Good afternoon, ladies and gentlemen. Thank you all for joining us today for the fifth annual Capital Market Day of IHCL. We would like to extend a warm welcome to everyone present in this room and those joining us virtually from across the globe. Before we start the event.
Installations. There is no mock drill planned for today. In case an emergency is raised, kindly consider it to be an original one. In an unlikely event of an emergency, please do not panic. Kindly follow the instructions of the hotel staff assisting you, as they are well trained to face all emergency situations. In case of medical emergency, we have first aid available in the hotel along with certified first aiders. We also have doctor available on call if required. Kindly refrain from leaving any personal belonging unattended in the hotel premise. We assure you of the highest standards of safety and wish you a pleasant day ahead. Thank you.
We will now commence with a presentation by our Managing Director and CEO, IHCL, Mr. Puneet Chhatwal, and Mr. Giridhar Sanjeevi, our Executive Vice President and CFO, IHCL. I would like to take this opportunity to invite Mr. Chhatwal up on the stage, please.
Good afternoon, everyone. Aircrafts are getting more and more occupied. Let me start the day with our presentation. Sorry, this jumped. Is titled as Aspiration When Coupled with Execution Creates Superlative Performance. That's the journey we embarked upon, the journey of Aspiration, which we called Aspiration 2022, which we officially announced in the month of February 2018. We did quite well for 6 consecutive quarters, and then COVID hit us, and Aspiration had to be stopped, and RESET was launched, which was called RESET 2020. As a reminder that RESET stood for revenue growth, excellence in operations, because those days we were very occupied with just sanitizing and following the COVID protocol. The S-E-T that follows is something we are very proud of because that started our journey of finding the right cost base for the company.
The S was for spend optimization, the E was for effective asset management, and T was for being thrift and financially prudent. Sometimes when you go through a crisis, it doesn't feel good. You're demoralized, your revenues are zero. In hindsight, I think that enabled us to accelerate the speed of change that we badly needed towards our goals. That's how a company which was traditionally at 15%, 16% EBITDA margin, was able to give a guidance under our one 2025 of 33%, more than doubling of that margin. When we started Aspiration 2022, a lot of people thought getting to 25 was a very stretched target. Some even said, "You will never get there." I think that's the, that's the setting of the context on how we did, what we did.
The good news is we started in 2018, so when COVID hit us, we were already in that journey. Had we started then, it would have been very, very difficult. We did promise profitability, but we did not promise record performance, and we delivered record performance. These figures say it all. Our enterprise level revenue, that means it includes revenue from all management contracts. As you all know, we reported INR 5,950 odd crores as consolidated, but enterprise level revenue reached INR 11,000 crores, which was a 1.5x increase. Later in the presentation, you will see where all it was coming from. We crossed INR 1,000 crore in our profit after tax. We had more than INR 1,000 crore free cash flow.
The company which was always, you know, kind of pushed with the pressure of debt for several decades, was able to talk about free cash flows and consistently, including in the month that has gone by. Our market cap increased INR 50,000 crores. Almost 5 years ago, 2017, 2018, it was at around INR 13,000 crores. It's almost a 4x increase from where we were at that point of time. Each quarter was a record quarter. Quarter one was the best quarter ever. Best quarter one in the history. Quarter two was the best quarter two. That saga continued, and we hope that this will continue also this year. At least there is nothing that makes us believe that the Q1 will be different than the Q1 of last year.
Obviously, Q3 being an absolute record, in terms of EBITDA, in terms of PAT, and we did announce that our Q3 PAT itself was higher than the best full year financial result in the history of the company. Moving on to the next slide, which says our RevPAR growth premium. We were always commanding a premium because of the strength of the Taj brand, which is really the backbone of the company. This used to be around 40%, it moved to more than 70% versus what the industry is doing. This really has happened, as I said, I'll keep talking about some of the initiatives that we have done by premium-premiumizing our portfolio. That means a lot of hotels which were not renovated, were renovated, were repositioned, were rebranded. Our brand itself was reimagined. That's the Ginger, the Vivanta.
A new one was introduced like SeleQtions. Even if we introduced new businesses like Ama or Qmin, in their own market segment, in order to stay relevant, they had to be perceived as the most premium offering to the competitors that were there. Obviously, we had the strong brand equity of Taj that really, really helped us. You'll see that in the later slides. Our market share kept increasing. All our companies were doing exceptionally well, or as they call it, firing on all cylinders. Our smart renovations. Some of the iconic assets have a lot of space, and we have never thought of sweating the assets in the way we have done that in the last few years. It keeps coming back to spend optimization, effective asset management, and by being thrift and financially prudent.
From the debt which we spoke about at the peak of COVID, more than INR 3,000 crore, getting to almost INR 1,000 crore net cash positive, and obviously also in the free cash flows. We have 1 debenture that needs to be paid off in June, for which the QIP monies were allocated. That will happen before the end of June, after that, you know, we will stay net cash positive. We have no plans to take on any further debt. One thing which we promised was unleashing the potential of our entire brandscape. We reimagined the brandscape and started delivering performance across all brands. I don't know how many of you remember. We have the hotels, we have the restaurants, we have the spa, we have the salons.
A lot of this got reimagined and renewed, and a lot of changes were made to all the brands except for the Taj. The reason being Taj was the most iconic, but was getting disturbed by putting under Vivanta by Taj. The TGH, The Gateway Hotel, also very cleverly through some owners became Taj Gateway Hotels or Taj Khazana or Taj Salon. You know, all this was not working, and we consciously embarked on the journey of House of Brands versus one branded house. Ladies and gentlemen, it was a very tough decision because people really wanted everything to stay Taj. Everything would stay Taj, then nothing would change. Change does not happen that easy or by itself.
In order to deliver on that promise, in order to bring that change, in order to become what we had set out to become, being the most iconic and most profitable hotel company from South Asia, the time to change had been long overdue, and thankfully it happened before COVID hit us. We continued to invest in our brands. You know, it's not that we just changed the names. Every change in name needed further investment, needed a different value proposition, and the results were obvious. Taj itself went from INR 4,600 crore - INR 8,000 crore revenue, and Taj's contribution to revenue increased to almost 72%.
There is a little story behind it, and that you see on the right of the slide, because 41 Taj hotels + 9 in pipeline, which was 50, became 81 + 19 in pipeline, which means 100. Doubled the size of hotels in operation, plus more than doubled the size of hotels in pipeline. A lot of the hotels were new, but almost 25 got upgraded, which for whatever reasons in the past, right or wrong, had been downgraded and were not Taj anymore. You'll see in another chart, which will come later, how the migration happened. The Taj brand was put back on some iconic assets like Fort Aguada, like Fisherman's Cove, like Taj Mahal Lucknow, like Holiday Village.
It was done just in time because when COVID came and we had phased openings, most of these properties, most of these assets were helping us in the revival and in the survival phase of the sector. Today, with the renovation, with the business being back, they are helping us after the survival and revival in the thrival part of the business. We are thriving at the back of Taj, but a lot of that revenue has been displaced from other brands, came here and was able to charge premium, which made Taj much stronger. The story did not stop. All other brands continued to grow also. Within SeleQtions, which is very recently launched, in 4 years of its launch, 2 years, we have had almost a lockdown.
In two years, the brand has grown to 31 properties. Vivanta, despite all the migrations to Taj, is also at a portfolio of 47, and total operational hotels being 48 in these two brands. enterprise revenue contribution of these brands is at a minimal, is at 16% of the total revenue, but it's quite a solid number given that the brands have been cleaned up and have done well. I come to one of our favorites, would become everyone's favorite, is the story of Ginger, which is just beginning. The story of Ginger is beginning because the name is old, but everything else that you see in Ginger is totally reimagined, and more than 50% of the portfolio is lean luxe. Ginger did a revenue of INR 300 crore and EBITDA of INR 120 crore.
I think something which we are really looking forward to is unfortunately delayed because of COVID, because of construction stop, our flagship Ginger opening in Santacruz on first of October of this year, not next year. It's first of October this year. This brand has also grown in number of hotels in operation, despite the fact that we let go of many contracts which we did not renew because they were damaging the brand. The Rail Yatri Niwas kind of proposition is not the new Ginger positioning, so we had to let them go, and some others also which were really hurting. This number that you see and also in the coming slides we'll see is about the net growth of the portfolio. Something which nobody really talked about so much till five, 10 years ago is the flight kitchen business.
We have 50% with our joint venture partner, SATS. They have 49. Today, TajSATS has 58% market share. The revenues hit almost INR 650 crores at a 20% margin. 20% margin in flight kitchen business is a very good margin. Typically, the margins in this sector would be between 6%-15%, depending where one would be. We expect to grow this business exponentially, also leveraging the group's synergies which will come through the airline sector in the future with the addition of the routings and the fleet craft, as you have all read in the newspapers. Hopefully, we will be the chosen or the preferred catering partner for hospitalities in the sky. Average number of meals served per day from TajSATS is 100,000.
I mean, that's a very big number. Not only that, we also, at the same time, started unleashing the potential of our strong existing F&B brands, as well as added some new brands. If you look at the top, you have House of Ming, the classic. Golden Dragon is also a classic Chinese in Mumbai. We have Ming Yang in this hotel from where we are making this presentation. We have Bombay Brasserie, we had, let's say, Shamiana. There are many more. Today, you'll find a Shamiana also in Dubai. You'll also find a Machan in Bhopal or at the Taj West End. You'll also find House of Ming in Bhopal or in London. There is a soft launch of House of Ming that has happened in our property in London.
The official launch is later this month in the last week. That is taking our iconic F&B brands also to other destinations. What was Bombay Brasserie as one standalone in London opened up in Taj in Dubai, then at Taj in Cape Town. Now we are converting the restaurant in Campton Place, which is San Francisco, as a Bombay Brasserie. Plus, we are adding, hopefully in other destinations, Bombay Brasserie also as a standalone concept. Hopefully very soon we'll be able to share that news also internationally. House of Nomad opened its second outlet in Goa. Seven Rivers opened a second outlet in Goa, all next to the Holiday Village.
We also launched Loya, which is our new F&B concept, and got the rights for not just Seven Rivers, but also of Paper Moon, which is an Italian concept which we also launched at Fort Aguada in Goa. We also were very blessed to have a wonderful spa platform and a brand called Jiva. Now, Jiva had its limitations, so it has, you know, kind of transitioned into J Wellness Circle, The Wellness Circle, which keeps the elements of the look and feel of Jiva. It has all those services, this is a brand which we own now 100% and there is no dispute. There was some dispute on Jiva which was not making it easy for us to merchandise the way we would have liked to merchandise the Jiva brand.
The Jiva brand under the JAYE as the newly reimagined and repositioned spa brand will talk more holistically about the wellness circle that is created and is a key learning coming from the pandemic for all of us. Other new businesses, albeit small, these are businesses for future. We created them only through incremental cost and an incremental revenue model. We have started pushing these. That's our homestay with Ama and Qmin, which is also growing very, very aggressively, both as a Qmin shop store, Qmin QSR, and Qmin as a home delivery business. Some of you might be surprised to know Qmin as QSR is already in 34 outlets. Half of them, 17 of them are in Ginger as the all-day dining concept, which has been specially made to fit in Ginger.
Every Ginger hotel over a period of next two years will also have Cumin. We also very nicely internally call it the Cuminization of Ginger, because the Ginger sits in Roots Corporation and the names which were not thought of scientifically, but just happened as an evolution, Ginger and Cumin rightfully belong together under the umbrella of Roots. This is a slide I was talking about 2017-2018. If you look Taj, the enterprise level revenue was INR 4,000 crores, which doubled. Not only the number of hotels doubled, but the revenue also doubled. Despite all the migrations, Vivanta and SeleQtions still stayed at the same level at what they were contributing.
