Q3 19/20

Jan 31, 2020

Good day, and welcome to the Indian Hotels Company Limited's Q3 FY 'twenty Earnings Call being hosted by Mr. Puneet Sattwal, Managing Director and CEO, IHCL and Mr. Giridhar Sanjeevi, EVP and CFO, IHCL. As a reminder, all participants' lines will be in the 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. Giridhar Sanjeevi. Please go ahead, sir. Hi. Good evening, all of you. Thank you for joining us for the Indian Hotels Analyst Call after the Q3 results. Think we welcome all of you and for the first statement to join the call. I now pass on the phone to Puneet Chitwal to sort of start the conference. Good evening, everyone. Let me start immediately with the financial performance highlights of the third quarter. Our revenue was up 5% on $13.38 last year to $14.00 9 in q three this year. We had a 32% growth in EBITDA totaling $4.62 CR. Our EBITDA margin reached 32.78, which was a six sixty two basis point increase and a profit after tax of $2.00 3 CR, which is an increase of 26% over last year. I think, if we look at the same, on a nine month or a year to date basis, we again have the top line growth of 5% and EBITDA growth of 44% to a figure of eight fifty four CR and EBITDA margin of 24.44% aided by 116 accounting standard change, but still totaling six sixty basis point And a PAT of 280 CR, which is 63% more than PAT of last year. If we did this pre 01/16, then it would have hit 310 CR, which is higher than the full year, fact for, last year. So, so we are, kind of pleased with the performance on all four parameters. And this is well illustrated by the last ten years if we see that we have had the best q three and the best nine months financial performance in a decade. And it does not matter which metric we look at, whether it's the revenue, it's the EBITDA, it's the EBITDA margin, it's the PBT or the PAT, both for the three months and the year to date in all metrics, we are ahead and have had the best performance, in the decade. I think this has been aided by revival of the Indian hospitality landscape. You know, in q one this year and in Q2, the demand versus supply, the gap, was negative in Q1 and marginally positive in Q2. But the gap has improved in q three, and I think this is good. The q one, the reasoning might have been because it was a one off as this is an election year. And in the election year, we know that especially the government business, which is a significant part of our business, especially in our conference properties like the Taj Palace or the Lands' End or the Coromandel did take take an impact of that. But I think the entire industry did as it happens once every five years. And thereafter, there has been slight recovery, which got accelerated in Q3. Having said that, the Q3 recovery, could have been far stronger. That was the belief, that we had in the last financial year if we were asked about this year. But we all know and have been reading in the news about the general sentiment in the market or certain destinations, especially for us, which will hit like Guwahati, where we have an IHCL property or towards the December in Delhi. But generally, we are very pleased with the performance and with this trend. And this is evidenced in the next slide that we show to you on the RevPAR growth, which seems to be back on track, which had fallen to less than 3% in the previous two quarters and is coming back to around 6%. Now 6% growth on RevPAR is good because the occupancies have been at a high level for quite a number of years now. And that means most of the growth that is coming will be driven by the rate and not by the volume. On our aspiration to execution, we wanted to give you a brief update on the key highlights. As a reminder, the pyramid where we said we will go from 17% to 25% EBITDA margin, That was 800 basis point increase. We will sign 15 new projects every year and have a balanced portfolio that our growth will be more driven by asset light or management management fee contract business versus owned and leased hotels. And, I think going forward, we want to, take you through as to what we have done on that front. We have all time high on hotel signings. So last year, we signed more than 3,000 rooms totaling 22 hotels. This year to date, we have already signed 24 hotels totaling 2,800 rooms. And I think we will exceed the number of rooms signed for last year, and definitely, we have already exceeded the number of hotels signed. And today, you know, we can tell you very proudly that we have a industry leading pipeline in terms of the number of rooms added this year, which is far higher than anyone else. And some of the statistics is going to be shared by some companies like HBS or JLL in the months to come at their events. So they have shared with us. We will let them share with you, but we feel pleased to be having the industry leader position in the number of signings. When it comes to the asset light model, you will see that we had given the guidance of going towards fifty-fifty in terms of managed and owned contracts. As things stand today, we have a portfolio of 197 hotels totaling 24,000 rooms. And the share of management contracts in this stands in January at 42%, and we'll continue to increase this number to get to fifty percent first on the total portfolio and as a next step in terms of number of rooms in operation and without counting for those in the pipeline because that's a very important factor in the change in our business model in terms of our margin expansion. We had said that we will open a hotel in month in 2019. And I think going forward, we'll open more than a hotel a month. We have already opened nine hotels in the first nine months of of this financial year, and we have had one opening in the month of January, the Fadhir Prakash Palace in Udaipur to complement our Lake palace as well as our convention and wedding resort destination of the Taj Aravalli also in Udaipur. So this is our third property in Udaipur. After that, as we speak today, we