Good day, welcome to The Indian Hotels Company Limited's FY 2018-2019 results conference call being hosted by Mr. Puneet Chhatwal, MD & CEO, IHCL, and Mr. Giridhar Sanjeevi, EVP & CFO, IHCL. As a reminder, all participant lines will be in listen only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. At this time, I would like to turn the conference over to Mr. Puneet Chhatwal, MD & CEO, IHCL. Please go ahead, sir.
Good afternoon, ladies and gentlemen, welcome to the announcement, the call on the full year 2018-2019 results. Let me begin first with certain highs and lows for the year and the industry trend. For the Indian hospitality, the demand growth has been outpacing the supply. There has been a sustained RevPAR growth and an average rate growth of 2.9% and an occupancy growth of 80 basis points. On the low side, the year saw the outbreak of Nipah virus, Kerala and Karnataka floods, a depreciation in the rupee, a turmoil in the airline industry. Most of the markets performed very well, with the exception of a couple of markets, where I would say Goa came from a very high of the average of last 10 years. There was a marginal decline, but the maximum decline was only in Kochi.
All other markets really did quite well, especially for our portfolio also. In terms of the key highlights for our performance for the fourth quarter, our revenue grew by 10%, our EBITDA grew by 21% to INR 322 crores. Our EBITDA margin went north of 25%, an increase of 230 basis points, an increase in profit after tax of 52% to INR 115 crores. When we look at the full year, it's even a stronger performance with a 10% growth in top line to almost INR 4,600 crores and EBITDA of 25% increase to an absolute amount of INR 913 crores, an EBITDA margin of almost 20%, an increase in 229 basis points, a profit after tax of INR 287 crores. This is the highest profit after tax that we have posted in the last 11 years.
When it comes to our pipeline, we were able to manage our pipeline as we have given the guidance based on Aspiration 2022, by signing 22 new contracts amongst all our brands, in the full financial year. Added another four signings, which you must have read about, a few of them have been announced in the month of April. Some of these signings are iconic assets, both within India as well as in international markets like Dubai or London Heathrow. More importantly, we have given the guidance of having a balanced portfolio in which we would have 50% fee-based business contracts and 50% lease to own. Today, as the portfolio stands, after this financial year, we've been able to increase our management contracts from 32%-40% of the portfolio. There is a clear shift in the business model as we go forward.
The year also saw five new openings and 500+ keys. We have given the guidance already, in different media forums that we will be opening a hotel, four month in this financial year. We started the year with the opening of Cidade de Goa in Goa. We finished last year with the opening of Shimla and Rishikesh, which you see on this slide. The ones in May and June, we are going to announce and for the remainder of the year also. We are very confident to open 12 hotels in this financial year. In terms of some of our important assets where we had been struggling and everyone was reading in the newspapers, we were able to secure a 33-year term for the Taj Mansingh in Delhi.
We were able to relaunch the Connemara in Chennai. We were able to also extend our contract with Lake Palace in Udaipur, the most photographed hotel in the world. With that, I hand over to my colleague, Giridhar Sanjeevi, to take you through some more details on the financials.
Thank you, Puneet. This is Giri here. I think what we have seen is that as a result of focus on execution on the Aspiration 2022, quarter-on-quarter, we have seen revenues go up 10%, EBITDA go up by 25% on a quarter-on-quarter basis, PAT go up and EBITDA margins go up. So this is a consistent performance that we hope to sustain. In terms of the network revenue performance, what we have seen is on the domestic side, a room revenue growth of 6.9%, a RevPAR of 6%, and an F&B revenue growth of 9.7%, which is essentially a strong performance and above what the overall industry has achieved. On the international side, we did room revenue of 9.4%, RevPAR grew by 9.3%, and F&B grew by 9.8%, once again demonstrating a strong performance.
Coming to the consolidated Q4 indicators, our revenue grew by 10% to INR 2,282 crores. EBITDA grew by 21% to INR 322 crores, with a margin expansion of 2.3%. On continuing on profit before exceptional items and taxes grew by 48% to INR 189 crores. Profit after tax by 52% to INR 115 crores. For the full year ended March 2019, our total revenue grew to slightly under INR 4,600 crores with a 10% growth. EBITDA grew by 25% with a margin expansion of 2.29%. Profit before exceptional items and taxes grew to INR 395 crores, which represents 144% growth. Profit after tax to INR 287 crores, which represents 184% growth over last year, 101. Just on the details, I will just highlight the key items.
