on your screen and proceed with your question. Am I audible? Yes, you are. Yes. Great. Thank you for taking my question. I have two, questions. One is you spoke about the the F and B sales. Is it possible for you to share a flavor? Is it because F and B sales are good, is it human related, or is it actually in the hotel that's doing well? No. ColdHuman is a is a kind of a start up. It helped us do sales in the period of lockdown. It's still helping us create sales, but the the revenue that are in Landsand or a work in Delhi or a or a Golden Dragon in Mumbai or the Masjabi Drives, that is very important. And that we are seeing coming back. Although the we had some restrictions and also in terms of seating because the seating is reduced due to social distancing. Okay. And and and but is that that FNB activity is coming back. You can go today to different places and see them Excuse me. This is the operator. Mister Chattwal, we've lost your line. We cannot hear you. Can you hear me or not? Yes. Now we can. So I don't know. I'm struggling with this. I think we're all struggling with this connection. We what I'm saying is that we are beginning to see F and B activity back in most of the, you know, preferred restaurants and hotels. So if it's in Taj Lands and or the Golden Dragon in Taj Mahal power, then it is Mhmm. It's is kind of loading because the seating has been reduced due to social distancing. Other to start returning to the the hotel restaurants. Right. Right. Right. The second part of question is the increase in occupancies in, let's say, RevPAR. Is it led by city hotel or is it leisure destination? It's all led by Yeah. You know, Goa third quarter went to almost 80% of the previous year. Wow. And and I I think the the also that we have better than COVID. One example is Srinagar. Another example is similar. One other is done better than the previous year. So there are many hotels which are doing better than previous year. Our home stays, which we had just launched and then COVID came. Home stays are doing better. So these are all mainly leisure driven businesses, and and we see no reason why that should change in the next months. Great. Thank you. Good work, and keep it up. Thank you. Thank thank you. The next question is from the line of Sharma from Intel Investments. Please go ahead. Thank you. This is for my first our staff to room ratio has come down from 1.8 to 1.4. As we go back, do think this number can inch back or now this is a sustainable reduction? So the staff room ratio is something that are working on a number of initiatives. So the way to look at staff room ratio is large hotels will have a slightly better slightly higher room manpower to room ratios. But as generally, we be much more on the on the on the ratios. And I think the current so therefore, as the activity comes back, I'd say, everything come back. You will see that some of the as we have always highlighted is a redeployment of manpower. Second second is as we said, talk about digitization efforts, which is leading to contactless check ins and also and also helping us in in both of and, of course, some of the shared services initiatives that we are taking. So there are and for this multi scaling initiatives that we spoke about. So as a result of these multiple initiatives, very clearly, this is track on. There will obviously be some changes and increases depending upon the level of business, but you will see some sustainable reductions in in manpower ratios going forward. Thanks. The second question is, you know, we have a wide assortment of focus. Have we ever considered, you know, using the loyalty program and, you know, having some sort of membership, not exactly a holiday membership holiday, but some hybrids about it. Any views on that? So we do have we do have a Epicure membership. We do have oriented towards the loyalty. Like, for instance, in the last month, we did a a program specifically for loyalty members to reasonably good business. So I think we continue to kind of work with our loyalty members carefully. We also work with select partnerships like, for instance, with American Express, which kind of targets the high spending customers. So in terms of working with different customer segments, the high spending customers, our loyalty programs, and doing selective programs with even OTS, I think we continue to kind of well, that is one of the reasons why I think if you see the the RevPAR premiums that we've got and another as company industry, I think we couldn't be able to see because of our focus approach with data customer. Even based on on the loyalty and how you have maybe, you know, used the data and and restart RF parts. And my third point is, you know, what is the breakup between the ODA, our own platform and agent or the agency network? And how do you see that evolving over the next three, five years? Thank you. Yeah. Sure. Sure. I think the ODA percentages for us has been approximately about 22% or so. I think that is the OTA percentages that is there in the network. And if I look at our own TAG website and our call centers, that's been another taken together, will be another 22% or so. Twenty two minutes. So between the two, I think it has been fairly steady, actually. And, obviously, during this pandemic period, because the reliance has been on the transient business, I think we have used OTAs to drive some traffic, actually. But but, yes, I think 22% each between OTAs and the number, actually. Hello? Yes. Can you hear us? Can can were you able to hear my response? Yeah. I think it was broken, but alright. I could yeah. I think what I did my last question Yes. And and do you see that evolving over the next three, five years? So, obviously, I think I think, you know, this is an area that we are clearly working. And one of the big areas that we are clearly working on is on, as you as you rightly mentioned, loyalty program plus the websites. The significant investment happening in both, actually. And and on over the last three years, we have seen significant improvement in terms of the website and the call centers to drive it up to the 22% that we have achieved today. So that's an area we should continue to grow for a very for sure, actually. And I think in terms of our partnership with the these strategic elements there and there will be tactical elements there. We'll continue to use both of these in terms of driving it up. But our key focus, obviously, is to drive the loyalty and the website and our call center business section. Alright. Alright. Thank you. If if I could just push in one more. You see, the leisure has been the leisure segment has been doing well. When you look out, of course, it's a guess, but over the next three, five years, the incremental could build up. Would you want it more towards the leisure side or you would actually want to be counter intuitive and build up the business hotel segment? Just your thoughts on it. Thanks. I think I think we do continue to dominate the leisure segment in the industry. So if you see, we dominate the different leisure