are opening the Devi Ratin in Jaipur, which will be a part of our selections plan. So that takes the total number of openings to 11. We have also giving you for the first time guidance on our pipeline. You'll see that Taj has 12 hotels in pipeline totaling 2,547 rooms. Under selections, we have three. And then Vivanta, there is another 12 properties of Vivanta and 13 for Ginger. So 84% of all these hotels in the pipeline is managed. We have one hotel which we have guided to Connaught, which is, which is a licensed asset. And otherwise, and and about to open in April, but we are very pleased to see the trend, that what we had promised of adding contracts on a fee based model is what we are demonstrating to you here on this slide. Then when it comes to the RevPAR growth in the Q3, the RevPAR growth in the market was 1.8%. We did very well by doing double the market at 3.6%. In Q3, the growth was at 5.5%. We did 5.6%, and we did trade off by not changing our rates. Especially towards the last week of December. We could have gone for occupancy, but that's a short term thing. We decided not to compromise on rates and to maintain them at a level which obviously results directly in the profitability because your operating cost per room after a certain level, does not translate always into profitability unless you go for a higher rate and the higher rate translates directly into profitability and the flow through is much higher. Just a snapshot on the RevPAR growth in key cities. These key cities are very important because we are very heavily represented in these key cities. So the RevPAR growth in key cities remains very strong. Mumbai is at plus 8%, Delhi at plus 7%, Chennai has seen a growth after the water scare in Q1 and Q2. The Q3, Chennai came back very strongly with a double digit growth of 10%. Hyderabad was also at plus 9% and Bangalore also a double digit growth of 10%. Then, as we have also guided to you, we have been very focused on alternative revenue streams. We had relaunched chambers. We have had 200 additional global members. Some upgraded their membership to global. Some are new members. So I would say half is new and half is migration to global. That created 30 CR in terms of incremental revenue for us. We've remained focused on a smart strategy we said, which is a combination of asset light and asset heavy. Whenever there is an opportunity to have a brand enhancing proposition like we had with the Fadhir Prakash Palace or like we have with the Kannot. We would take small stakes or small investments or we'll move for licensing or leasing. And otherwise, we will be very focused on margin enhancing growth with which is fueled through asset management, that's the A, with strong relationship with the owners that do more hotels with us and a continuous tracking of our portfolio. Further, we have taken some of our food and beverage brands also global. We have the have had the relaunch of Bombay Brasserie in Cape Town. We have added Shamyana in the newly opened Jumeera Lake Towers in Dubai. For those of you who know Shamyana from Tajmael Palace in Colaba and Mumbai know that it's a very, very well recognized brand. We are taking House of Ming, which is from Taj Mansingh to London. We'll be opening in a couple of months. And we are also expanding Golden Dragon. We just upgraded our Chinese restaurant in Coromandel in Chennai to Golden Dragon and are going to convert the one in Santa Cruz also to Golden Dragon as that's a brand people really like. We are also now scaling up our Sano brand, the new one now. And the first brew pub or the micro brewery with the name Seven River is to be launched in Bangalore. Works are almost 70% complete. So by April, we think we would have opened our first microglomerate followed by the second in Goa, and more to come. And we have now 13 ARMA stays and trails bungalows operational with another six in pipeline, which will be opening over the next two months. So that's that's an update on some of our new initiatives. But we are more proud to announce that Ginger brand, which we are very much focused on in the last few years, has now achieved the fiftieth opening and totaling 4,500 keys across 35 locations. You must have noticed that it has another 13 in the pipeline. Actually, that number is already been overtaken. We'll be very soon announcing another one, which we just signed today. So so we have another 14 in the pipeline. And now we will also be, going for some big box ginger properties as some of you know and have read, starting with the one which is in Santa Cruz where we received, the initial planning permission for the IOD from the government a few weeks ago. 12 of the gingers were repositioned into the LeanLux segment. They were renovated and, 50% would have been done by the end of this financial year. And within the very first few months, the average growth in Q3 for the average room rate in the Ginger, in the repositioned Ginger in the new LeanLux segment is around 26%. And RevPAR growth for the first nine months in Ginger is 7.4%, really aided through the repositioned brand and the repositioned new customer proposition and the highest ever TripAdvisor score of 4.27. Also, wanted to give you a highlight on our operating cost base, and that is pretty evident that our raw material costs have if we compare the nine months of the last four financial years has gone down from 23.3% to 21.6%. The payroll cost has gone from 34.9% to 33.1%. Fuel, power and light has gone down from 6.6% to 6.2% and other expenditure has also declined from 28.7% to 27% for the first nine months of this year. You some of you might wonder that in Q3, there may be a number that shows increase, but that is really because of certain wage settlements, which as per law coming into certain properties. So like in Q3, we had Potashmail Palace Tower, which will now come the next time in three years from now, which might distort the figure for a quarter. But I think we have to take some of these costs on an annual basis