Our expenditure control remained consistent, where our expenditure growth was about 7% as against the revenue growth of 10%, giving us the boost in terms of the leverage in terms of the EBITDA. Our finance cost, we had a substantial saving with a total annual cost of INR 190 crore as against INR 269 crore in the previous year. All this resulted in a profit after tax of INR 287 crore. Now coming to standalone. The Q4 standalone was INR 875 crore with a 9% uplift, an EBITDA uplift of 19%, and a margin expansion of 3.3%. Profit before exceptional items and taxes was INR 243 crore, which is 23% growth, and PAT of INR 165 crore, which is 152% growth.
For the full year ended, the standalone had a 9% growth with a top line of INR 2,871 crore, EBITDA of INR 820 crore at 20%, margin expansion of 2.6%, and profit after tax of INR 264 crore, which represents a growth of 17%. One point to note is that after a long time, the consolidated PAT of INR 287 crore is higher than the standalone PAT of INR 264 crore, which is a good thing that is showing that the rest of the network has begun to contribute positively. The same similar patterns on the standalone as well, where the expenditure control was even better at 3% growth to 5% growth for the full year, while the revenue grew by 9% which gave us the EBITDA uplift. The EBITDA margin for the full year was 28.56% for standalone, which represents a strong number. Interest costs went down.
Profit after taxes were INR 264 crore as just explained. In terms of debt, we did not do any incremental borrowing on standalone. It remained constant at INR 1,784 crore. We continue to have good liquidity position of INR 282 crore, and net debt to equity was 0.33 in standalone and weighted average cost of debt at 8.2% and net debt to EBITDA of 1.83. Similarly, in consolidated, our net debt to equity was 0.44, weighted average cost of debt was 7.2%, and net debt to EBITDA was 2.11, which represents a 0.47% reduction from the opening net debt to EBITDA of 2.58. This is an area that we'll continue to focus on. These are the key highlights in brief on the financials. We will be happy to take questions.
Thank you. Dear participants, if you'd 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. Once again, please press star one to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal for questions. I would request everyone to say their name and the company they belong to before asking a question. Once again, dear participant, if you'd like to ask a question through audio, I would request you to please press star one on your telephone keypad. All right. We'll take the first question.
Hi, can you hear me?
Yes.
Good evening, everyone. This is Satyam from Morgan Stanley. I had a couple of questions. One on the cost control targets that you had outlined at the Investor Day last year, where you had mentioned around 400 basis points of margin improvement is what you expect by fiscal 2023. We know that in fiscal 2019, you have had good cost control that you've already kind of begun with. If you can share any sense of how much of that 400 basis points cost control target is already done in fiscal 2019 itself, and how much more is there to go on that? The second question that I had was on the management contract side. We have had very good, healthy run rate of new signings that we have done in fiscal 2019 and further in April as well on the new management contract side.
Based on announcements that we hear from global peers as well, clearly it seems that there is a lot of aggression on getting management contracts from other players as well. Have you seen any increased aggression in bidding for management contracts from your peers as well? As a result, are you seeing lower fees become the norm or something like that? Any outcome of that that you're seeing in your new contracts that you have signed last year? That's all. Thank you.
Okay. Satyam, the first one, I would go the reverse order on the management contracts. I think, obviously, when the competition increases, there would be certain pressure, but last year we did not witness much. However, going forward, I think there could be some pressure coming on the fees by 5% or 10%, but the fees is what, 6%-10% of the top line. That is not a big number. Important is to get those plain vanilla management contracts so we can have a change in our business model. It is also very difficult to benchmark in a heterogeneous country like India, as certain mega markets you could do with a lesser percentage of fees as the average rate in markets like Mumbai and Delhi and Bangalore is far higher than in secondary tertiary markets.