If you take out high-performing, high-revenue hotels like Holiday Village, like Fish Cove, like Fort Aguada, like Taj Mahal Lucknow, and then still maintain the level of revenue that you had before, it's a level that we are satisfied with. Of course, it can always be more. Ginger was INR 200, went to INR 360. TajSATS was INR 420, went to INR 640. What used to be a INR 7,000 crore enterprise level revenue became INR 11,000 crore. I think there is a lot of strategic decision making, lot of science and a lot of art that went into the last five years despite the lockdown to bring around this change. Some of you are analysts, some of you are very good at modeling, and everything is obviously related to the RevPAR.
Only focusing on the RevPAR and projecting that in your modeling for future is, in our system, with the way we are growing as a fast-growing company, would be a kind of an antique model, I would say. I would only encourage you when you have questions, please come, you ask because a lot of the data that you are looking at may not be that relevant because you have to break it into like for like and not like for like. When you have high growth, you're opening the hotels we are opening. On the day one, they're not at a stabilized phase. Your RevPAR premium might look like it's as if it's going down because last year we opened 16 hotels. This year, we'll definitely open more than 20. That will have some impact.
Every hotel will not open with 70% occupancy and a rate of INR 7,000-8,000+ that is needed for the portfolio. I think that is something which one needs to carefully consider and also in terms of our new businesses and the kind of source of income, which Giri will show you later in his more detailed financial slides, that a lot of our income will be coming through our management contract model. Those numbers may not be that large, but their conversion to bottom line is very high, and that creates the percentage impact. Today, in the hospitality ecosystem, the house of brands that we have built, the kind of business model that we have built, we are benefiting from the operating leverage from the owned portfolio coupled with the asset-light growth which is driving the margins.
This was a strategy which was very clearly thought through. The speed and the acceleration of change of the set from the RESET of spend optimization, effective asset management, and being thrift and financially prudent and getting rid of the debt is what is driving premium performance for our portfolio. Of course, we had promised expansion. I remember in May at a hospitality forum, I had already mentioned when some consultants were saying, you know, all foreign brands are the fastest growing, and this one is there and that. I said, "It's all right. It's everything that has been presented is true, but as of today, it will be false." This is what happened, and we did not embark on a journey of just adding rooms and hotels. That's not our strategy.
We communicated way back in 18, S.M.A.R.T., which every industry, every sector has a principle of S.M.A.R.T. We have stuck by that. We are still doing development, which is has to be strategic, has to be margin enhancing. It is driven with the same principle of asset management, which you heard on the set. It is driven by relationship building, so that the same owner is giving you more and more contracts and doing more business with you and continuous tracking. You said you will do X, what you actually did, how you measure that, and keeping close engagement with our owners because that is the fundamental of asset-light growth. Otherwise, that goes for a toss. I think this is the principle which we have done.
If needed, we will never be 100% asset light because with Ginger itself, we have changed the concept and, you know, we said we'll go more for operating leases. Operating leases is technically asset heavy, but why would you want to do business at 7% or 8% of a top line which is very small than to. Ginger can do 50%-60% EBITDA margin. You might as well go for the revenue share where you give 25%, 30%, 32% to an owner and keep the rest 20% or 25% with you instead of being with the 7%. That would not move the needle. Neither on the revenue, because you're only accounting for the management fee income, nor for your profitability. That's why we changed that model.
If there are strategic investments, like we have done in the past, in the history of the company, in building a destination, then in the spirit of nation building, in the spirit of the good business propositions, like we did for Goa 50 years ago, like we have done for Andaman, maybe, you know, embarked on the journey 10 years ago, we'll continue to do that, and that is also what differentiates us from the rest of the pack. That is our competitive advantage, and from time to time, we will invest in our competitive advantage. That's where we are today, 263 hotels. If we account for hotels in the pipeline and the rooms in the pipeline, we are already at a 50/50 balanced portfolio. This is not for what is in operation.
For that number, we'll have to wait for a couple of years. If again, we separate from that, companies in which we have a promoter holding, whether majority or minority, then we have to wait another few years to get to the real 50/50 because then we don't have an ownership stake in that company. Very well-positioned with almost 100 hotels in a brand like Taj, which is very, very unique. There are very few luxury hotel brands, I think to the best of my knowledge, together with us, it's only 3 brands that are 100+ in this segment. Something very difficult to achieve with the kind of iconic portfolio we have and the kind of presence from the 2 top lodging markets of the world, New York, London, to the palaces and the safari portfolio.
We are also getting very close to 100 with Ginger. We have 59 in operation, but a total portfolio of 85, and together with SeleQtions and Vivanta, 78. What does this mean? What we have always said, I'm going to re-emphasize it today. This means we are now ready to add another brand in the hotel portfolio. Once you have built critical mass in two of your four key hotel brands, you can afford and start thinking of adding one more, not just because you've got the numbers, but because the space to grow starts getting limited. There is only so many Taj hotels that we can have in Jaipur, in Delhi, in Mumbai. We can have maybe 20 Ginger hotels in Mumbai or even 50, we cannot have 20 or 50 in Mumbai. There is...
slowly space is becoming relevant and also free to add another brand. Over the next six months, nine months, depending on how the market continues to evolve, on the kind of opportunities that we keep getting, if there is an ideal fit, we have certain preferences on where we want to go, what kind of brand we want to launch, but we'll also see what is it that we can afford and what will best serve the needs of our balance sheet as well as our P&L. Our growth journey, below is on the gross, where it shows 50%-100% for the Taj, and the Ginger at 85%. You see the net growth of both the hotels in operation as well as in pipeline.
Interesting is look at more than 3.5x or 3.7x increase in the pipeline in the last 5 years. Net growth in hotels, because some assets, as I said, you don't want to be in, you want to get out of those. Some get, you know, they come to the end of their term, and maybe it made sense when you signed them, it doesn't make sense to renew them. From a net growth perspective, going from 145 - 188 hotels or 43 hotels net growth, a gross growth of 53, 10 were taken out, is a number that we were satisfied with because the two years of COVID, not much hotels could have been opened the way they were.
Now, since the last financial year when we opened 16, and we think going forward, it will be 18-22 hotels as of this financial year that will open consistently across our brands. Number of signings, as I said, 2018-2019, 2019-2020, we were doing fine. Comes COVID, you go down. Last year, absolute exception. Even we don't feel and we don't believe that 36 contracts is that easy to sign. It is just unthinkable. Actually, it is unthinkable that it took us almost 115 years to get to the first 130 hotels as a portfolio and only 5 years to get to the next 130.
It says, we have signed more than 120 agreements, ladies and gentlemen, in the last 5 years and consistently rated, I see also HVS has joined us here, as the company with the highest number of signings. We would have also been rated with the highest number of openings, but there is a technical issue in there where some renewals are considered as also openings, so it depends. Normally, on number of hotels signed and number of hotels opened, at the moment, no one can match up on that with us. Some of this is also foraying into new destinations. Very important, building new destinations, building new spots like we are going to Ekta Nagar, also popularly called where the Statue of Unity is in the city of Kevadia.
It is also partnering with the government on certain bits. That's also how Kevadia happened. That's also how Lakshadweep has happened. Also deeper penetration into key markets, which I just alluded to. That we have certain markets which we own. There are certain which we don't own from a supply perspective, but we would like to own. I think it's always going into market, the depth of the market, as well as the width. The width comes through brands like Ginger and Vivanta, the depth will come through both the iconic brands as well as the other brands of our portfolio. A very clear focus currently we have is on the Northeast. We have already announced that in 2025, we hope to have 25 hotels in the Northeast, either in operation or under development.
Half of that number we have achieved. It's a very high growth market. We have seen the success of Vivanta in Guwahati. We are also seeing a very successful start of Vivanta in Shillong. Very soon, we'll be opening a Vivanta in Tawang in Arunachal. This year, the Taj Guras Kutir in Gangtok will be coming. We already have a Vivanta in Pakyong. All this will keep going on. Not to forget that Ginger had one of its first hotel in Agartala, and there is two more Gingers going to take place in Guwahati.
From our strategic point of view, maybe there is space for one or two Taj properties in the short term in the Northeast, but every state capital in the Northeast should have a Vivanta and a Ginger, and every other commercially relevant city in those states must have, at a minimum, a Ginger branded property. New openings, as I said, from 5 accelerated to 12, fell back to 7, accelerated it back to 16. Some of the very nice new openings include 2 hotels in Jaipur, both Taj branded. One is a mahal opened within the premises of the Rambagh Palace called Taj Sawai Man Mahal. Another one, a very good MICE and a wedding destination, and that is the Taj Amer.
There is Taj in new city center in Kolkata, as well as another resort in Kerala. I'll give you a snapshot of how some of these openings look as you see on this slideshow with the Vivanta in Shillong, also the Vivanta in Katra in Vaishno Devi, and many, many, many more to come, one nicer than the other, one more strategic than the one which was already present, so that we get a higher market share, a deeper penetration, and remain customer centric as well as profitable. By doing all this, we have never been shy. If you want to be iconic, you have to invest in your assets.
Our CapEx we have been spending is at a pretty high level, and that is also needed because if we don't do that, we don't get the RevPAR premium. If you want to get that extra premium than what the market is paying, you have to continuously invest in your assets. In this very hotel where you are sitting, there'll be a new auditorium opening. There is a new Chambers that is gone under renovation, so the reimagined Chambers will be coming back as our private membership club in 3-4 months from now. There are 60 rooms under renovation in this property just now started, and that is the need of the hour. I think, again, we have to find the right balance, the right amount of displacement, the right amount of revenue generation, the right time to renovate.
We don't do renovations in November, February, March. You know, these are very high performing months, so the time to do it is always Q1 and Q2, which are traditionally the 3rd and the 4th weakest quarters, not Q3, which is the strongest quarter, even for all the key metros that we have in India. This gives also the impact of not only renovating, but smart renovations that we spoke about on one of the earlier slides. It gives you an idea of how we have reimagined the Taj Club. Those of you who have time, I would encourage you to go here in Taj Lands End. That's one place where we have redone the Taj Club. We've done it in Coromandel. We have done it in Taj Mansingh in Delhi.
We keep doing a lot of this new club proposition, the Taj Resort and Convention Center in Goa or the Taj Exotica in Dubai. They all have a club proposition, which is fantastic. The last picture on which the slide stopped is going to be the new spa, which will open also within a month in this hotel. We'll have a new spa, a second pool on top of that spa. We already did the new one now. We'll have the auditorium at the back of the reception.
Ladies and gentlemen, actually, if you have time, I would also invite you, those present here, to go and see the Lands End Cafe, which was done for the staff, so that the staff meals are in as beautiful an environment as for the guests who are going to dine in some of our iconic restaurants in this hotel. We are very well poised to reach to reach our Ahvaan 2025 targets. I don't know how many of you noticed when we started Aspiration 2022, it was a five-year plan. This time we did it on purpose, three years, because we were missing the 2 years of COVID on the journey that we had embarked upon. So we added just one year and said, "This is what we'll do.
We'll have 300+ hotels and spread well across different brands. Hopefully Ginger will be at 125. Taj already achieved 100. Have a balanced portfolio of 50/50 and continue to grow other new brands. The one where we might be shy of reaching the target is Ama, where we had said we would want to have 500 homestays. Given the success or given the image of Ama, we have taken a step back and want to take it even further premium and instead of the scale, the advice and the customer feedback that we got from the who's who have used our properties was to be more premium and more selective and maintain that level and that standard instead of just planting different villas and get into that service concept.
Also we think that although we have given a guidance of 300+, the potential, based on if there was some M&A activity that came or some kind of a consolidation in the industry, that target could even be increased to 325+, and Taj doing 10% more, and so would Vivanta and SeleQtions, especially SeleQtions being the conversion brand. One thing we said is profitability, but the second is iconic hospitality. The iconic hospitality cannot happen without customer centricity. We are very pleased to share we took permission from TrustYou is a portal that does these kind of data. On the Net Promoter Score, we are ranking the highest. We're not only the world's strongest hotel brand, we are ranking the highest on NPS.