because on a quarterly basis, they do show certain deviations. We have also continued our journey of margin expansion, which we, already started in q four when we announced the aspiration 2022 in February. Those of you, who were there will remember when we did the first Capital Market Day. And we had a a very, very good q four, and we've still been able to build on that base and have been continuously expanding our margins at an EBITDA level. And I think the highlight has been that, for this year, year to date, we are already sitting at six sixty basis points for the first nine months of this year. In summary, before I hand over to my colleague, Giridhar Sanjeevi, There is a strong performance exhibited across parameters with highest number of hotels signed in any financial year ever. We have significant growth in portfolio on the basis of an asset light model. We opened one hotel a month in 2019, and we are geared to open more than a hotel a month in 2020 based on the pipeline that we have. We have higher Q3 RevPAR growth compared to industry in 2018, 2019 and twenty nineteen, twenty. We have created alternate revenue streams as well as going forward, these revenue streams will create values in those individual brands. Ginger reaches a milestone of 50 hotels. LeanLux positioning of Ginger is delivering is beginning to deliver strong results for Ginger, which we will keep you updated on quarter by quarter basis going forward. And we are continuing on our journey of cost optimization and EBITDA margin expansion. Over to you, Mr. Sanjeevi. Thank you. Thank you. Over to the financial update now. Building on what Mr. Chattwal has said, I think the consolidated reported P and L statement for Q3 essentially reflects the different parameters that were highlighted. The revenue per operations grew as a result of our working all the different revenue levers, number one being the room revenue, number two being the F and B growth, number three being the alternate revenue streams like chambers, etcetera, and number four is the growth in management contracts. All of these have helped us in terms of driving the revenue from operations. The non operating revenue represented sale of apartments that we did in this quarter, which got us about INR 30 crores or so in terms of profitability. As a result, EBITDA margins went up. The finance costs are well managed. We had an event in terms of the refinancing of debt, which we were able to do at lower cost. So that is also will help going forward. On the provision for tax and other items, there are no other exceptionals to sort of note. And fundamentally, the profit after tax came up at INR203 crores, which is a significant increase from the previous quarter. Exceptional items, nothing much to note except on other income had a sale of flats of INR30 crores or so. On a nine month basis, the performance effectively reflects the cumulative performance of the first three quarters. It reflects by first, as we just said, on revenue, cost parameters, finance costs, sale of noncore assets and others. And also the tax deferred tax impact that we have positive impact we had in the previous quarter. All of this translates to INR $2.80 crores of PAT. And I think what is to be noted is that last year, we ended the year with INR $2.87 crores. And I think in nine months, pretty much, we have kind of set the same number in the current year. So so I think that is a positive development here. On the exceptional items, again, this year, there were no specific exceptional items which impacted, and sale of flats included in nonoperating revenue has been about 62 crores or so. In terms of the network revenue, I think what we saw was that the domestic business clearly grew. Boomer revenue grew by 11% and F and B revenue grew by 7.1% and RevPAR was 5.6% as highlighted. On an international basis, this is, of course, a network related growth. The UK and The US properties have done very well. And I think that is reflected in the performance of The UK and US properties. On the F and B revenue and room revenue, there has been some decline, but I think you should look at the own properties which matter, which is UK and The US properties. In terms of the network revenue, nine months, essentially, it reflects again the RevPAR growth, room revenue growth of 8.5%, F and B revenue growth of 4.4%, and the international business did better on a nine month basis actually. UK in particular has done extremely well and U. S. Losses have been also contained actually. Moving on to stand alone. The stand alone reflects the total revenue growth of 9% to INR $8.90 crores. EBITDA was at INR $3.53 crores and the PAT was INR 168 crores for the quarter. If I look at the quarterly numbers, it effectively reflects the our efforts in revenues, cost optimization, finance cost optimization, leading to a Q3 PAT of INR168 crores. On the exceptionals, nothing much to report on exceptionals for the quarter. On the nine months performance, total revenue crossed INR2000 crores, a 6% growth. EBITDA was INR646 crores. EBITDA margin at INR 30.43 crores and PAT of INR $3.00 9 crores. You will see that the PAT went up from INR 99 crores in for the nine months in the previous year to INR $3.00 9 crores in the current period. This was aided by number one, improvement in operating performance number two, the non core asset sales and number three, interest cost optimization and number four, the deferred tax credit of 87 crores that we received in the previous quarter. All of these have helped. Plus, of course, last year, we had exchange losses, which in which impacted the performance. This year, we did not have any, what do you say, the translation losses, actually. So all of these factors helped in terms of a significant increase in PAT from INR99 crores to INR309 crores. On that is what the nine months P and L reflects as we just discussed. Exceptional items we discussed again. And I think one point to note in exceptionals is that you will notice that The U. S. Losses