I think going forward, what we will do is in the next quarter when we announce the results or the following quarters, we might start doing some of the analysis by brand and by geography. I think it's very important to know it's which brand and what geography, because a smaller fee on Ginger is very small versus a smaller fee on a Taj brand in Mumbai or in Delhi. I think that factor we will put in going forward. The second one is on the cost side. We did say that our 800 basis point margin expansion will come 300 to 400 basis points from the cost. I think we have a long way to go on the cost side. We have just started because we are not into a cost-cutting game. It's more like driving efficiencies and finding new ways of conducting business.
That itself would drive the efficiency. I think we would have kind of started maturing on the cost side of the business in another 14 to 16 months, as some of that requires remodeling of the spaces, it requires remodeling of the kitchens. The whole journey of from a receiving to a storage to a production to a service supply chain. I think all that is a very significant part of that cost journey.
I think if I may just add to what Puneet has said, I think if I sort of look at the number, our raw material cost in standalone actually grew by 1%, and payroll cost remains flat and fuel, power and light also remain flat. I think on all these three elements, we were able to maintain the cost. Our CapEx overheads also were broadly at a flat level. In fact, we were able to save some even though our top line went up. We continue to keep a tight focus in terms of cost reduction.
Thanks for that. Just one follow-up on that. Essentially, the reason for the question being sparked is that this year we have already had almost 250 basis points of console EBITDA margin expansion on a year-over-year basis. To go to your target of 25% margin by FY 2023, the incremental run rate required is lower. That's why one is trying to understand whether a lot of cost control has already happened this year. Going ahead, are we going to see lesser benefit from cost control? Or would you not agree with that?
I think, Satyam, if you are wanting to ask us if we want to give a higher guidance on margin expansion, we need to wait, as we have said last year the same. Q1 and Q2 in any fiscal year is not the time to give the guidance, because the majority of our business is in the Indian subcontinent, and what determines the performance here on absolute terms and margin terms is mainly Q3 and Q4. We remain confident that we'll be in line with whatever we have communicated, and if there was an improvement possible, we'll give that guidance as we come towards September, October.
Great. Thanks a lot, Puneet. Thanks, Giri.
We'll take the next audio question.
Hi, this is Ritesh from HSBC. Can you hear me?
Yes.
Yeah, sure.
Can hear you.
Sure. Thanks for the opportunity and congratulations on closing FY 2019 at a double-digit growth rate. My first question is, we have been able to achieve this kind of growth after seven years. How confident we are that we can maintain this kind of growth going forward? And also on this 10% growth, how much of this was contributed by the new rooms addition? I'm looking for like-to-like growth, how much, what that number was. That's my first question.
I don't think there was a big impact because of the new additions. As I mentioned, two of the five hotels or three of the five hotels opened in Q4. All three are on management contracts, so they are not even six months in operation. They're in a kind of a soft opening phase. That's the Vivanta in Kathmandu, the Taj in Theog in Shimla, which is not in a seasonal period, and the Taj in Rishikesh, which has been in operation for less than six weeks. I think that's the three of the five. And then there was one in Katra, which is undergoing serious renovations. Mainly you can think that the 10% growth for the year is more or less like-for-like. I think the growth story becomes interesting as of this year, where I said we'll be opening a hotel every month.
As we go forward, as I said, we'll do by brand and by geography. We will also start giving a kind of comparison on like-for-like in total, because it will have some impact on our occupancies and rates. The more hotels we open new, the more they're in the stabilizing phase, they might dilute our RevPAR or occupancy, which is very normal for a growth company. That would be very important. We will start giving you guidance as of next quarter on that.
Sure. Secondly, sir, how is your direct booking shaping up? Just if you can give us a trend in past few quarters. Have we been able to build on our direct booking, because we have talked about the digital channel in the past. Yeah.
There we saw a lot of traction and improvement in our direct booking, especially during our winter campaign, through our advertising. The total almost reached through our reservation center worldwide and our own website to almost 22%. That's quite a healthy number. There is a good growth on that number. Maybe, Girish, you wanted to add something?
No, I think 22% on the reservation network and website is a good number. The HRO, which is the Hotel Reservation Office, is 48% of the business in any case. Therefore we continue to make progress on our web strategy then, and also through our loyalty programs.