Also the metric that they use to calculate the ratings on Tripadvisor, Booking, and Google, we are ahead of the pack. I think that's very important. It's not just profitability, it's also customer centricity, it's iconic hospitality, it's our operational excellence that we deliver with our heart and soul. Further good news for us, and it's very interesting. We tried 20 years with our own loyalty program, which we still have. It's not that we don't have, thanks to Tata Neu, the super app created, which is really helping us. It's only 1 year and 1 month in operation. It will take another 2 years to get to its right potential in terms of delivering business. Our loyalty led revenue has almost doubled.
INR 2,200 crore of our INR 11,000 crore enterprise level revenue came through any source of loyalty that we have. That's how we measure it. That is doubling of that revenue, including doubling of the members. I think if we were trying that on our own for the next decade, it would have been quite a task to get there. With the success and with the more and more companies joining the Tata Neu platform, most recently Titan, Croma is already there. We were the founding members. We were the first one to join, and we are very happy, very pleased to have this source.
It really helps us in weak periods of business because we can very quickly come up on a promotion on Tata Neu and really market our hotels and get a higher share, especially now that we have onboarded Ginger. Ginger with BigBasket, Ginger with Tata 1mg on that platform stands to benefit a lot going forward in getting this source of business. At the same time, we also remain the custodians of Indian hospitality. That's a claim the group has had. That's a claim Taj has had for several decades. I think we are the main partner for G20. More events of G20 are happening with us than with anyone else. Of course, because also of the assets we have. G20 kickoff meeting of the G20 Sherpa was in Andaman, in Havelock, which was with us.
The second one was on the terrace of Lake Palace, is the right place to do it, was with us. The third one was at the Chambers Terrace at the Taj Mahal Palace in, you know, tower in Colaba. I think we are very blessed to have such a wonderful platform and such a wonderful portfolio of assets and coupled with that service, it helps us not only to host dignitaries, not only to host government delegations, not only to be good partners of G20, but also something that we very specially do is promote the warmth of Indian hospitality. The warmth of Indian hospitality, if one wants to see, if you go check in into different hotels in London and then you come and stay at the Taj in London, you will see what a difference it makes. Also integrated marketing campaigns.
I think, we have done more campaigns, in the last three, four years than we did in maybe last 20 years. With the one which was most successful being She Remains a Taj. The second most successful being Dekho Apna Desh. Also many other campaigns. During COVID, our 4 D campaign, which was DreamDrive, discover, and delight. You dream that I want to go out, I'm shut in a lockdown. There is a window to leave. You dream of that. You get into your car, you drive, you discover a new destination, and delight yourself. Those a very strong campaign which helped us in the survival phase in the COVID period. Also one of our key enablers is our culture and our ESG.
You know, as a Tata Group company, our founder, Jamsetji Tata, who also built the Taj, in Colaba, said that community is not just another stakeholder, rather the purpose of the existence of any business. When people did not even know what purpose meant, this purpose got defined by the founder of Tata Group. We continuously work on those principles today. Maybe it's called ESG, but this has been a part of the DNA of all group companies, and especially us as the oldest operating company of the group. On the culture part, we defined this also around 17 18, our core values being trust, awareness, and joy. We said these three letters in the name Taj stand for trust, awareness, and joy.
Trust of all our stakeholders, awareness of our communities and what is happening around us, and joy in doing everything that we do. We kept this as the core value across all brands and across all businesses. Our culture of camaraderie, we also are known for providing Tajness, which is a part of our DNA. We created 24th of March, which was the date of lockdown, as the day of Tajness, and it was celebrated in all our hotels in India and abroad, as the Tajness Day, as a special day to celebrate the spirit of resilience, the spirit of responsiveness of our colleagues, and the spirit of resurgence. Also, our responsible business just celebrated 1 year, the program called Paathya.
We were doing responsible business before also, we introduced the six key differentiating factors of Paathya, the six Ps of Paathya. Basically they are built around 100% getting rid of single-use plastic, 100% recycling of wastewater, 50% of our energy coming from renewable sources, 100% of waste management, going green on green meetings, and also using EV charging stations, as well as doing all the things in the community with the right level of governance. That's why we have been consistently rewarded with both corporate governance awards as well as risk management awards. Very interesting for me to share with you is that our temple of hospitality, as I call it, the Taj Mahal Palace and Tower, is now 100% green.
68% through renewable energy that we got with the help of Tata Power. 32% we could not because you know how this whole distribution works. For that, we bought certificates through Tata Power to claim that we are 100% green. I think this would be the right time, instead of me keep talking about Paathya, is to show you what all happened in 365 days in a year. A program that was launched in March 2022, how that has evolved within 1 year's time.
People and places. Happy, smiling faces. That's what this world is about. Heaven on earth is laughter and mirth. The secret of life without doubt. The magic of nature. The best of our culture needs commitment to protect and save. Cheers to the chaps. Each one a lamp with a vision inspired and brave. More and more people. The Earth's numbers steeple. Sustainable growth is the call. What life's worth living without the value of giving? Together we should all stand tall. Leading by example. Every act a sample of saving tomorrow today. Taking just what we need. Not feeding our greed. Letting our steps lead the way. Thank you for talking that talk with us. Thank you for walking that walk with us. Thank you for seeing eye to eye with us. Thank you for dreaming that dream with us. Thank you for standing for the weak with us.
Thank you for sharing the journey with us. Thank you for building tomorrow with us. Thank you for erasing sorrow with us. Thank you for powering Paathya with us. Thank you for powering Paathya with us.
With that, I would like to call my colleague, Giri, for delivering responsible, profitable growth, and I'll come back after his session.
Thank you.
Thank you.
Good afternoon. It's always nice to see a lot of you here. Thank you for coming, and for all the people who are watching us online. I think, moving on in terms of what all of this means, in terms of the strategy and the execution, in terms of the result, which is really driving responsible, profitable growth. Just to recap, and I think it's important, to sort of say the recap because I think, when we announced the Aspiration 2022, it was about building belief, actually. As Puneet said, when we were at 16% EBITDA, when we said we'll go to 25%, a lot of the people said, "How will you do it?" actually.
When we say last year that it will go to 33%, and people say, "But have you not already done it?" actually. Some interesting numbers, we were INR 665 crores of EBITDA in 2016, 2017, and when we hit the pandemic year, 2019, 2020, we had nearly doubled it to INR 1,100 crores actually, for a change in top line, which was just about less than 15% actually. When we look at 2019, 2020 to go to 2022, 2023, that's almost a doubling of EBITDA for a change in top line, which is one-third actually.
I think that momentum has been lovely to see in terms of how the strategy and the execution has kind of come together, and as we talked about, we'll go through some of the details in terms of how this is building on as we go forward, actually. There are three things, and we always talk about it in all our meetings. You talk about the revenue, which is the revenue side of the P&L. The second is the expenditure side of the P&L leading onto margins, and the third is the balance sheet. It's a fairly straightforward story. To a great extent, we believe that our story mirrors what's happening in India. For instance, I think the GDP growth continues to be strong, which reflects in the strong consumption story.
I think what is happening today is not just the youngsters, the demographic dividend in terms of spending, it's also the baby boomers, the people who were born in the early 60s, as the terminology is used in the U.S. They've also become empty nesters and they are spending, actually. In fact, there are studies in the U.S. which say that in about 15 years' time, when eventually the young, the present generation inherit from the baby boomers, that will be one of the largest wealth transfers which will happen in the U.S., and the same story is going to repeat in India as well.
Therefore, I do believe that there is a secular consumption story which is playing out actually, not just in the key metros of India, but also in the interiors as the government pushes through infrastructure growth and roads and smart cities and all of that. What we have seen post the pandemic is the challenge in terms of demand supply. Industry estimates, of course, say that the demand is growing at maybe 7%+, supply is growing at 5%-5.5%, actually, and this is not likely to change in the short term, actually, in the next 3-4 years. This also is a bit of a misnomer, because when you talk about a 5.5% supply growth, it. Where is the space in South Bombay for another hotel, as an example?
It may come near the airports in Navi Mumbai, but not in South Bombay. If you look at where the micro markets supply potential is there, if you look at that, I think the position is even more starker. That is to say that the consumption will continue to sort of surprise, the demand is not matching up to it, actually. A lot of the growth also, when you talk of the supply, is also coming beyond the metros, actually. That is where I think, as Puneet was talking about the RevPAR. When you talk about occupancies and say, how much can an occupancy grow by 1%? That's also a misnomer because you're considering the occupancy in totality.
A lot of the occupancy is coming up, not in places like Bombay, but the occupancy is actually happening in the other cities where the hotels are growing, actually. Hence, you know, the blended occupancy will always be an average. Whereas I think those are factors which have to be considered as you look at models, actually. I think the biggest story for us is the, as the business development pipeline shows and the asset light growth shows, is not just the like for like story, but it is the not like for like story, because that will continue to build momentum, and that has to be understood when you look at us in terms of understanding the financial model, actually.
When I talk about asset light growth, I think one of the things I do want to emphasize, it is not just asset light in terms of investments, it is also about growth which is now cycle independent, actually. What do I mean by that? We know that the hospitality industry is a cyclical industry, but some of the actions that we are taking here are actually stretching the cycle. Like Puneet spoke about the auditorium, which is going to come up in Taj Lands End behind the reception, actually. Which will become hopefully the place where OTT premier screenings will happen, actually. That has nothing to do with the hospitality cycle. Which means the OTT screenings in the, in the auditorium will feed into F&B, will feed into our auditorium business, will feed into room revenue, and that has nothing to do with this.
We spoke about the new spa, newly renovated spa. We launch a spa program on top that has nothing to do, once again, with the cycle. In Taj Mansingh, for instance, we have a long-stay floor. We saw in the pandemic that Wellington Mews had an 85%, 90% occupancy even during the pandemic. When you add a long-stay floor in a diplomatic area in Taj Mansingh, I think that will be resilient independent of the cycle, actually. A lot of actions that we are taking, Chambers and all of those, are actually becoming stories which is building resilience in terms of it being independent, in terms of the cyclicality of hospitality industry. That builds the resilience, actually. As far as margins are concerned, I will talk you through some slides in terms of sweating existing assets.
I think once again, we spoke, I think Puneet spoke about it, and we'll see some numbers here in terms of how we continuously improve. Like, we are not satisfied with the profitability in an existing property. As we set up the auditoriums here, and as we renovate the spas, and as we kind of do all of those things, we continue to drive profitability and RevPAR growth, actually. That is a great way in terms of adding to the profitability. You saw that in the last year's numbers. If there was a chart that we had put which said that our margins from the pre-pandemic period to March 2023 actually grew by 9%, from 24% to about 33% or so.
Of that 9% growth, 6.7% came through the existing property driving more profitability, which is really the asset sweating. Share of high-margin business is clearly going up, which is all the Chambers and management fees, et cetera. Enhanced productivity, that is coming through the expenditure side in terms of staff-to-room ratios and all the ratios that we show quarter on quarter. 0 interest cost. Of course, we had an INR 300+ crores interest cost on the balance sheet, and that is gone now, and we intend to stay net debt 0, and therefore that is a very big kind of freedom we get in terms of the P&L management. On the balance sheet, we will continue to focus on simplification. ROC clearly is a big area of focus.
Free cash flows is something which is kind of being driven through, you saw what happened last year in terms of INR 1,000 crore free cash flow. We'll continue to have robust cash reserves as a strategic reserve. Now moving into some of the details, I think what is very important to understand is the diversification of top line. That is at the core of our strategy, actually. The asset-heavy business like these, as an example, is great in times when the business is booming because that adds to profitability. It's a simple cost, volume profit equation, where a certain fixed cost needs a certain volume to break even. Once you have hit that, anything incremental in terms of top line just adds to your profitability, actually.