have been lower by about INR 5 crores, INR 27 crores for the nine months as compared to INR 32 crores, reflecting our continuous efforts in terms of trying to manage The U. S. Cost function. Cost optimization, as we alluded, the corporate overage has gone down from 7.7% in the previous year to 6.8%. Raw material costs have gone down by nearly 1% to 21.6%. The heat, light and power costs have dropped and payroll costs have also dropped actually. So we continue to focus on comprehensively on our cost optimization. In terms of unlocking value through simplification and monetization, we sold land in Pune, which was done yesterday, about 63 crores or so. Residential apartments, we sold about 73.2 we realized, 73.2 crores. And through simplification and reorganization of shareholding, we realized sale proceeds of our shareholding in Taj Mahalan's Flight Kitchen of INR29.8 crores, giving us a total monetization of approximately INR175 crores or so. And that effort will continue and these monies are being used to reduce debt actually. So this will continue to simplify and unlock value as we have said as part of our aspiration to 2022. And the next one is really the improvement in net debt to EBITDA and net debt to equity. As you can see, right from March 16, when we were at a peak of 6.47 net debt to EBITDA and 1.65 of net debt to equity, it has come down to 1.76 now in terms of the net debt to EBITDA and 0.34 in terms of net debt to equity actually. I think that is where the presentation ends actually. We'll be happy to take questions at this point of time. Thank you, sir. Participants, if you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question. We'll pass for just a moment to allow everyone an opportunity to signal for questions. I will request everyone to say their name and the company they belong to before asking a question. We will now take our first question. Hello? Hello? Yes. Please go ahead, sir. Yeah. Sir, from Dollar Capital. Thanks. Thanks a lot for for the opportunity, and congratulations from great set of numbers. Sir, first, a bookkeeping question. There has been profit profit from joint venture stroke associates in this quarter, whereas there has been law losses in last two quarters. Can you just help to clarify this? The reason for losses in previous two quarters and the profit in this quarter? So I think I think the way to I mean, I think I mean, let let me let me answer this question. I think, basically, Himanshu, I think if you see, what we have tried to do is to try and make sure that not just Indian hotel stand alone, but also the rest of the network, which is all the other companies also improve in performance. So what we have seen this time is that there is an all round improvement in performance across the network. So number one is that the Roots Corporation, we said, has improved. Banaras Hotels has improved. US losses have come down. St. James Court has done very well. In terms of to start GBK hotels has done better. Start that has also improved despite the loss of jet business which happened. So therefore, we have seen all round improvements in across the different entities, actually. Okay. Got it because maybe we can pick it up offline. But I think message to the analyst is that to those on the call is that it is not just the stand alone, which is where the performance improvement has taken place, but also across the network. Fair enough, sir. So, secondly, if you can just provide I I know we are there is almost a pipeline of 5,600 room and 82% of that is management contract. But in terms of room count, if you can provide in stand alone, like, what would be the room count that will come in stand alone over the next twelve to eighteen months, fifteen months? So what happens in stand alone is that all the management contract income is booked in stand alone, actually. So therefore, as far as the entire pipeline is concerned, except the ginger, which has its own p and l, I think you will see that it comes in stand alone. In stand alone, the two properties the three properties which have come on to the p and l have in touch, Kannimura last year, which came back after the renovation. As you know, we signed up to the Patiprakai, which opened which we took over on January 1. So that the p n if we take on the p and l. And third, Kannot in Delhi will come on stream sometime in the month of April or May. I think these will be the three which will kind of come on to the p and l. And undermanned, of course, came on stream about a year ago. So these are the four. Undermanned, Panimara, and will be the two properties where we'll get the benefit of the full p and l. And the all of the management contracts except Ginger, we booked the management income in a stand alone action plan. Got it. That's it. Thank you. That's it from my side. Thank you. We take our next question. Hello? Hello? Please go ahead, sir. I congratulate on good set of number. This question to Puneet. Puneet, in your initial remark, you have mentioned that December because of this in protest against the aid has impacted, which has largely now has happened in January. So any color that how this occupancy is getting impacted because of this protest? Well, the occupancy has stayed quite resilient. But as I said, we could have gone I think I would clarify once more. We could have gone for higher occupancy, but the the rate, if you reduce the rate, then the climb on that staircase takes much longer. So we took a conscious decision, instead of going for a 100% occupancy to go for a lot of our properties and assets, 90 plus, but we maintain the rate. So that was a long term decision because once you start reducing rates, it's a very difficult climb back up and has an impact also on your profitability. But your occupancies have grown and will continue to grow. Okay. And second thing, Puneet, I mean, in q three, because of the reduction on GST, So how much that has helped us? I mean, because, ultimately, with the increase in the rate, I mean, customer