That number, corresponding to the growth in the portfolio, will not show much change. For us it is important to keep promoting our own website, to keep promoting direct relationship with our customers. That's the state of the industry. Others have their share, too. Actually, for us, I would say it is a big help outside of our domestic markets, so that our reach in places like New York, London, Cape Town, Dubai, many other places, is much higher when we have a third-party business channel possibilities to add to the revenue or to sell more room nights.
Sure. Thank you. I just have one last question.
Sorry, I just got advice from a colleague. There is one number if you want to know. Overall website revenue has increased by approximately 11% for us in 2018, 2019 compared to 2017, 2018.
Okay. 11%. Sure. Thank you. Sir, one last question. This quarter, the employee cost increased by 13%. Going forward, what are the margin we were left for achieving our aspirational target? That's my final question. Thanks a lot, and that's it.
The payroll cost sometimes increases in a certain quarter because certain of our properties have a wage settlement. We don't average it out for the year, so I would not like to look at it on a quarter-by-quarter basis. I think it's good to look at it as a percentage of revenue for the year. Certain wage settlements cost more, certain cost less. On our standalone, it's just flat. There is a 0% increase in the labor cost. We don't see that trend changing going forward. Despite increase in wages, as we said before, we'll keep looking for new ways of business models, leveraging technology, et cetera, to remain efficient and relevant.
Sure. Thank you.
We'll take the next audio question.
Shriram from Sundaram Mutual. Sir, what was the ARR for the standalone entity and the room revenue for the year? For the standalone piece, if you can give the number.
Yeah. For the standalone full year. Full year is what you are asking, Shriram?
Yes, sir.
Yeah. The ARR for the full year was about INR 11,000.
The room revenue, absolute number, full year for the standalone entity?
Room revenue full year number is about INR 1,160 crore.
Okay. Sir, the corporate negotiations, how did it go? If you could elaborate on what was the ADR increase that you were able to take on those front and how do we see the ADR shaping up forward? The coming quarter, do we see some kind of disruption on account of the slowdown on aviation traffic or something?
Yeah. The corporate business for us is only about 14% or so. In terms of negotiations, we have had about 4%-5% increase in rates. I think we're just consistent with our expectations in terms of what we say, the rate cycles. In terms of aviation disruption, I think I'm still believing that the traffic is going to build up, of course, post Coronavirus. The first quarter is a little difficult to predict because of the elections and all that. Nevertheless, let us see. I think it should settle down at some point.
Okay. Thank you, sir. T hank you.
We'll take the next audio question.
Yeah. Correct sir, on this set of number this is Kaushik Rao from Goldman Sachs. Sir, what was the occupancy expansion for 2019 and for Q4?
Sorry. Could you repeat the question, please? Couldn't hear it clearly.
The increase in occupancy rate for FY 2019 quarter four.
Yeah. The occupancy overall was about 68% or so. Which grew by a little under 1% as per the full year.
For this full year. What could be for the quarter?
Quarter, I think we saw a very good rate increase, 7% or so. Occupancy took a bit of a hit then Q4, 2%.
Okay. What could be the reason for the same for quarter four?
What could be the reason for the same? I can't pin it down to specific factors, definitely.
There is one thing is, for what we experienced was in the month of March, after 15th or 16th of March till the end of March, there was a significant slowdown in pre and post Holi. That's the only thing we have seen. There was a slowdown. There was a similar slowdown in October because Diwali was this year a bit later, and so was that with Holi being a bit later. December came out very strong and so did January come out very strong. March did see a dip on that. Because March has 31 days it becomes even more relevant because February has only 28. It does have an impact if you lose 15, 16 days in March.
Right. Sir, in your presentation-
I think also in the month of March, if I'm not wrong, there were four or five weekends.
Okay.
I mean, not four. I think there were five weekends. Let me just confirm that to you. Yeah. The month of March started on a Friday and it ended on a Sunday. There were five weekends in that month.
Sir, in your presentation you mentioned that there is still a gap between the demand and supply. For FY 2020, do you expect that gap to sustain which would help you to see another good year in terms of better RevPAR?