Therefore, the asset-heavy business in times of an upside really drives the leverage, actually, which is what we are experiencing now. The growth in asset-light businesses will give us the resilience whenever the cycle changes. You see on this chart that the asset-light business grew from 10% - 14%. Bear in mind, 10% and 14% are not on the same base. The 14% in 2022/2023 is on a much larger base, actually. One percent of the INR 5,000 crore, what do you say, INR 6,000 crore consolidated revenue is really about INR 60 crore or so, and whereas the base in 2017/2018 was different. As this base goes up, and this we believe will continue to grow, will kind of provide us the resilience on the in terms of the P&L.
More importantly, because these come without any significant capital employed, it also adds to ROC as well, actually. The diversification of top line really becomes the heart of the strategy for us, actually. What are the some of the elements of the diversified top line? Number one is really... Sorry, the pipeline, of course. Let me come to the pipeline. The pipeline itself, we spoke about the pipeline in the, in terms of the number of properties we're opening, but what does it translate to on a year-by-year basis in terms of the number of rooms we're opening? I think that momentum is only going up. We opened 16 hotels last year. As you go forward, now the pipeline is improving, 2,300 rooms in 2023/2024.
You know, you see 2024/2025, nearly 2,500 rooms. When you see 2025/2026 dropping to 2,200, it doesn't mean it drops. We still have time in terms of conversions to bring in. There is the momentum in terms of new openings coming up, and which is great in terms of driving the top-line growth, and most of it is asset-light growth. Of course, some asset-heavy activities like what we are building in Lakshadweep and Kevadia will also add to it. Sorry. Management fees, and I think all of you have been seeing the growth in management fees. We have seen a very good momentum in terms of growth in management fees.
Many of you have been asking, saying that you did announce last year that you will hit INR 400 crore in terms of management fees by 2025-2026, and we achieved that number as of 31st March 2023. Where is it likely to be? We have looked at our pipeline, and we believe that it is fair to sort of give a guidance that this is likely to go to about INR 550 crore+. Which means if you go back to the 2019-2020 levels, the pre-pandemic level of INR 213 crore, we are talking of more than doubling to take it to INR 550 crore numbers, actually.
That's the first part of how we see the management fee structure going and how it'll add to the incomes and the profitabilities. If you look at the Ginger, and I think Ginger is clearly a very exciting story in terms of how it's growing. We have the potential to reach 100 operating hotels, and we believe that we will achieve it. You saw the growth, the jump. In March 2022, we had a top line of about INR 179 crores and an EBITDA of about INR 46- INR 47 crores or so. That jumped in March 2023 to INR 307 crores with an EBITDA of INR 120 crores, and the margin really jumped to about 39%.
That we think will grow to about INR 600 crores+ as we go towards the Ahvaan 2025 period actually, giving us more than INR 250 crores in terms of EBITDA. We're very excited about the opening of the flagship hotel in Santacruz. That single hotel will contribute about INR 100 crores in steady state actually, as compared to the INR 300 crores which the entire network of Ginger contributed as of 31st March 2023. That is going to be another significant driver in terms of the growth in top line as well as profitability. If you go back to compare it with the 2021-2022, where we had INR 46, I NR 48 crores of EBITDAs, that going to INR 250+ is clearly a bump up of more than INR 200 crores actually.
As far as Chambers membership is concerned, that momentum continues. I think this is just the membership fees, and we've always guided that it'll go to about INR 150 crores. We see no reason to change the guidance. What it is doing is that the opening of the new Chambers in Delhi, the opening of the Chambers in London, and as we go forward, at the Pier in New York and in West End in Bangalore, I think what it is doing is also it is adding to other businesses, actually. Other businesses and you see that. When I talk about INR 150 crores of potential membership business, this does not include, obviously, the revenues which come because people eat, people stay, people use conference rooms, and all of that is paid for.
That potential is very significant on Chambers, actually. In terms of sweating assets, I just wanted to show a couple of charts in terms of how sweating of assets really translates itself. We said that as for the year-ended 31st March 2023, our margins went up from a pre-pandemic 23%-24% to about 33%. That's a 9% growth, of which we said 6.7% came through existing assets, which is asset sweating. You see at 3, 4 cities that we want to show. Mumbai was in 2017-2018, a revenue of INR 930 crores. Same store. This is all data for same store. That has gone up to INR 1,254 crores.
Look at the jump in EBITDA from INR 316 crores - INR 522 crores in terms of the jump in EBITDA. All this links back to the smart renovation that Puneet spoke about, where we continuously upgrade the properties. As you do that, the ability to charge RevPAR goes up, and that drives greater profitability. That's the same story repeating in Delhi NCR as well, where the revenue jumped from INR 378 crores - INR 546 crores. EBITDA jumped from INR 64 crores -I NR 164 crores. The interesting thing is that since you're comparing from 2017- 2020-23, this is with Man Singh being in the renovation actually.
Which means these same store assets have kind of dramatically increased in terms of top line and EBITDA is a very strong story actually. That I will not underemphasize in terms of the potential of existing assets to kind of sweat out more in terms of profitability. Similarly, look at Goa. Goa is a fantastic story where the top line grew from INR 224 crore - INR 356 crore. Smart renovations in Holiday Village, smart renovations in Fort Aguada, and other properties are really helping to ensure that the momentum is there in terms of RevPAR premiums. Look at Bangalore similarly. 44% growth in revenue. 144% growth. This also has another story here.
I think people, you know, in India, I think it shows how much people are traveling, how much people are using the hotels, and the ability to pay. I think one of the things that one of my friends in the audience told me, and I think very valid here, and we also recognize that, is that in India, it's a penetrating story in terms of tourism, actually. Which means that it is going to grow linked to the economy and consumption, actually. As that happens, the ability of people to kind of spend more is going up, and that is reflected in the way the performance of properties are happening, combined with smart renovations. It is price, property, what do you say? Renovations, the service quality, all of these have to come together.
You just can't increase price without product quality and service levels also kind of not matching up there, actually. If you stay in one of our hotels and you look back to what was offered even pre-pandemic period, the service levels have gone up. You know, we have Taljinder as a brand custodian who is now driving through the service level changes to make sure that the product and the service reflects the product and the potential in terms of customer service, actually. This is a very important charts for us in terms of showing that we will continue to sweat the assets and our existing assets will continue to drive profitabilities. Traditional business. I think this question keeps coming up in terms of how RevPAR growth is gonna pan out, and we just wanted to address it upfront, actually.
If you see the pre-pandemic period, the RevPAR growth was varying between 2%-6%, actually, that was the pattern of growth, actually. We have already seen what has happened. In April, for instance, our RevPAR has grown by 11%, actually. See, what is if you compare it last year, the base has settled down. The base that you see in April is at a level which is slightly lower than what ended in March, actually. The base in April is about 11% higher than what happened last year. Therefore, the RevPAR growth will continue. Our belief is that there are enough tailwinds, and this is just April. The April to September are the weaker quarters.
As we go towards the next few months, as we go towards the second half with the G20, with the World Cup, with the tourist season, with the foreign travel resuming back to India, I think there are enough tailwinds to ensure that the RevPAR momentum will continue. I don't see why that the RevPAR growth this year cannot be more than the historical averages, actually. This, of course, comes to many of your models in terms of how you model. As we also said, I think this is only one part of our business. If you look at our diversified top line, I think this contributes to one part of the story in terms of profitability.
As the asset-light growth grows disproportionately, driving greater profitability, I think both kind of go hand-in-hand and kind of feeds into the overall margin profile of the company. In terms of enterprise performance and potential, I think we did demonstrate about INR 11,000 crores in terms of enterprise revenue. Consolidated top line was nearly INR 6,000 crores, which means enterprise revenue is roughly double that of the consolidated top line. We think with all the activities, the strategy, and the execution we are doing, the potential is clearly approximately INR 15,000 crores as we go through the RMAN period actually. Productivity focus, I think we have spoken about it consistently, saying that we are focused on productivity ever since, even before the pandemic.
When we announced Aspiration 2022, our 8% growth in margins at that point of time came through a combination of revenue fact levers as well as cost levers. That continued through the pandemic. We have demonstrated that we are able to continue to maintain productivity. On raw materials, inflation, of course, has impacted, but we have also been able to pass on the price increases to be able to maintain the raw material percentages at the similar levels like prior. On payroll costs, the staff-to-room ratios are effectively managed. Investments in digitization and technology are also helping, and therefore, we will be focused on maintaining the productivity in terms of manpower. On power and fuel, for instance, we are very encouraged.
Hotel by hotel is implementing multiple schemes in terms of renewable power and cheaper power, actually, that is helping us, actually. Corporate overheads has been one of our biggest success story. What was in 2017, 2018, what is today in terms of network is doubled, but it's the same. The corporate overheads have not gone up at all. I think the corporate overhead productivity continues to be very strong, actually. The focus on productivity is something that will continue. Last year, I think we had given us a guidance in terms of margin and free cash flow. I think largely the guidance remains intact. People ask us, having achieved 32.7% in terms of EBITDA guidance, is that going to go up?
I think anything about 30, 32% is a very, very strong EBITDA. Therefore, I think we believe that's a very fair EBITDA in terms of a guidance, actually. I think what is going to happen is that the growth of existing businesses, the growth of asset-light businesses will continue to drive the top line and the margin profile, actually. I think as we kind of model, I think please, we are not at this point of time kind of saying that 33% EBITDA is a guidance which is fair at this point of time, actually. This guidance in terms of how the split will happen from revenue to cash flow is also broadly correct, and that is something that we'll continue to do. Moving on, I think capital allocation principles.
I think the question from debt to cash, and people have been asking us in terms of capital allocation principles. There are really four broad themes that we have here. Number one is to build resilience, and resilience means that if there's another COVID, another GST, another demonetization, we should not be going back to the market in terms of money. There is a strategic reserve which is being built. At this point of time, our view is that it's about INR 750 crores, and this will not come down below INR 750 crores. It could go up, actually. The second is what do you say? The CapEx which happens in terms of renovations, actually. I think these renovations will happen. The big picture guidance is that renovations will be in line with the depreciation for the year.
Of course, there may be exceptions in certain years, actually. The third is dividend. You have seen the jump in dividend. We have not yet announced a dividend which is linked to PAT, but that is something that we are working through, and we may come back to the market at an appropriate time. You will see that dividends will be because for us, it has not just got to be meaningful, it's got to be sustainable, and we are being steady about it. In terms of greenfield and M&As, those are part of the plan. I think the important direction from the board on this is that a greenfield and an M&A will whenever it happens, it cannot happen at the cost of the balance sheet, actually.
We have, you know, I think the guidance from the board is that if there's a great property available, go for it, guys, if the economics works, we will find the money without impacting the balance sheet. I think that's the big picture message. If you go back into history, 2007, 2008, and when we went into some of our M&A activities and acquisition activities, I think it did impact the balance sheet. Now we are saying that we cannot afford that to happen. The balance sheet protection and integrity has got to be a very important plank of it. As far as greenfield is concerned, we may be open to some level of project-specific debt, actually.
Like if you are doing a project in Lakshadweep, we are open to some sustainable financing, for instance, in that project, but that has got to be completely funded at that level, actually. Those will be carefully tracked at a project level, actually. These capital allocation principles will be the cornerstone of how we will manage the balance sheet. ROC is something that we have been focused on, and that has been going up through the years, actually. There are some numbers here, and there are detailed workings in the slide which gives you the numbers, where ROC on hotel assets is about 16%. ROC on domestic hotel assets is 24%. See, if you look at the domestic operating assets, I think in the last 6, 7 years, what have you built new assets? Maybe Guwahati has been a new one.
We have renovated the Man Singh. We have put up Andamans. We have renovated Connemara. Ginger Santacruz is coming up, actually. No significant new greenfields has come up, actually. These properties, as you have seen in terms of asset sweating, has been very significant. The ROC on domestic assets will continue to be very strong. The other thing to note is that when investors ask me about ROCs, I think there is a historical ROC on a balance sheet which is getting rectified and improving as we go forward. On an incremental basis, where incremental capital is being deployed, we will always ensure that the ROCs are strong, actually. That's the message on this slide.