ultimate billing may not be getting impacted. So benefit of that, we have seen. And going ahead, how do we see that? I think policymaking does not have immediate impact whether negative or positive. It takes a bit of time. However, unrest or, like, you know, current health hazard kind of virus, these things have immediate impact. So policymaking, it takes time because you have also got contracted rates for a long time. You know, have contracted certain rates, and you've sold a part of your inventory in advance. So I think the move is positive in the reduction of GST. We think it was a a very important step towards the right goal. So it will eventually assist. Having a 28% GST on on certain category of rooms is very counterproductive because of we are competing. So I think I think that we have to thank the government and the policy making people that they've taken the step in the right direction. But it takes a few quarters for that to help. Right? It does not happen overnight. That if you announce something in in the first week of October that it is relevant as of October 1, then October 10, October 11, your your margin in terms of rates starts getting added by the difference between 2818%. It's just that just does not work. Okay. And, essentially, I mean, how much CapEx we have done in FY '20 I mean and how much is we have planned for FY '21? So I think for the current year, nine months in Indian hotels, have spent about 204 crores or so, and another ninety eight we hope to spend, which means around 302 crores is what we would have spent for the first nine months across Indian hotels and other parts of the network. And the forecast is that we will do about 335 crores in stand alone and maybe another $1.65 in others. So we will spend the total CapEx and renovation of about 500 crores by March 2020. And next year, any plan, I mean? So next year plans are work work work we are working through. I think we will continue to sort of focus on revenue enhancing the, what do you say, renovations, actually. And we will come back to you on next year's numbers once they have been firmed up. We'll we'll come back to you in the next couple of months to maybe by the next investor call or so. And any color on this starting I mean, on this Jinja at our domestic airport near, which is we have the property in the place. And I need color on this moment on this, you know, Taj Lands and, I mean, near the property that we had. I mean so where where where is the current status? So on the Santa Cruz property near the airport, we are waiting now for we got the IOD, which is the intimation of disapproval, which means basically approval. Now we have applied for the commencement certificate. We hope to get it so that we can start works in six weeks' time. And, as far as Siroc is concerned, we communicated in the last quarter that we will be negotiating to close and acquire 100% share in that business. And we are very far ahead in our negotiations. It will take a little more time, and then we will have the certainty if that comes to a closure. So apart from the Santa Cruz, Ginger, are we building any new property in near future? Nothing immediately on the plan. I think what we're doing is really the Mansing renovation, which is going, I think, because that's about it in terms of Is your question related to Ginger, or is it related expansion? Any any new expansion, I mean, new property. See, we are doing a lot of hotels, but where we are spending money is on the renovation of Mansingh, on the repositioning of the Kanot, and we will spend money on building this flagship Ginger near the airport. We already own the land for twenty five years, so there is no cost of Sorry. Sorry? Other than that, at this point of time, as on this call, we neither have a plan nor are we in negotiations to build something out of our own pocket. And when do we expect in that Hello? Go ahead. Yes. Ahead. Start Mansing renovation complete renovation will be over and so and we will be able so and what level that property is currently operating or it's not operating at all? No. No. No. It is very much operating. It has four floors out of order. That's how we will do floor wise renovation. We are six weeks delayed because of the construction ban was imposed by the honorable supreme court because of the pollution in Delhi. The first few renovated products, the the all day dining machan and the chambers will be opening within the next six to ten weeks. Okay. And, sir, you will be important because of the because of the value proposition of chambers, the real new value proposition of chambers will be seen at the Taj Mahan Singh first. And, Puneet, you shared, I mean, RevPAR in Cream for our major cities. But what is the status of Goa, which declined, I mean, in q three also? So how what is the status for Goa? I mean, RevPAR, I mean, and where do we see because there we have a lot of many properties in Goa. So Yeah. It is true that Goa did not have the kind of year it we are used to for last ten years, but Goa did, for us, our Tash properties, Goa still did an average rate north of 14,500 rupees. So in a in a very high RevPAR, We've had a RevPAR increase. Although the market went down for us, Goa went up by 3%. And, we are very pleased to announce that Taj Exotica has been the RevPAR leader in its comp set for the full year last year. And both Agwada and Holiday Village have seen significant investments, in the last twelve months, and we are doing we are renovating further to reposition them where they always belong as these are, these are very iconic assets, which bring back, memories to a lot of people who really, like to go back to Holiday Village or they like to go back to Fort Agwada. And so we are, you know, we are kind of backing our crown jewels, and definitely, these two properties will continue to see enhancements and capital improvements and renovations and, you know, nicer pool and a nicer gym. We just opened a new gym in Holiday Village. We renovated around 40 villas there. So