Yes. I think so. I think the supply-demand gap is more structural, actually because you do see new supply, especially on the luxury side, taking much longer to come. As far as demand is concerned, we are actually very positive on demand because of all the international passengers coming in as well as the domestic passenger traffic. We see that demand is likely to kind of surprise and supply constraints will continue to remain. I don't think it is a one-year event. The supply-demand gap is likely to be for the next medium term, at least four to five years.
Thanks, sir. Just to ask a second question on the same term, the ARR growth for this year it was 2.9% as per the presentation what sir gave. Should we expect that ARR growth improve for the second half, considering the second half will be a key period for the hotel industry in India? Should we expect next season to be good in terms of ARR?
I think what we have said that 2.9% in the presentation was mostly overall industry. I think we have always guided to a RevPAR of about 6% plus. Therefore, I think we should continue to maintain that 6% in front of RevPAR. There may be variations. For example, Q1 may be a little different, but nevertheless, I think 6% is a fair RevPAR to go after.
Right. One last, if I can, Sir. I nternational properties did well for you this year. We have seen 10% growth in the revenues. Can you throw some light how the performance would be in FY 2020, and what was the key highlights for FY 2019 in terms of performance?
I think on the international properties, all the properties did very well. In fact, I think we continue to focus on U.S., The Pierre, Taj Campton Place, as well as St. James' Court. I think all of them have done very well in terms of business performance. Do you want to add anything, Puneet, sir?
Yeah, I think despite all the news on Brexit, we are very well-positioned in London to take benefit. San Francisco is doing very well for us. We've been able to improve significantly the performance in The Pierre. Dubai is stabilized at a low level. It's been under distress. Generally speaking, we think it started also very well. The international properties in the month of April have, till date, done quite good numbers on the top line. For us, we would be happy if this trend continues, I don't think anybody today can judge with certain amount of confidence what is going to happen in London, what is going to happen with Brexit, what else will happen.
I think I can only say what as figures stand today, everything is looking good, and we feel we are very blessed to be present in the two largest lodging markets of the world, namely both London and New York.
Right, sir. Okay. Thank you, sir. I will return it back to you. Thank you.
We'll take the next audio question.
I think while we wait for the next audio question, there are a couple of questions which have come on the Slido system. Let me take them up one by one. I think question number 1 from Salil Garga is, "What are the plans for capacity addition in FY 2020?" As we have clarified, we have signed a number of management contracts, and we expect to open a hotel every month. If on basis that plan, I think in 1920, we should open approximately about 1,800 rooms in the current year actually.
Yeah. I think assuming 1,800-2,000 rooms in operation this year would be what we can provide guidance for.
Right. The second question, which is there on Slido system, "How do you classify the rooms between owned and under contract? And what is the number historically and what has been the trend?" I think the management rooms are around 4,900 out of the 17,823 rooms. Owned in IHCL is about 4,350 rooms. In the group, we own about 8,500 rooms. I think these are the two questions that I have on Slido system. I don't have any other question on Slido system.
Yeah. Hi, this is Shalin from UBS.
Yes, Shalin.
Giri, if I heard it right, you said 7% ARR increase for this quarter?
We had a 7% ARR increase for this quarter, fourth quarter, standalone.
Standalone. Any sense on console?
Any sense on console is a little hard. I think you have to look at it more in terms of the network, actually. Console, what happens, Shalin, is that it gets consolidated differently. Like Orient Hotels will come at a one liner.
I think if I look at it from a domestic perspective, the room revenue did grow by around 8% on a network basis, ARR did grow by more than 6% actually.
Got you. Okay. That's very impressive, actually. The corresponding number, if I go by my notes for last quarter, was 4.6%. This year, we're talking about this quarter, we're talking about 7%. That's the reason we are seeing a significant jump in your EBITDA margin for this quarter in the standalone. There's a deflection. Your EBITDA margin has improved significantly from last quarter in standalone, but not so significant in the consolidated, and that's the reason for this. Great. That's I want to understand. Pretty much in the right direction. Most of my questions have answered. One question, I want to understand if I look at your PAT doing at console around INR 280 crore, depreciation we are doing roughly INR 330. INR 600 crore of cash flow without considering the working capital we able to generate and our debt has also increased marginally.