On the standalone side, it's even better because those assets have been the cornerstone of the growth of this company. These ROCs are even better, actually. With this, I think I'll pass it on to Puneet in terms of the closing comments.
Are we well-positioned for the future? I think so, because the macroeconomic tailwinds are positive. There is a India growth story that we should not forget. India is definitely among the leaders in GDP growth and is among the top five economies expecting and, what do you say, not just expected, but is ambitious enough to try to go among the top three. There is a lot of focus from the government on infrastructure. The better the infrastructure, the more the number of airports, the more the number of highways, the better it is for our business. I think one of the most important indirect beneficiary of infrastructure investment is the tourism and hospitality sector. India is emerging more and more as a services economy.
Even that would benefit on the discretionary spend in terms of disposable income. We do believe that these macroeconomic tailwind should help us. Earning power and spend patterns are also continuously evolving and moving in the direction of, you know, unique unique properties, experiential tourism. Anything which is different gets more attraction. I think which is one of our very important competitive advantage by being present in 125 + cities, especially now with also other businesses, like the homestays. Also the spend from the top 25 is actually becoming lesser and more of the non-top 25 are beginning to invest. There is a structural shift also there, which should also help a heterogeneous country like us in very different kinds of destinations, and we are very, very positive about that.
The more important factor, or I would say the most important factor is RevPAR. RevPAR rate and occupancy is always a consequence of demand and supply. As one would have read it, the demand is outpacing supply, especially on our home front, which is more than 85% of our business is India centric. Due to lack of supply that was built in the last three years, even if some catch-up was to happen, in the short to medium term, the expectation remains that demand will continue to outpace supply, which means higher occupancies. If, as the occupancy is high, your ability to charge is higher. So that's another positive trend. Are we well-positioned to proactively capture this potential? Yes, because the macroeconomic factors favor us immensely.
Demographics, having young age population, which is expected to hit the sweet spot around 2040. The sector itself, the sector has cyclicality, and we believe that we're at the in a upcycle since six, eight, nine months. Typically, a cycle does last anything between four to seven years, based on the previous history or cyclicality that we have seen in the business. This is happening in all segments and at all price points. Obviously, the higher you go, the more profitable it gets because once you cross that famous cost volume profit analysis chart, then the divide after reaching the break-even point increases significantly. That way also with the premiumization of our portfolio, we think we are very well positioned as IHCL.
We have industry-leading RevPAR, we have industry-leading growth, we have industry-leading margins. We are a part of maybe one of the top global leading group, with all possible, other verticals which could help us, in having a robust, sustainable, profitable growth. With that, we come to our famous pyramid, the same which we started with, in Aspiration 2022. Only the bubbles out there have changed into 300+, and the margin guidance from 25%-33% and the 0 net debt. Our balanced portfolio was always a part of it. The bedrock remains the core values. I always say this when I have investor meetings, we can change strategy from aspiration to execution to performance, and to calling it Ahvaan, but you don't change your core values every day.
Our core values of trust, awareness and joy and the five core values of Tatas with our enablers of enabling, you know, through the iconic assets, through our ESG, Paathya as a program, through our one digital initiative after the other. leveraging the digital, using one Tata as a source of very strong business and our continued excellence in operations would definitely help us or so that we can continue to reimagine our brandscape, restructure our portfolio and reengineer our margins on a sustainable basis so that we become the most iconic, which we have always been. And as facts would point out now, also the most profitable hospitality ecosystem that South Asia has to offer.
In summary, I would say clear aspirations, robust strategy, powerful and passionate execution engine can help us to be very confident in delivering on our strategy and which is summarized under responsible, profitable growth, which will benefit with the strong tailwinds, both from a macroeconomic point of view as well as from the sector. Also, our strategic advantage of being in 125+ locations as well as our portfolio of brands, our culture and our capabilities, our very strong 120+ year culture of Taj and a bit longer when we add all the AGMs of IHCL, our long-term focus on sustainable growth of ROCE or return on capital employed and achieving all this in a right and responsible way.
We do believe that what we promise we will deliver like we have done in the past, save for any event which is out of our reasonable control. Thank you very much for listening and happy to take any questions. We can have the Q&A now?
Yeah.
No one's here.
No, no, it's okay. We can stand. We can stand. Let's stand. Thank you, Mr. Chhatwal. Ladies and gentlemen, we will now begin with the question and answer session. For today's event, we have guests present in the ballroom, as well as guests joining us from across the globe online. We will begin with a few questions from those of you present here and subsequently move over to our guests online. Should you wish to ask a question, kindly raise your hand and we will have a microphone passed to you. We request you to kindly introduce yourself before asking your question.
Hello. Good afternoon, sir. Thanks for the great presentation. This is Kaustubh Pawaskar from Sharekhan by BNP Paribas. I have a few questions. First, you spoke about smart renovation. Do we have any particular target in a year that 15%-20% of our room inventory you would be focusing on, you know, re-renovating so that you can grab more opportunities from those rooms?
Not really. I think it comes with the need basis. It's not that everything is so bad that we'll do every year 15% and in 6 years we'll be done. I think a lot of this, as we said, is also based on certain trends. If we launch a new restaurant concept like Loya, which we've done in Taj Palace, we are changing it in West End, and we are also bringing it to Taj Mahal Palace in Colaba. That's not really renovation only, right? It's also introduction of a new concept and a kind of a new line of F&B offering. We also have the work. We also had the Masala series, right? This is a continuous investment. It is done on a very strategic basis. The normal renovation comes under two heads.
To answer your question the other way around, 2%-3% of your revenue of a property, whether managed or owned, will go into the general upkeep on an annual basis. There's a painting or, you know, a polishing, replacing some of the items which cannot be capitalized. The major renovations would be in the same ballpark as both Giri and I have pointed out. That is typically in the industry and the sector is 4%-5% of your top line.
In one or the other year, because we were investing, let's say, in Ekta Nagar, it might show a jump, but a few years later it might show a less amount because we might have sold that property and taken it on a sale and lease back or a sale and manage back because of the way the tenders are structured. You should have the company that is actually running and operating a hotel, owns a brand, but then you cannot transfer immediately, you have to wait for 3 years to transfer. Some of those things will happen. We don't have the strategy of suddenly becoming asset heavy because of that. We can't let go of a business opportunity.
My second question is, you spoke about launching 1 more brand or adding a brand to your portfolio. Is it like you want to tap tier 2, tier 3 towns? There you are looking out for any specific brand to come up with?
No. For tier two, tier three cities, we have Ginger and we have Vivanta, you know, that will work. Every state capital in India can have a Vivanta, and every district capital can have a Ginger, also, obviously, state and the national capital. That is not the reason. The reason would be to diversify your brandscape into another kind of business. There are many such possibilities that are there, which a lot of other companies in this sector, mostly outside of India and the western hemisphere, have done. I think, very soon we will get to that. As I said, we are studying various options. We have some of our own preferences, but we'll see how market evolves.
Definitely by next capital market day, which is in a year from now, we'll be able to tell you what it is.
Well, last to Giri sir. You spoke about the EBITDA margins that you are maintaining at around 30%-33%, the guidance has been maintained. We have seen that you are raising up the Ginger guidance to around 650. You are raising some of the other businesses guidance and also the room demand supply. We know that the demand is going to be better than supply. From the domestic, you know, RevPAR point of view or business point of view, next 2 years are going to be good years for us. Why are we, you know, sticking to the guidance of 33% and not raising it up to around, you know, 34%-35%?
I think, as I said, 33% is a very strong margin actually. I think, and since we're talking about guidance, there's no point in. I mean, we just want to be careful to sort of say that it's a very strong margin and growth will happen anyway in terms of top line growth and margin growth. We don't see a reason to change that at this point of time. I think that's only fair, you know. I think measure us in terms of performance. Don't measure us against the guidance, actually.
I think I might want to add something. Firstly, I must compliment you on the question you asked, because if you are obviously growing Ginger and you are saying we are doing Ginger 50%-60%, mathematically the margin should go up and your ability to charge is there. All these factors should help. Having said that, 72%, as I said in the presentation, is coming from Taj. That's number one. That we want to keep it that way because that's really our backbone. That kind of iconic brand, as I mentioned in the presentation, requires certain investments, innovations, new F&B concept, new private membership club, and there are a lot of additions that need to be done.
Some of you who do the analysis, which I said in my presentation, like for like and not like for like, you should also take standalone and consolidated throughout. If we take standalone, that's why your question is very good and relevant. We are already at almost 40%. It could even go to 42 or 43. That's not the issue. I think while comparing, which some of you people do and sometimes it really hurts us reading that. Some comparisons I've created a new term, it's apples versus oranges, and now we have added even small grapes to it, right? It has to be a. The question is great. Yes, that will happen. Standalone is different on consolidated.
When you add properties like London, New York, Cape Town, San Francisco, et cetera, and that's what we account for, then that is a very good margin for a company with a more global footprint. You know, those figures get added and get multiplied by GBP 100 for a pound and $82 for a dollar. Those numbers become very big. They also create that disproportionate. We would not be the world's strongest brand if we were not present in the 2 top lodging markets of the world. Only Paris is missing. If we had Paris, then it is a 3 top lodging markets of the world. The top 3. Okay.
Thanks. Thanks.
Good evening.
Yes, Nihal.
Mr. Chugh and Mr. Giri. First of all, congratulations to you. This is Nihal here from Nomura. Three questions from my side. First is traditionally how the hospitality space used to work was that you used to have business on books, have a pipeline, and once you had a certain occupancy, you would go for rate hikes. You've been mentioning over the last few quarters that the visibility in the sector is obviously reducing much. In that background, how do you see the kind of RevPAR performance you mentioned for April sustaining? You believe you maintain the rates there, keep taking hikes and believe that the guests keep coming in and the occupancy plays out?
We would like to believe that the 23, if we take that as a base, that you can still achieve close to double-digit RevPAR growth going forward. We would like to believe that, and that there is nothing that we know at the moment that makes us believe the contrary. Right? Especially the events when they pick up momentum on G20 or the World Cup cricket or when the FTAs, you are not free trade agreement, but the foreign tourist arrivals come back to the pre-COVID level, which was at 60%, last financial year. If it comes back to 100 or goes to 110, 120%, that kind of quality of revenue growth is possible and should happen. There's nothing that points out why it should not happen.
You know, it's not like a pent-up demand is 3 months, 6 months, 9 months. A pent-up cannot go on for 15, 16, 18 months or other people like to call our nice business of providing experiences and unique dining, some call it revenge. You know, that this is all revenge travel. I mean, I think it's over. I think we are on a very good wicket because of the demand and supply being in a positive sync for the sector.
That is helpful. A related question there was that, again, the share of transient has seen a good increase versus corporate. You see that normalizing or you believe that that's the way the mix will be in the future also for you?
The share of transient is 50% +. If you look at our history, it's always been 50% +, and we would like to keep it that way. In fact, I think if you look at our corporate strategy also, I think couple of things have happened. Number one is that many smaller corporates have actually moved them to transient. That's number one. I think transient will continue to be the non-negotiated segment will continue to be the main 50% + of the business. We don't see that changing actually. Even in corporate, as I've explained in the past also, we made some contract changes where the rates are getting fixed for many of our corporate customers as a rate of the best available rate.
Which means if the BAR changes, the goes up, the discount of the best available rate also goes up. Those contract changes are also helping us. I think, we will continue to do those actually. We'll continue to do those.
Just one final question was, you've made a statement saying that you don't want IHCL to be associated with any brand which is not premium. We've seen that Ginger is also in a way upscale. Is it that the budget as a category is something totally out? If any thoughts on the positioning of the new brand in terms of where it would place?