so that for us, Goa has done very well, and we will continue to back Goa. As, of course, there has been a slowdown this year, but it's at a very high level. Okay. So I I It's a high up to date market still in India. Okay. Great. And can I squeeze one more question, Sanjeevi? Yes. Of course. Sanjeevi, this derivative contract that we had taken, I mean, for acquiring the property in The US. And so when do we what is the outstanding now derivative amount? And when do we expect that full unwinding happening? Yeah. The full unwinding will happen in 2021 sometime in July or so. Because one of the contracts we unwound there were four contracts, starting up to about 108,000,000. The half of it was unwound about a couple of months ago. And the balance, we will hold till maturity because these are my four contracts, and it doesn't make sense to kind of cancel before because the market is thin and deliberate. So we will unwind it in July 2021 or near about that date. Okay. Thank you. That's all from my side. I wish you all the best. Thank you. Thank you, sir. We'll take our next question. Thank you so much. This is Nehal Cham from Hillwise. And first of all, congratulations to the management for the quick set of numbers. So my first question was the INR 500 crore number that you mentioned for CapEx, was that the system wide CapEx or the consolidated CapEx that Immunodell will be doing this year? That's the system wide, but it's consolidated. No. No. No. It's system wide because the CapEx number System wide. For what we report for IHCL would be any we have guided that on that on the on the previous calls also. That's almost four to 5%, which is half of that number. And as the system wide revenue is around 8,000 crores, that number comes to 400 to $4.50 crores. Fair enough. So I am guessing that for Indian hotels, that number will be 4% to 5% of the 5,000 crores of revenues approximately. That's That's correct. Absolutely. So the second question was that, obviously, signings and openings are something which are going great counts. Just in terms of the management fees, I'm not sure what is the Y o Y growth in revenue there, but where do you see, you know, when that can also start seeing such strong traction and growth? And I know that as a part of Vision two zero two, you have a a proportion of rooms that you want coming out of managing contracts. But do we have an internal guidance about somewhere the share of revenue that should be driven by management fees? Yeah. No. I think the management fees for the first nine months has been about 223 crores, which is roughly around 6% or so growth. And the forecast this year is about 234 crores or so in terms of management fees, which will be at least 5% plus. So I think these continue to grow well, actually. And and also bear in mind that some of the openings yeah. And and I think the other one is that this year is the first year where we are seeing the openings. So you will start seeing the full year effects starting with 2021. So we expect that the pace of growth will be higher going forward. Absolutely. I'm guessing from the year ahead, considering the number of rooms that we opened, there is at least will be a 20% to 30% increase in room count itself that will be done. And I'm assuming that the, you know, the room rates or the management fee on these rooms is more or the same. So can we expect that the management fees can grow at a rate of 25, 30% after this year? You know, it sounds like a very, very, very optimistic number. So either you're the base you're working off is only on stand alone and not consolidated. Because if you're at 20,000 room, you're saying we will open 30% more rooms would mean, like, you know, 6,000 more rooms. There are only 5,600 rooms in the pipeline. Yeah. So No. Only those are management program. That's what I'm saying. So it will not be that kind of number. Let's say, a little less. So if we sign every year 3,000 to 3500 rooms, we would open approximately 1,800 to 2,000. Yeah. Because it just takes time and some things happens in a marketplace. And this year, we think, you know, we have opened up till now 1,400 rooms. We're opening a large property in Goa, which is 300 rooms. We're opening Devilathan today, which is another 100. So so it comes to one thousand eight hundred two thousand eight hundred rooms. Maybe next year, it will be 2,200 rooms. And with the exception of Cannot, everything will be on a managed managed contract or an operating lease basis, but there is no no project coming online where there is investment CapEx involved. And that's a number we very confident about, you know, confident in terms of also absorbing the growth in a in a in a very good professional and a profitable fashion. Absolutely. So just last question on my side. I'm sorry I missed, but what was the reason for the fall in the international business RevPAR and the SMB portion? I think the international business, see, that is a network thing. So if you look at properties like Sri Lanka, which was impacted because of the terrorist effect, I think those were some of the reasons which impacted actually. But other than that, if you look for us, what matters is really U. S. And UK actually. And U. S. UK did very well. There was a 9% growth in RevPAR for London. So that matters because we consolidate actually. The USA was kind of about minus 3% or so. In fact, Camden was flat. PR was about minus 4%. Other than that, the rest of the properties was daily management contracts. So I think it's more information in terms of And that's only for q three. If we what what Mr. Sanjeevi said is only for q three. If we looked at year to date, then London is, you know, 15% growth. Yeah. And US is more or less flat at, you know, like, minus 1%. So for our portfolio. So that is that together, you know, we have to look at London and New York and San Francisco together. It's still collectively a very healthy increase. Fair enough, sir. I'll get back in the queue. Thank you so much, and best wishes