When do you think that you will start reducing the debt? Because I don't see much of the capital also happening over here.
I think we continue to be very strongly focused on debt, Shalin. I think as we saw in the consolidated debt, EBITDA was about 2.11 and our debt to equity was about 0.44. I think what we are now seeing is that the cash from operations will be good in terms of meeting all our requirements, actually. Then, of course, we continue to focus on whatever we can do on asset monetizations as well. So while there are going to be some repayment of debt as the rent is coming up in the current year, while we are planning to refinance, I think you will probably see as we go forward with the monetizations also, we could bring it down. Our target is to bring down the debt EBITDA and debt interest further during the current year.
Sure. What's the CapEx plan for this year and the coming year, FY 2020?
The CapEx plan?
The CapEx plan always stays the same, which we have given the guidance. One is system-wide and one is the revenue that is reported. Basically anything which is 4%-5% of system-wide revenue. Our revenue system-wide would be around INR 8,000 crores. You can assume INR 350-400 crores as the total CapEx expenditure. If you want to take only of the reported revenue, which is this year INR 4,600 crores, it will be around INR 250 crores. That's a very standard amount that we have. I think we would be operating within that level. That's a standard accepted guidance globally for the hospitality industry.
Sure. The last bit, of the 12 hotels which you're talking about, all will be management contract or is there any of them is a part of a group or IHCL?
There is one which, if all goes well and opens in time, is the Connaught, in Connaught Place in Delhi. We are hoping to open it by end of January or early February. It would have been open for six, seven weeks for this financial year.
Sure. Cool. That's it from my side. Thank you so much, and best of luck.
Thank you, sir.
We will take the next audio question.
Yeah, hi. Sumant Kumar from Motilal Oswal. For FY 2019-
Hi.
Yeah, hi. For FY 2019 subsidiary EBITDA, the consolidated minus standalone was around INR 100 crore versus around INR 42 crore previous year. Could you please discuss the key subsidiary performance? How the key subsidiary like U.S., U.K., and other domestic subsidiaries like PM performance for the year and for FY 2019?
Sure. Fundamentally, I think one of the things we are focused on is to make sure that not just Indian hotels, but also all the other companies do well. If I look around the patch, I think PM Hotels have definitely done better. In fact, their performance top line went up by around 16%. I think those you will see in the subsidiary balance sheets coming through. Roots Corporation also improved in terms of top line. Benares Hotels is a small company, listed company, that also went up significantly. The U.S. top line went up by actually 17%. St. James' Court Hotel also went up by nearly 19% or so. Taj SATS went up around 8%. I think across the patch, you will see that all the entities have performed positively. Therefore, we will see overall improvement through the line.
When you talk about the 17% growth in U.S. business, is there any improvement in operating performance?
Yes, there is. There is actually.
Could you please quantify the EBITDA of the respective subsidiary like U.S., U.K., and PM?
Yes, of course. Yeah. In fact, I think if I just look at The Pierre, Campton Place, and St. James' Court, I think the swing in performance is maybe about, what do you say, $6 million or so in terms of the swing. Therefore, that is a very strong swing in operating performance.
$6 million U.S. dollars you are saying the swing in the EBITDA?
Swing in the EBITDA, yes. It's a little more than INR 6 million. In fact, it's about nearly INR 7 million actually.
I think the EBITDA.
The cash profit level went up by around INR 7 million or so in these three hotels, which is Pierre, Campton, and St. James' Court.
These are the three hotels that are driving the international performance and are very relevant in our margin expansion story as well as our absolute improvement in EBITDA.
What is the EBITDA loss for U.S. business in FY 2019?
Yeah. EBITDA loss is just under $9 million.
$9 million.
It's only Pierre and Campton. Sorry.
I think if you add the profit in one and offset it against the loss of the other, we are talking about a positive of INR 4.5 million for these three hotels together. Pierre, Campton Place, and St. James' Court. It's around INR 4.5 million positive.
Okay. What about the PM EBITDA?
I think we can take that offline. I'm not sure if we can give individual EBITDA for every property.