No, that's not accurate, or maybe I did not communicate it well. In every category, the brand in that competitive set must be perceived as the premium brand. Of course, that stays at the top. You have SeleQtions or Vivanta, then we have Ginger. Ginger should not be perceived as the way it was launched as a cheap product, which is everybody's possibility for INR 999. That was maybe right when it was thought through, but the world changed. The entire world became aspirational. I think the Ginger in its positioning, the room size has not changed. It's become more fun, it's more interactive, it's more colorful, and it does three things very well. It provides the best bed in town, it provides the best coffee and the best shower in that segment.
It's not that the Ginger bed is now better than Taj. It's not. Within that segment, it is the best.
Thank you so much.
Hi, Puneet and Rishi. Thanks for the presentation. I had my question more around our core cities. What would be your strategy in terms of maintaining, let's say growing RevPAR? Would it be more ARR or occupancy, especially in the light of our competition also trying to flex muscle there?
The core cities you're talking.
The core cities, let's say the metro cities. As you talked about the pent-up demand already having played out and the competition also trying to come in there. What would be our strategy going ahead in the next?
I think these cities are resilient, you know. I mean, you have seen, we put up the charts for Bombay and Delhi.
Yeah.
I think these cities are resilient, and they will continue to grow. You know, for instance, take Bombay. Now, the Jio World Convention Centre has come in actually, which means you'll see lot more conferences happening. When that happens, the hotels benefit as an example, actually. These cities will continue to be very strong, and that's true for any international market. If you see, when you talk of occupancies, again, these cities always have an occupancy in excess of 75%, whether it is New York to Hong Kong to Singapore, all these cities have strong occupancies and there is enough resilience in terms of building it. There is no concern actually.
Hi, Puneet. Hi, Giri. This is Achal from HSBC. I had couple of questions. First of all, on the capacity, you mentioned that the capacity last year grew by 4 point something, and then, you referred to some of the consultant report, which suggests that the capacity is gonna grow in that range. Just want to understand, if you break it up between the greenfield and the brownfield, basically it is the greenfield capacity which is gonna be added. Otherwise, it's just a switch, right? That capacity was already there. In terms of that breakup, what is the kind of capacity growth was there and what kind of capacity growth do you expect going forward?
Especially the greenfield project, do you really see the greenfield project would be able to make the returns to offset the cost of capital? I think we are talking about cost of capital, it's very expensive. Land is very expensive. Construction cost, do you think, really could offset the cost of capital? Can you please talk about that?
There are three things that you touched upon. Actually, you said two, but there are actually three. One is greenfield, which takes anything between 3-7 years to get built. That is one of the reasons there'll be an imbalance in demand and supply, because what is not under construction takes this kind of time period. Something keeps happening, whether it's a bad weather, the construction stops or something else happens. It just takes a bit longer. The second thing that you said is brownfield. Brownfield, the way we define, is not already in the capacity. It's something which somebody started building and has stopped because of lack of funds or something else changed. You try to get that property that that time to completion is less. That could be 16 months, 12 months, 18 months, etc.
The third, which you are saying was already included, that is neither greenfield nor brownfield. It's a conversion. Either it's unbranded that gets branded, or it's changing from one brand to the other brand. These kind of three activists, that's the fastest way of growing, and that some people also call it if it comes in a larger chunk, it's called an M&A or a consolidation in the sector. These three are different. I also agree with what you said, greenfield will take longer, and the cost of land in hospitality business with your ability to charge makes greenfield construction not very conducive to the return on capital that is needed. You get it ultimately, but after five, seven, eight years that the property has been in operation. Especially if it happens to be in a metro.
Sometimes you have to calculate differently. We had the Santacruz Taj Flight Kitchen land for 27 years sitting there doing nothing with a dilapidated old flight kitchen building. We are looking at only incremental investment and then the return on that incremental investment because we already had the land. That's not the only place where we have the land. There are many other spots, including right opposite this hotel, where we have the land, which is actually not helping us in our return requirements. There are many others where we have the FSI available and we feel that that's how we are better positioned to monetize on those and also propel growth of our brands, especially amã, in the homestay. We had not done it because we kept it as a purely asset-light model.
Building on, let's say as an example, if we have Taj Exotica in Goa and it has FSI available, and if we create a cluster of Amãs and call it Ama Village or whatever out there. It's a, it's something which is very positive. That it depends from company to company, brand to brand, and your source of capital, and whether you are funding it through your internally accrued free cash flow or you are borrowing money. In our case, I think all these things as we speak today are all very green and all very positive, and we have all possible options to do that.
Sorry. Yeah, that's fine. Just to understand, I mean, I'm not sure if you can break up the capacity growth expected between the conversions and the greenfield plus brownfield?
We can. You know, the one thing which we will change when we do the next capital market day is we'll give you more data by brand. By brand, by contract type, and by geography. If we took all those parameters and say India is the place, then almost 60% of our growth will come through new projects, new constructions, around 20% will come through brownfield, and 20% will come through conversions.
Okay. Perfect. My second question was around the revenue management. Basically, of course, ARRs are very strong, but how much of that part is contributed by the revenue management efforts from the hotels and how much is driven by the market? Basically, I think, I mean, there is a huge scope of flexibility in terms of tariffs, later or earlier, you know. What kind of, what kind of contribution do you think in this ARRs growth or strength you reported is contributed by the revenue management? What sort of, what revenue management are you doing at the moment, or are you adding something on that part?
I'm looking at our head of revenue management is sitting in the audience. I was wondering, would you like to answer that, Brij? Because it's really checking the credibility. Is revenue management able to add value in a strong market? Until he gets the mic, I think revenue management is a bedrock of any good hotel management company. We have various tools from forecasting to measuring business on the books to when to launch which campaign for how many days, with which partner or do it alone. Should we go for digital? Should we go for print in terms of supporting that campaign through advertising? It's not just the rates. We tend to forget revenue management is a much larger science. It includes the content, the content on the website.
I think this I give to you. Brij, you can take over from here.
Thank you, sir. Like Mr. Chhatwal.
Take mic closer to your.
From a revenue management point of view, as I had seen, I think we are very well poised and what efforts what we are doing, is driven towards, you know, growing our ARRs as well as occupancies. It's a fine balance. As we move forward and like what you were also mentioning a short while back, we have a lot of reliance when it comes to the transient bit of it, which actually gives us the ability to flex and charge rates based on demand and supply.
Which basically, you know, helps to yield up as we move forward.
Okay.
From a tools and technology point of view, I think the group itself is investing quite a lot of technological things as we move forward. We have, when it comes to forecasting, we use revenue management systems and pricing algorithms, which basically helps us to forecast as well as predict demand to do the right things at the right time across distribution channels, whether we're talking about our partners, whether we're talking about our own loyalty programs, and that is what we are doing when it comes to revenue management as we move forward. Does that answer?
Yeah.
You have to give the mic back.
Thanks. Thanks, Puneet. Last question from my side is, sorry, coming back to the question which you like, but you don't want to answer about the 33% EBITDA margin. If I look at your the chart showing operating costs, especially as you said, the admin cost and all those sort of things, I think it has performed so well, and the operating leverage is so high. I mean, you know, just a small increase in occupancy, or the way is the growth is structured, EBITDA margin should naturally go up from here on, given that your costs are not going to increase and the kind of inventory you have on order or coming up.
I mean, what exactly makes you to sort of to think twice before, you know, I mean, again, talking about the margins or anything, you know, because, I mean, as you rightly said, Puneet, the numbers really add up that, you know, of course, EBITDA margin should go up and especially operating leverage, looking at that, you know, looks like it should go up from here on, right?
You know, it's as Giri mentioned, we mentioned, we can always, you know, it's not that we will not strive for more, but to maintain the quality of our brands, we have to continuously invest. We are not doing business from 1 quarter to the next quarter only. I think your colleague also from the table behind had asked over the next 2 years. You know, in our group, in our brands, we don't think just 6 months, 1 year, 2 years. If you take a mid to long-term view about where you see your brands, where you see your company, where you see all these things, especially when the going is good, it is also prudent to keep investing in the businesses needed for the future and keep removing as a part of the management of the group.
It is an obligation for us to increase the size of the cycle and at the same time decrease the volatility in the portfolio.
Okay.
You cannot do all that by just being focused on 1 metric, which is margin.
Right.
You-- That's why that whole pyramid has, you know, 3 R strategy, which is about also reimagining your brandscape. Also, it would be fair to say that in the survival and revival phase, which we said also in the RESET, the T of the RESET was being thrift and financially prudent. When the times are good, also, you need to spend more before the bad times come because you'll not have the money. I think it's finding the right balance. If we are able to do instead of 33, 35, we'll be the happiest people, right? To say we did that. We cannot start with 35 and then define the strategy. We follow our strategic course.
If the markets continue to support us, if the rates continue to increase, occupancy continue to increase, the growth of Ginger comes the way it comes, mathematically the margin will increase. We're not saying it's not possible. The guidance given by us is this is what we plan as a management company. I think Giri said it rightly. When we started on that journey of Aspiration 2022, and we said we'll do 25%, and I said it also in my presentation, people said, "No, this is not going to happen." Especially the hotel consultants says... Now when we said 33%, everyone says increase. Nobody believed 25%, it's a very healthy situation. I think it's very good to see the encouragement from all of you. Go for 35% or go for 36% or 37%. Why not?
We take it as a positive. We'll work on it, but as a guidance, we have to look at the holistic picture. I think it's very important. Is it 33 of a 15% increase in top line or a 10% increase of top line? Is it a 35 of the top line staying the same or even a slight reduction?
Okay.
That's why I say percentage is just one factor. I think the entire theme that you kept seeing in the presentation from Giri was the diversification of the top line.
Yeah.
That how INR 8,000 crores became INR 11,000 crore enterprise revenue and INR 11 could become INR 15, and if you're still maintaining that kind of good margins, then the absolute amount is a very different number.
Yeah.
Sure.
I think focus on the absolute, Achal, actually.
Sure.
I think rather than one single percentage, because ultimately what we want is the HDFC growth story as an example I've just quote. you know, how does the P&L move? 31, the revenue moving, absolute EBITDA is moving, and absolute PAT moving actually. I think that is actually where I think will be great, actually. Yeah.
Sure. Just want to squeeze in last question, if I may. I know I'll not get mic after that. I promise I'll shut up after that. I'll definitely shut up. In terms of Tata Neu, I guess, probably I'm actually more bullish than you are. Just want to understand, have you seen any kind of conversion rate which is happening at the moment, at the customer level, which is helping you, helping you out? Going forward with more brands joining Tata Neu, what do you see? I mean, at the moment, I guess you mentioned about 20% of your enterprise level revenue, but is that after all the brands joined Tata Neu or is that additional we're talking about?
If you could please talk about that'll be helpful. Thank you.
See, it's not just what additional you get, it's also maintaining, because loyalty is such an important aspect of our business. You could lose your customers or you cannot acquire customers because they are stuck with another loyalty program. You know? I have been with one or the other loyalty program in my life and, you know, it's very difficult to move because when you move out, you stand to lose a lot. The great thing about Tata Neu is it's touching all points from a grocery shopping to jewelry to whatever else, hotels, et cetera, et cetera. Your cost of customer acquisition is 1. From our point of view, there are 2 things.
One, as a hotel company with the kind of monies we are investing, I doubt if we would have been able to build a industry-leading loyalty program or platform on our own. That's the first reason. Second, our variable costs on being on that platform is actually less than the money we were spending before trying to get those customers, advertising on all possible social media, and still not getting the customer to come through your website and, you know, the entire sector keeps complaining about third parties. I think that is the ability, unique ability to do that part. The third is synergizing.