ahead. Thank you. Thank you, sir. We'll take our next question now. Hi. Good evening, everyone. This is Satyam Thakul from Morgan Stanley. Puneet, my first question is to you. Hi. Can you guys hear me? Yes. Yes, Satyam. Please go ahead. Okay. Yeah. Sorry about that. Yeah. So Puneet, so my first question is that, you know, I noticed that, you know, on the slide where you talked about the key mark micro markets and what the RevPAR performance was in them. So and and those were pretty much like the bigger all the big metros. It covered that and go, I think. So in all of those, your referral growth was, you know, eight to 10% range on a YOYO business, whereas your network same store is, like, 5.6%. So which are the fees or markets which are, you know, bringing down this average? I mean, it sounds like most of the smaller towns and the frontier markets that you're getting into, that is where referral growth is just not happening. And that, you know, makes me worry because I was analyzing all your growth in properties that you have signed in the last eighteen to twenty four months, and that is tilted more towards these frontier markets than in the past than than your your portfolio, say, two years back. So is there any structural challenge in these markets where, you know, supply growth is much stronger or, you know, maybe the appetite for, you know or the demand for five star properties is not as much, which is why right now, RevPAR growth is is going to continue to be a challenge. How do you think about this? I don't I don't really agree with the comment. I think, technically, what you said is right, that the growth in these markets is eight or 9%, but the overall growth in the portfolio is 5.6%. That also comes from the fact that, you know and all the the the secondary, tertiary markets that you were talking about, they're very much related to Ginger and Vibanta branding. So as we have, you know, reimagined our brandscape, some of these brands are very relevant for those markets. We are not building a Taj in Chikmagalur or in Tawang or in Shillong. You know, we have a Vibanta in Shillong, and we have identified strategically Northeast as a very Vibanta and a ginger driven market. There's an example. Because maybe one day, it will be very good market for Taj branding. But today, the state capitals in the Northeast are just right for a Vibanta or a upscale kind of branding. So and in those markets, they these kind of hotels will do well. There is definitely a challenge when the times are a bit difficult. So in Guwahati, if there is some kind of rioting that happens and the market kind of shuts down, then it has an impact. Or we had a closure of our debt in Lankavi in Malaysia because one of the pipes which was bringing water burst out. So things like this happen in a marketplace, but the world is not built only on Mumbai, Delhi, Bangalore, Rome, London, and Paris. There are markets which in their respect are very good markets over long term and and for different kinds of brands. As I said, as long as we are not investing in a Taj branded property, then it's fine. It cost also cost much more to build a Taj than to build a ginger or a vivantar. So I think we have to look at it from a brand point of view by brand, by geography, and by contract type. Okay. Fair enough. Share this with you, Satya. When we when we meet, we can do that analysis for you on terms of openings by brand, by geography, and by contract type. Yeah. Yeah. That would that would be good to look at. Okay. And then, you know, moving on to something which I thought was more positive that, you know, in this quarter, despite the economic growth being where it is and despite this quarter having been affected by the whole, you know, CAB protest and things like that, we still did 5.6% RevPAR growth, and which is definitely better than what we did in the first half, what the industry did in the first half. So and incrementally from here, you know, next as we go into the next year or rather this calendar year, we will have the pricing renegotiations that we have done on the corporate side. That also will kick in from channel checks. It seems like that has also gone well. So then, net net, would you agree that, you know, this kind of RevPAR growth can continue or maybe even better? Or how do you see this calendar year shaping up on RevPAR growth? It seems like a leading question, Satya. And you're kind of putting a question where we say yes or no. I I personally feel that given the fact that last year or this year, Q1 was impacted by one off, that's the elections, given the fact that we had some macroeconomic challenges in the GDP growth number, where we stand the market with a little bit of outlook we have if we get through this current, virus situation or the coronavirus, I think coming from a lower base, we can safely assume a higher RevPAR growth than this year. If you're coming from a higher base, it's difficult. But if you're coming from a lower base, which is, you know, sub 7%, I think we should aim for 7% plus. That's what we have guided. So if you're starting at a 5.6, the average of two years, should it should it be seven percent, then I think we should perform definitely better than 5.6. Okay. And and lastly, Mike, I had one other question on, you know, Ginger Roots Corporation because you you shared this time that, you know, you have completed this, you know, moving 20% of your portfolio already to LeanLux, And there, have managed 26% improvement in area, which is, you know, very handsome. So has this started kind of filtering into, you know, EBITDA growth or better EBITDA growth for Roots Corporation already? Or or, you know, do you see that starting to shape up soon at least? Because this year, I suspect, you know, it might be charging off the innovation costs and things like that. But, you know, how how are you viewing the performance of Roots Corporation from here? Just say that again, Sathiya. Yeah. On Ginger Yeah. I'm saying I'm saying the the ADR improvement is