Okay.
We have confidentiality clauses with certain owners and co-op, and we don't want to be in that breach.
Okay.
As this hotel is owned by a co-op and we are a tenant
Okay. Talking about the Q4 performance of subsidiary, I think it is flat. The EBITDA loss was at INR 10 crore and at the same level of the previous year. What was the key reason where we have not seen an improvement in the key subsidiary like PM and U.S. and U.K.? Also, losses in U.S. have increased in Q4.
I think maybe it's got something to do with the change in currency. Otherwise, if you actually look at the amount and put that 10% depreciation in the currency, it would be the same.
Okay.
Also this we can get back to you by tomorrow.
Okay. Talking about for Indian Hotel, what will be the impact on the Ind AS 116 on our return ratio on the new accounting policy?
On Ind AS, we are kind of evaluating. We will have a separate conversation around the impact of Ind AS. Clearly speaking, under the standard, all the leases are now being classified as financial leases. Therefore, directionally what will happen is that the lease rentals will go below the EBITDA line, and therefore the EBITDA % will improve. Having said that, the depreciation and interest would come through, and therefore, this will have an impact on the PBT. On the balance sheet side, there will be a capitalization of those leases, especially where there are fixed leases, actually. This is something that we are still in the process of evaluating, and we will talk separately on that.
Okay. Sir, for Q4 FY 2019, you talked about the dip in occupancy by 2%. What was the occupancy in Q4 FY 2019 for your standalone business?
The occupancy in standalone last year was about 75.8, or something like that.
Seventy-six.
76 and 74. Yeah, that's correct.
76. This quarter will be 74%?
Correct.
Okay. You said the 2% decline in your occupancy and the standalone business have ARR growth of 9% in this quarter?
No, I said about 7% or so in this quarter.
Oh, 7% growth in ARR.
Yes.
For a standalone.
Yes.
Okay. Thank you so much.
We'll take the next audio question.
Hi, this is Bharat Sheth from Quest. Congratulations on good set of number. Puneet, we are talking of adding around 1,800 to 2,000 rooms in FY 2020. Can you give some color key which brand will be more, how our portfolio mix will change, which geography, if you can throw a better color?
Yeah. Almost all hotels will be domestic. Almost you can say 900 rooms will be added under the Taj brand.
Okay.
Another 500 under SeleQtions.
Okay, great.
We are hoping a minimum of 500 rooms also with Ginger.
Okay. When do we expect that Santa Cruz Ginger to come up? What is the status at this level?
Sorry, I couldn't understand the question.
We're working on opening a new Ginger at airport in Santa Cruz.
Yes.
What is the status of that?
We are progressing, we are in the final negotiation with the general contractor for the terms of the construction of the property. We are awaiting the final planning. The preliminary planning approval has been granted. Now we're going for the final planning. It will take at least two and a half years to open. It will be a real flagship property with 375 plus rooms.
Okay. Any color, how do we look at ARR for FY 2020, overall for domestic and international business? Both separately-
I think you should go by the guidance that we are talking about is that, 6% RevPAR is probably a fair guidance.
You said that pre-Holi and post-Holi, we see some dip in occupancy in Indian market, domestic. How was the April?
How was April?
I think April and May, both months are significantly impacted by the elections. For example, you do not get government delegations, visiting heads of states. I think all that will start coming as of June. Last time, I'm told by my colleagues, when there was elections last time, we saw similar trends. In April, we have not seen a dip worse as last year. We're more or less flat in terms of revenue. May and June, we will see what happens. June outlook looks very good. We have to say April was okay. We have to see how May will perform.
Thanks, wish you all the success.
Thank you.
That's all.
What I will do is that there are a couple of questions which have come on the Slido list. Let me take that. One is that, what is the reason for the increase in other income? I think other income includes the sale of apartments, about INR 14 crores or so. That is kind of included in other income. The other thing is, second question is throw some light on domestic subsidiary, but that is something that we have answered in some of the earlier questions. What is the growth in foreign guests in India with respect to foreign tourist growth in India?
You have to ask that of HVS or STR.
Correct.