The synergizing within the group with different companies is not only about a super app, it's about all other business which does not come or would not have come otherwise because all this is bringing you and your teams closer to each other. Your first choice, your first thought which comes to your mind whenever you have to do a dinner or a party or a stay in a hotel or et cetera will obviously be us. It should be with or without Tata Neu, but the likelihood and the strength of synergizing actually starts showing up. As I said, you get a customer who's not necessarily a typical hotel customer. He's maybe going to Cromā or he's a BigBasket. For the BigBasket customer staying, collecting enough Tata NeuCoins and becoming...
those coins becoming an enabler to afford a stay in a Taj is very aspirational. I think it's a holistic approach, and we feel that we are very blessed that without making that investment, we are benefiting and also from the know-how. See, we are very good in operational excellence in running hotels. We're not necessarily the champions of digital or building platforms. We are in the wrong business, right? There are other people who know that best. You cannot just build it today and leave it. This is a continuous change and investment which keeps happening. It's on a weekly basis, sometimes on a daily basis, and all the kind of customers' aspirations, what they see.
We understand what they would like to eat, how the plate could be, how the room should be, but not necessarily the digital journey of the consumer on using such kind of apps or super apps. We need that help. We are very blessed to have a company within the group that is building all this and we are benefiting. Want to say something, Pravin? He's our head, not only head of sales and marketing, but he's heading all the initiative on Tata Neu.
I think you said most of the things. Just to answer your question, keep in mind that when we started this journey, we were 2 million as our active members. In 1 year, we are 4 million, and today we have an excess to over 70 million people as part of the conglomerate, which will grow above 100 million once Air India and all comes in. I think the possibilities, the world of possibilities is immense, and we have just started to scratch the surface.
A quick, a quick note to the online participants. Kindly use the raise hand icon should you wish to ask a question. We can continue from here.
Hi. This is Pranav from RARE Enterprise Hi.
Oh, yes.
Yes.
Yeah.
I have some basic questions, and forgive me for not knowing this. Can you just explain in, because you have been repeating that Mumbai, Delhi, Bangalore, these guys, these locations have even larger demand for properties in Taj category. Can you just elaborate, taking example of one city like Mumbai, what could be a potential Taj revenue here if you were to open one more Taj somewhere.
Ah.
As compared to current, revenue of INR 11,000 crore.
11,000 is for the entire system, but if you took the city of Mumbai, then let's say if this hotel has close to INR 400 crore-INR 500 crore, if you built right opposite, that could have also INR 700 crore. Just one property itself could do that kind of. Because it's a very large development. As and when we get the permission, that's what we would aim for.
So, that means that, one category below all the hotels are 100% occupied?
No, hotels are never. I wish that was the case that the hotels could be 100% occupied. It happens, only in service residences, because those residences are given for a longer period. Hotels, if they achieve, in India especially, anything between 70%-80%, you're doing very well, because that's what the sector is expected to do, 70% occupancy in the next few years, based on a latest report which came from HVS, Hospitality Valuation Services. As Giri mentioned, places like Singapore, Hong Kong, London, New York, Paris, they're all 80%+ including Mumbai, 80%+ market. Metros like Delhi NCR are at 75%, et cetera. It depends from market to market. If you get to those kind of occupancy numbers, you're doing quite well.
Right. Right. Just a question related to this only. Next year, we understand that there are 3 main triggers. There is G20, then there is foreign tourists, and probably the World Cup also, which can actually help your RevPAR. If these factors were not there, and you mentioned this in your quarterly con call that actually the base has moved up after a long time, a long gap of 7, 8 years, and that's why there is a lot of support to RevPAR. If these 3 factors were not there, then what kind of RevPAR actually you can expect in next 4, 5 years on a continuous basis and avoiding one-time events?
You know, there will always be a one-time event. If it's not happening in India, it will happen elsewhere. I've just come last night from London. There was a coronation of, you know, the king in London, and for one week it's like the happening place. It will boost the revenue in May. Some analyst was recently writing about another company and Giri and I were having a discussion. There was a major air show in Bengaluru. Our Taj West End and other Taj properties in the month of March did exceedingly well. Next year it's not there. The year after, it's once every two years. It is there. If this year there is G20 and no air show in March, next year there'll be an air show.
Something keeps happening in the, in the sector. The one-off events, of course, a World Cup soccer or a World Cup cricket or a Olympics, these are one-time big events. That benefit is definitely there this year for cricket, also for G20. If that was not there, just imagine the kind of facilities that have got built. Very soon, the big convention center in Pragati Maidan as well as in Dwarka in Delhi will be open, which were built for this, but later starts getting used for other purposes. In my career I've seen that when I was a student, we were working in the Asian Games Village because Asiad was happening in India. That village did not move away because Asian Games Village, that whole complex became a new attraction for that part of town, right?
A lot of stadiums got built. The stadium started getting used for day and night cricket matches. That's how the day and night cricket. Also for music concerts. A lot of things evolve with time. They get built for one particular event, but that facility cannot be moved. Actually it's another improvement in the infrastructure. As I said before, any improvement in the infrastructure is a direct correlation, just like RevPAR is a direct correlation with our business. Improvement in infrastructure, having that facility, ability to hold 10,000 delegates under one roof, which was not there before, increases your reach to the world to get those kind of conventions.
Right. Right. Sir, last question from my side. In Ama, how many of the properties are group company owned properties, are there any third-party properties that also we are acquiring? Any strategy out there?
We only own two. The rest we service, we typically charge 15% of the top line as a management fee and 3% as marketing contribution. However, going forward, we might tweak that model and build a few of those on the land banks that we have. We haven't done that as yet. As I said, we were checking the viability, but we might do that going forward. Only two of the 114 that we have total in the portfolio are owned by us.
Right, sir. Since you mentioned that the land opposite to this building itself, what is the status there, like in terms of approvals, et cetera?
The status is that the file has been moving for the last 2 quarters. That's the positive news I can give. It was not moving. It was stuck for several years. For the last 2 quarters it's moving. Any quarterly call or a capital market day would be incomplete, so thank you for asking that question.
Thanks a lot. Congrats for a great performance.
Thank you.
Am I audible? Yes, I am. Good evening, Mr. Chhatwala and Giri. This is Karan Khanna from Ambit Capital. I had the first question on the demand side of the cycle and also the upside that's still left in the room rates. A survey by STR that tracks the top reason why people will not travel or perhaps reduce travel. Until 2022 this used to be because of COVID, but now it's the cost of travel. Do you think that the change in consumer sentiment and the fact that most of the international routes are now fully operational, especially to Middle East Asian and Southeast Asian countries, how should one think about the upside that's still left in the room rates?
You spoke about double-digit, you know, upside in the room rate in FY 2024, and some of your other listed hoteliers also spoke about low- to mid-digit upside in the room rates.
There are certain events in our life which change or have an impact on the behavior. I don't know how many of you in this hall actually after the first wave started driving yourself and go on a holiday. Started combining business with leisure and, you know, you go to a destination where there is a good Wi-Fi. I usually give this figure, which is a very easy one. Let's assume that it was only 10 million people out of a population of 1.5 billion who started driving themselves and got used to it. First time was very difficult because if you had not done it before. Second time was less difficult. Third time it became normal to do that.
Of those 10 million people, if only 10%, which means only 1 million people are doing it permanently in whole of India, these are just fictitious figures, and they only spend 7 nights in a year. Once 2 nights, once 3 nights, and one more time, another 3 nights or 2 nights, right? That is 7 times 1 million is 7 million additional room nights, which were not there before. That is what is having an impact because the term leisure was coined maybe 10, 15 years ago, but it did not happen to the extent that it is happening now. If there is a holiday, there were people also going before, if a holiday was there on Tuesday, you take a Monday off and leave on Friday evening and come back on a Tuesday evening.
The amount of that happening now is higher than it was happening before because there is that change, and also again, through improved infrastructure. I have not done it myself. A friend of mine recently had organized his company's business conference in Jaipur, and he drove. He said to me while he was on that highway, he called me and said, "You actually have to see this new highway which is going to link Delhi and Mumbai, and a part of that goes through to Jaipur, and this is as good as any other highway you would have seen in the world." This is the way things are changing. We are in a very dynamic kind of a situation where demand is back, supply is constrained, infrastructure development is moving fast.
Even Government is talking about tourism, which was mentioned by the Honorable Finance Minister in the budget speech. We had post-budget also meetings. As I chair the CII National Committee on Tourism, I can say that we have spoken more about tourism and what we can do. A global tourism investment summit is also planned to be held in Delhi in the next months. The date is to be confirmed. All this was not happening to the extent earlier. These are for a sector like us, it's a positive. We have not seen so many positives come together. That's all what you said rightly. It's demonstrated in the results that are being announced quarter on quarter by different listed companies that we can all read.
Thanks for the clarification. My second question is on the supply. You spoke about 4.5% supply CAGR over the last three years. Let's take the number as 160,000 branded room inventory in the country today and possibly expected to go to 190,000 rooms, say by FY25. If I look at the data, you have close to 5,000 rooms that are getting added. Recently, Tony Capuano, when he was in India, he spoke about doubling their hotels from close to 110 hotels in 2021 to nearly 250 hotels by 2025. Other hoteliers like Wyndham, Accor, and even domestic players like Lemon Tree also talking about a very strong pipeline.
If you can help us understand, you know, how confident are you on the supply continuing to be lower, in fact, significantly lower than the demand that you're suggesting?
We don't know about others, especially the international ones that you mentioned. As a, as a publicly listed company, when we speak about our pipeline, it is something which is legally binding. Contracts which are signed, have been announced, and are in different stages of development. We are very confident of that supply opening. That's one. The other thing is you have to go back to the slide which I showed about S.M.A.R.T. In the kind of strategic growth where we are talking about a balanced portfolio, how we are coupling the asset heavy with the asset light. I think that is far more critical than just doing flag planting and just adding number of rooms. We are not in the business of taking rooms to the bank account. Rooms is an enabler. A new hotel is an enabler.
We try to find the right balance of asset management, of introducing new brands, continue to reimagine our brandscape, and that is the beauty when you own 50% of your portfolio, right? You have to take care of that which drives your operating leverage, and then you talk about the new supply that you keep adding to balance that risk in case there is a downside or in order to expedite growth. If you build everything yourself, you cannot have the speed of growth that you have now. I think it's a lot of parameters and lot of pillars that need to come together to build this house of brands in the way that we are building and still keep, like Achal was saying, aiming for higher and higher margin and absolute growth.
It's a combination of a lot of things, and I remain confident that we will keep having our growth.
Thank you. Last two questions for Giri. Giri, firstly on the GIC platform, any update on acquisitions there and whether there's anything in the pipeline that you're working on or is it likely that it will be status quo and any plans to extend the same beyond 2024, given that adding 2,000 rooms in one year could prove to be very difficult?
No, I think it is status quo. We continue to kind of engage and kind of explore opportunities. At this point of time, I think I would more look at it as what are the opportunities for acquisition rather than one single platform. I think, I think that's the way it should be. They're great partners, and I think, we will continue to do so. Yeah.
Lastly, I think in the last Capital Markets Day, you spoke about 35% of your EBITDA coming from the new businesses, including management contracts. Does that number still hold true or is there any changes to that?
That is true, isn't it? Because I think, the management contracts do add a significant flow-through. I think what we are saying is that, as we add these new asset light businesses, they need to be able to contribute margins in excess of that 35%. That's true. I think Ginger, we spoke about management contracts. That is true, actually. Yeah.
That's it from my side. Thank you and all the best.
Just I will add to what you asked earlier is on the consolidation opportunities. They will come in near future because that ECLGS scheme that we tried to get for the sector, which we got, and then the improvement, you know, ECLGS 1.2 and 2.2. It's the Emergency Credit Line Guarantee Scheme, which basically replaced your old debt from a new one at some better terms. But the debt is not gone. At some point, certain of those variables need to be achieved. Because of that, some opportunities will come. That was very good for the sector, but it will not help 100%. It could help maybe 90% or 95%. Still 5%, 7% will come, and that positions us well together with GIC to have a platform.
Should something come up, at least we have a platform that has the capability of absorbing that supply or, well-positioned to take, you know, advantage of that growth, that is possible.