very good in Roots Corporation. Yes. Yes. With yeah. So has that started to kind of flow into, you know, better EBITDA improvement at Roots Corporation yet? No. No. Absolutely. We are we are we are very focused on ginger brands since last two years. We believe in the ginger story. We have opened now fiftieth hotel. We will we are very strongly if you follow some of our signings and announcements, we have accelerated significantly the growth of ginger. And now we are talking about big box gingers like the one in Santa Cruz. You know, one hotel will have 370 rooms. So we'll be aiming for a few more bigger boxes near the airports in city centers totaling 300 plus rooms so that we give that final touch to the LeanLux brand. Obviously, on one, we are monetizing on our land bank, which we had. And the others, we will, you know, go into an operating lease or a management contract model or a combination of these. And, hopefully, before the end of next quarter, we'll be able to, you know, give some guidance on that where we stand. Have we commenced construction or not? But this it will not be like 100 rooms over 10 hotels on an average. It would be three properties giving 1,000 rooms. Yeah. Okay. Okay. Great. That makes sense. Thank you, and all the best. Thank you. Time for a couple of questions. Yeah. We have time for a couple of questions now. Okay. Sure, sir. Thank you. We take a next question. Hi. This is Sumant Kumar from OTIL as well. So my question is regarding corporate rate negotiation. How it is going on currently? And what is the expectation in the percentage term? Yeah. Business and corporate, as you know, Sumant, is only about 15% of the total business. And I think you should assume that the corporate rate negotiations have given us maybe 4% to 5% in terms of rate growth, actually. And regarding the despite of muted top line, so by the subsidiary business, we have seen a significant improvement in operating profit. So can can we say that St. James and PM and Root Corporation has performed out better? I think St. James is the best performance in terms of improvement. I think Roots Corporation has improved. And then one second. I'll just I'll just come back to you. I think St. James Roots has improved. St. James has definitely improved, but that has improved. It's been across the board. I mean, across the board, across the different facilities, actually. Okay. The PM Hotel also has a a better performance? PM PM because of some renovations has been a bit down, but because we had some dividends last year. But operating performance has been has been okay, actually. And operating level has been fine. So we so we can say that St. James and Root Corporation has given overall sustained performance? I think so. I think you should make a comment that across the board, all the companies have improved. St. In particular has been has been very, very good, actually. St. James has also been very good because it had this year of World Cup cricket. We have Wimbledon. We have all this, but this year, with World Cup cricket, we did get an additional boost, especially as an Indian brand or a brand coming from India. We did get a very, very good occupancy and rates in those months driven by by Indian customers. Okay. Thank you so much, sir. The last question, please. Sure, sir. Thank you. We take up our last question. Hello. Thank you for taking my question, sir. This is Ritika Viraj from Quest Investment. Sir, could you throw some light on the demand supply scenario in the market that we we'll be seeing in the medium term according to your analysis? I think we have explained that in terms of the green shoots that we put up in the presentation. We are certainly seeing the uptick in terms of where the demand supply gap, the balance has shifted to the demand being higher than supply. So we have started seeing that. And luxury will, of course, see the biggest gap because supply is low in luxury. And upper upscale and upscale is also the similar situation. Midscale and economy also, we are seeing the that the demand is higher than supply. So I think on a medium term basis, we should see the demand kind of being better than supply. And if you see, it compares well with the international passenger arrivals, the domestic passenger air airline passenger growth. All of this, if you see, it's consistent with those underlying macro parameters. Okay, sir. So my second question is regarding the strategic partnership that the company has announced with GIC Singapore and the deployment of 4,000 crores. So has there been any steps taken, any hotel finalized in that regards? Yeah. We did announce last quarter the acquisition of one of the properties, and that should be completed before the March. I think we should be completing it. We are evaluating now three or four other properties, and we will update as and when we kind of are ready because these are all, as you know, pre and CLT or NCLT type properties. It takes time to sort of announce, but we are working on those. Okay, sir. Sir, last question would be are there any major renovations currently the company is undergoing in any of the properties? No. I think our renovation plan is consistent with with what we have already always said, actually. I think I think the major renovation is really, at this point in time, which we are kind of doing it after we license after we won the auction, yeah, it's about a year ago or so. So that continues. Other than that, I think the others are all in line with what we have already spoken about. Okay, sir. That's it from my side. Thank you so much, and all the best. Thank you. I just want to take the opportunity to thank all the participants for participating in this call. I think we are, of course, available for separate meetings and questions. I think do write to us, and we'll be happy to take them. Many thanks for coming and joining this call today. Thank you. This concludes today's conference call. Thank you for your participation. You may now disconnect your lines.