destinations of Kerala, Goa, Rajasthan, and now we are seeing Shimla, Rishikesh, and other destinations. So we are the leaders in the leisure segment, and we will continue that work that is happening. I think we, of course, see demand in terms of new hotels in other destinations. So I suppose that I think in the pandemic with leisure kind of driving the recovery, we are fortunate to have dominated. So I don't think we can kind of comment that one will be more than as far as we are concerned, we will continue to have a balanced portfolio across both business and leisure and across all the key destinations, actually. And and and the other point to note is that, you know, if you look at the key cities of Delhi, Jaipur, Goa, Bombay, Delhi, Bangalore, I think we continue to have significant number of hotels and therefore continue to dominate market share actually. So I think we also look at market share dominance as well, which will allow us to get a more than a proportionate share of the business in all these places. Alright. Thank you for that. I think we will probably just or the moderator just we'll probably take the last five minutes in terms of questions. And I think if you're not able to take any more questions, then don't worry. I think I'm available, and we can always schedule calls to get into a lot more detail. So maybe we should just use the last five minutes for a couple of questions, please. Sure, sir. The next question is from is a text question from the line of Deepika Mundra. Deepika Mundra is from JPMorgan. The question is, given that 3Q is seasonally strong, could the momentum slip in 4Q? What is the outlook on debt increase from here? What is the outlook for business travel and hence Mumbai Delhi properties? Yes. I think we did answer that, Deepika. I think what we said is that if you look at the fourth quarter considering if you it be I think we continue to see strong momentum in Q4. I think that is something that will continue. As far as the debt levels are concerned, I think as I pointed out, there has been a significant drop in the incremental debt post September with the recovery of business. And that is something that we are closely tracking to to make sure, in fact, that then with EBITDA turning positive in in many of the hotels, I think our operating cash requirement has dropped dramatically in stand alone, actually. So therefore, I think it's near breakeven in terms of operating cash requirements. Of course, we will still have to look at funding some of the, what do you say, international properties. Those continue. So I do think that debt levels will will kind of start to get much better in terms of the incremental debt requirements. So that is continues to be an area of focus. As we and as the quarter passes by, as the people clarify better. And also if you see the cost of debt, that also is being managed quite efficiently at this point in time. Can we take the last question now please? Sure, sir. We take the question from the line of Achal Kumar from HSBC. You may go ahead please. Yeah. Am I audible? Yes. You are, Anjan. Perfect. No. I just had one question. Basically, we have space to one. Is that in terms of cash burn rate, how that has moved, you know, quarter to quarter and now where we are? And how do you expect it going forward? And if I can squeeze in a last question, in terms of your in terms of your in terms of your cost, how the cost evolved and how do you see the cost evolving of what I mean to say is that so so what I mean to say is that assuming that you were operating at pre COVID levels and then now because of your cost restructuring, how much of your cost you you think you can permanently throw out of the business? So if you could please help me on these two. Yeah. I think the second question we did answer sometime back. I think what I what I what we said is that the sustainable fixed expenses at this point of time has been about $1.20 crores a month. And I think we have seen savings of between 40 to 45 crores a month on fixed expenses that we are seeing. And so the attempt now as we go forward is to make sure that we can and maybe, Anshul, on this, maybe we can have a separate discussion. On the first discussion, as I just clarified, I think with the resurgence in business, I think we are seeing operating cash requirements has come to nearly a breakeven, actually. And and, really, what is happening is the 100 crores, actually, in terms of cash burn. And in December, it was just about 12 crores or so. Positive, actually. So, therefore, I think there has been a massive shift in terms of the cash burn between April and now. And I think so I think we keep as I said, we keep a very close watch on this. And you saw that in the moment of debt levels as I told you in from the presentation. Up to September, if you see, the increase in debt levels was significant. But post September to now, it has been kind of contained significantly, actually. So this, again, is something that we can take up separately, Anshul, actually. Not a problem. Not a problem. I think yeah. Perfect. Thank you so much. Yeah. Thank you. Ladies and gentlemen, there are a few more questions. However, due to paucity of time, we will not be able to answer all of them. I now hand over the floor to mister Giridhar Sanjeevi for closing comments. Conference. And I think I think, as I said, we are available. I think, clearly, while this call was for about an hour little more than an hour or so, I think we are available for other conversations post today. And I think do be in touch with us, and we will be happy to discuss this in greater detail, actually. All I can say is that since September, October, we are seeing an improved performance driven by. And with all the vaccination efforts that is going around subject to no second or third wave coming in terms of viruses. I think we continue to be cautiously optimistic in terms of the business recovery in terms of the overall recovery. Currently driven clearly by leisure, But business travel, as was clarified, also should hopefully come back. And you're also seeing, you know, airline and GDP growth is also expected to come back strongly. Puneet, do you want to say any last comments before we kind of disclose? No. I'm actually a bit want to apologize to all the people. I just got a message that there has been a fiber cut at Mahalakshmi, and that has created a lag in the network. So, you know, some of our discussions, conversations, and presentations had a certain lag. So our apologies, but it's not in our hands. And and and that's another thing. Maybe to to end on this note that everything that's why it doesn't work digitally. Sometimes you have to meet in person too. So, hopefully, our next quarter call will be a physical one. So those who want to be digitally present, they'll be digitally present, and the rest, like, will in person. Thank you. Thank you so much. Thank you. Thank you all. Thank you very much, sir. Ladies and gentlemen, on behalf of IFCL, thank you for joining us. That concludes the session. You may all disconnect.