We get that data historically. I don't think they've come out with that data for the last financial year.
Yeah. There is a question on what is the management contract revenue for FY 2019, and what is the total pipeline of management contracts from Deepika. I think the management contract revenue was about INR 157 crores or so, which will be made, and reimbursements were about INR 66. In all, beyond about INR 222 crores on management contracts including fees, actually. That pipeline of management contracts, as we mentioned, we expect to open one hotel a month, and most of these are management contracts. Pragati Maidan, of course, I think there's a question on the update on Pragati Maidan, right? I think we did not bid, therefore, ultimately, we are not in the project. The other question which has come is what are the initiatives taken to increase food and beverage revenue across properties and what are the expectations for FY 2020?
I think our F&B growth continues to be strong, double-digit growth. This is driven by both restaurant income as well as the banquet income. They continue to be very strong. We will continue our efforts in terms of driving this. I have one more question. JV and associate performance we spoke about. Guidance on 20% EBITDA margin expansion. I think it's in line with the aspiration. Payment lease back on Ginger properties, not as yet, and that is something that is on work in progress. I think we have another five minutes or so. For the last couple of questions perhaps.
All right. To all participants, if you find that your question has been answered, you may remove yourself from the queue by pressing star two. Okay, we'll take the next question. Please go ahead.
Hello? Hello?
Yes?
Yeah. Thanks for the opportunity. Can you just outline, there is an item assets held for sale in the balance sheet. What is it pertaining to as of FY 2019 around INR 84 crore?
This is basically residential apartments. Some of these have been held for sale. Nothing else actually.
Which is INR 8 crore.
Okay. Oh, sorry, INR 8 crore. Okay, and these are residential apartments?
That's where employees stay. We have always said that we are selling our residential apartments where the employees are staying. We have sold about two in the last quarter, and we have sold one in the current quarter. This is something that we will kind of monetize as we go forward.
Okay. Secondly, sir, if you can just provide some guidance on tax rate. It has been trending downwards, but if you could just provide some color on tax rate, either at consolidated level or at standalone books level.
I think standalone is more relevant to look at it because I think 37% is the standalone tax rate. I think standalone will probably head up a little bit next year because what happens in standalone is that because we take an impairment of U.S. losses standalone. This year, the losses provided were lower. Those losses do not get a tax deduction. We got a benefit where the tax rate went down from actually 48% to 37%. We expect the standalone tax rate to probably head up to 40% or so. I think that's probably a number that you should assume. We don't get a tax break on that. We have been working on it.
Okay. Sir, I'm just trying to understand why is it higher than in the corporate tax rate, especially in the standalone?
That percentage is the normal tax on U.S. losses.
Yeah, basically, I think that's what happens. I think the 35% is the basic tax rate. We don't get a tax break for U.S. losses, that takes it up actually.
Sir, I'm talking about at standalone level, only on the standalone books level. 40% is the guidance for standalone, right?
Yeah. Because standalone, what happens is that, to the extent that there are cash losses in the U.S., we fund from there. Earlier when cash losses were funded from India, we were used to add it to the investment account. We stopped that practice roughly around three years ago. Therefore, what we do is that to the extent that there are cash losses, we charge it off in the standalone P&L. Because it's a U.S. loss which is charged in the standalone P&L, we don't get a tax break for that. That is the reason why.
Okay, sir. No issues.
Actually an investment through our international division subsidiary.
Sure. Sir, just last question. Basically, this quarter, subsidiaries' performance has been quite slightly weaker, means there has been losses in subsidiary versus the first three quarter where we saw a healthy performance. Anything specific over there?
No, nothing very specific, to be honest, actually. I think not. We didn't see anything specific in terms of subsidiary performance.
Okay, fine, sir. No issues. That's it from my side. Thank you.
Very good, sir. Very good. Thank you.
I think if there are no other questions, I think I would like to close the call. If there is any follow-on question, don't hesitate to reach out to us, and we'll be more than happy to sort of clarify that offline. Thank you very much for your participation.
Thank you, everyone. Thank you for joining the call, and we look forward to speaking to you in the next quarter.
Thank you.
Thank you.
This concludes today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect your lines. Thank you.