Thank you and, best of luck for the year ahead.
Thank you.
Jayesh, yeah.
Hi. This is Jayesh Shah. My question is to Puneeth and to Giri both. I think the whole presentation focused more on the non-hotel revenues, which is my primary interest. In a way, this revenue stream actually takes away the cyclicality. Am I thinking right when I actually look at the numbers now that Ginger plus SATS plus Chambers is actually more than the net profit of the company? Given the aggressive growth rate that we have for these three businesses, in the next five years, they can actually marginalize the hotel revenues, if I can put it lightly. These are the stable annuity kind of revenues which can keep growing without any cyclicality, which also means that there are different challenges and upsides. How do you see this whole mix changing? I'm talking of next five years more qualitatively.
Today, I don't know the exact number, but I don't think this is higher than 15%-18% of our total EBITDA, the new businesses. What maybe we have not achieved fully, that's why you asked this question, is any new business that we will enter into has to have a threshold of 35% or more EBITDA margin, because then I rather focus on a 30% or 32% of the existing assets that we own. We don't expect this to change our ambition or aspiration. With all the possibilities that we have on execution, make us believe that in 3 to 5 years, what is today sub-15%, if it grows to 30% of the total EBITDA that we have, then we would be extremely pleased.
That 70 that has been achieved or more than 70 that is coming today, has also come over almost a century. Even if we discount the first 70 years, because first 70 years we had only 1 hotel. In 73, the second Taj hotel opened, right? If we take only the last 50, these brands need to have at least 5 to 10 years to become stable. There is a consequence of keeping the same name. As I said, we kept Ginger because it's a good name. It sat in the right company. It was very relevant in the Indian context. For us it's like a totally reimagined new brand. If Ginger plus, Ama, plus, this private membership club business, which was always there, but it was only to support the Taj.
This membership club business and the Qmin, if 4 of them together become 25% of our top line, then the diversification of the top line would have happened in a very great way. Chambers membership fees is 85% flow through. A good Ginger is definitely above 50% margin, and a very good Ginger in Mumbai could be above 60% margin. These high margin businesses will take away. amã is a 60% margin business. Qmin is already basically sweating your existing infrastructure. We have not spent any money in either building an amã or a Qmin. It's reflected the profitability of Qmin is at both the hotel level and at a corporate level because it sits in a different company and it pays a fee.
That's why we cannot exactly take it out either. How much is coming here, we can always give that guidance and number. In it is integrated approach because it is improving and reimagining your brandscape. A Qmin in a Ginger is helping a Ginger. That all-day dining was always there. It's only got, you know, becoming a more cookie-cutter, more standardized, more premium and more stylish. That's how also those investments are also needed, which will always, you know, in existing 59 Ginger hotels, if 50 are relevant or 40, if we add 40 Qmin, they don't come for nothing. Some cost is there, whether you paint or you add new furniture or you add, you know, swing or whatever we have to do out there.
I thought Ginger at INR 400 crores and Chambers at INR 400 crores means INR 800 crores revenue at almost 50%-60% net margin at PBT level. It makes a significant difference. Probably these two businesses can scale up into 2x in or 3 years.
Sure. The rest is not sleeping. No, The Taj, as you saw, went from 4,000 to 8,000.
Yeah.
It's INR 4,000 crores. If Taj is doing a 30% margin, that is 1,200 coming from there alone. There are 19 more Taj hotels expected to open and a lot of more asset manage. That is the top line diversification we talk about, that it will keep growing. In that high growth story, if the new brands or newly reimagined brands can take a significant percentage of it, then we are in a very, very, very good position to face any kind of downturn that comes.
My second question is, when can your international hotels hit the company level EBITDA margins qualitatively? I'm not asking you to commit to a particular year or a deadline, but do you see that visibility? Are you internally confident?
See.
Can it happen in 3-5 years?
I'll answer it the way it is. One is an accounting challenge. Our international hotels do not get, and I'll let Giri answer the second part, for tax reason and other reasons, wherever we get a management fee, it gets accounted in IHCL stand alone out here. It is not accounted in the international. Even in London, a part is in the profit and the other part is coming as fees. The picture looks diluted when all the analyst and investor community sees it. It is not possible to drive 40% EBITDA margin in New York City. It's not doable with the kind of food and beverage we have. It's not happening in the industry. There may be a few exceptions here or there, but for various reasons.
If you're a well-governed company and you're following all the rules, laws, practices, 280-room property in New York cannot do 40% margin. If it happens to be the pier overlooking Central Park, because again, very iconic, more than 100 years old asset, it has certain investment needs. Same thing is on the salaries, costs and wages. The site cost in operation in a European context, the labor cost is almost double than that in India. It is not because the person is earning more. In that context, maybe earning the same. It's all the pension system, the social security, the health coverage, the unemployment insurance. That's why when they went through COVID, they could furlough people because the rest you could get from the unemployment insurance.
That's why we didn't do anything because you take away life and livelihood of people, right? That was a very different context, but you also pay in that context. Everybody has a de-deduction from both employee and employer point of view. That's why those kind of margins are not possible in a Western Hemisphere context.
The other thing.
Are they possible under management contracts?
Yes, it is possible.
Which is going to be the.
Not in the hotel P&L. Those margins on what you account for, because we're only accounting for the management fee.
Yeah.
A hotel level is very difficult.
I think, Jayesh, I think, in any portfolio, you will always have portfolios which are revenue drivers and portfolios which are profit drivers as well, actually. I think, and therefore having a New York and a London property is very good in term. You know, you need to balance it. That's where the capital allocation also comes in when you look at revenue, profit and capital. You need to look at all of it together actually. Hence, and that's the way we will manage actually. Yeah.
Thank you very much. That's all.
Hi. This is Kunal from CLSA. Puneet.
Oh.
Puneet, you highlighted earlier that, you know, greenfield capacity is difficult to put up today because of the high cost.
I can't hear. Can you speak a bit loud?
Louder?
Yeah.
Louder?
Yeah. Mm-hmm.
You highlighted earlier that, you know, greenfield capacity is difficult to put up today at the current cost levels because the returns are in long gestation. My question is, like if not today, then when, you know? Like, you know, if you look at the industry level, the margins are at their peak levels or rather like record highs. ROSIs are pretty healthy. Like you, like you highlighted in your presentation that, you know, there are macro tailwinds behind us. Would you, even in the current, at the current profitability levels, would you not anticipate any, you know, addition?
We said that's why we are very confident of our pipeline, because we are a very strong brand. We command RevPAR premium. People who are building with us will continue to build, and also they will get funding because our name is there. It's not that easy to get funding for hotel business, especially when banks are still not out of the challenges they have because of the COVID with other partners, right? Not for us, it's not an issue, and that is why we opened 16 hotels. We're opening 20 hotels or maybe even more in this current financial year because hotels are getting built. As I said myself, 60% is new build and 20 is brown. It's 80% of that what is coming in.
If it is going to be in some form of new construction, then obviously the supply gets built, but the speed will not be the same as it was, let's say in 9, 10, 11, 12, 13, 14, 15. I mean, that time the supply rate growth was much higher.
And, and I think-
There's one.
A related question to that is, You know, because of the high profitability of the industry, like, you know, how is the competitive intensity on the management contract side? You know, your peer group is also growing through management contracts. How is the competitive intensity there?
I think it's not something that we keep doing like kind of a price cutting to get a management contract. You know, when somebody comes and wants to tie up with us, and if everything is right, the site is right, it's the right fit for the brand, then in a scheme and scope of things with the given what a project costs, I don't think it's the fee is such a sensitive thing for any owner. I think it's more important is are you the choice, preferred choice as a brand or as a partner? With Taj, we never face any issues. Anybody who could get Taj would always prefer a Taj, including by the global majors.
In a recently held conference in Bangalore, a global CEO said, "You know, we try to compete, we find it difficult with the Taj," or, "We recognize," whatever words he used, but something like that. Of course, with our new brands we have competition. We have competition with Vivanta. With Ginger, again, our business model is different. We are putting the money where our mouth if we are saying we are going to do an operating lease, then that is a rent agreement. Then you are like a landlord, and you are a tenant. I don't think. It's also not always just a management contract, it's also the business model and which brand we are talking about.
Sure. Thanks. Yeah.
Hi, Sumanth here from Motilal Oswal.
Sumanth, we've completely neglected the online.
No, I think. No, somebody's tracking. Mohit is tracking there.
Mohit is tracking. Okay.
Do we have questions on online at this point of time?
Okay. Shall we continue?
Yeah.
Okay. Yes, Sumanth.
Can you talk about hourly basis, charges in hotel industry and how it is helping Indian hotel industry and Indian hotel for ARR?
Sorry, Sumant. Excuse me, in the back, can we somehow increase the volume of the mic?
Yeah.
Is there a Because it cannot be that everyone who speaks we can't hear.
Can you talk about hourly basis charges for hotel and how it is helping Indian hotel industry?
Hourly basis?
Yes.
You mean like a Niranta or what?
So three-
The airport hotel with 2 hours or 4 hours.
Yeah, three. Yeah.
It's very small. It's, there's 10, 15 rooms out there, you know. That is like, The German expression is ""weder Fisch noch Fleisch"" It's neither fish nor meat or anything.
Yeah.
It's like a drop in the whole sector. How much we want to, Sumanth. That is not a model. There are other models like this in the Western Hemisphere for hourly, but that's for a very different segment which we'll not enter into.
Yeah. Why I am asking, the way rate is increasing and the business travel you might need three, four-hour stay for hotels. Do you think the trend is going to increase from here?
I think the airport hotels will do. Like if I take Taj Santacruz as an example, the occupancy there is more than 90%. I think being where it is next to the airport, I mean, I think I know that that hotel also does day use kind of charges actually. As Puneet said, it is specific to that hotel actually. I was in Tirupati the other day where, you know, where people go from Chennai and other places to Tirupati. They just need the hotel for a few hours. Those opportunities may be very specific to certain contexts actually. I think hotel general managers will take those opportunities in terms of doing it. Is it going to be the bulk of the occupancy and rate? No.
I think it'll just add to the cream is what I would say, actually. Thank you so much. Yeah.
Hi. Amit Agarwal from Nuvama Wealth. My question pertains to your strategy, Puneet. I mean, in the current context where the market's also looking good in terms of hospitality, you have a very aggressive growth strategy. First question is, in your mind, what would be the key risks to the strategy? Because the situations can change very, very quickly, and we've seen that. My second question comes to, with this aggressive growth strategy which you have, how are you going to be maintaining the quality control? Because end of the day, people are paying for the Taj brand. If the quality control gets lost, you lose the brand image. That's all. Thanks.
Second one is easy. We have that whole focus on culture, on trust, awareness, joy across all brands and all the things that we do consistently with or without COVID or in a boom or a doom time. Our focus has been very strong on culture, and we can boast of a very strong culture that has been created, which we also call Tajness. Four generations now. I think it's third or fourth generation. It's in the DNA of the group and within the group in the company, so that part is quite intact. On the growth, aggressive growth, I think that actually helps to keep the culture. You know why? When people don't get growth, they leave the organization.
What has happened is that a lot of our people, including the current management team that you see in the, at the executive committee level or one level lower, they've all got promoted at least once or twice. If somebody was a senior vice president, then it's today an executive vice president. If somebody was a VP, is a senior vice president, including the person sitting in this hotel when I joined was a general manager, then he became an area director. He was from one hotel, he's now having 35 hotels. What is the risk? There are risks because not every person is able to grow to that role. The question is how can you mitigate that risk? By giving them further education, training, experience, exposure, et cetera.
One hand is great, you're able to retain, have people you grow from within, otherwise those terms would not have existed, that there comes a ceiling for everyone at some point of time, where. That's one risk is how you grow from within, keep the culture, and still absorb that kind of growth. The question is very relevant. Second, risk, which is when you become a very high growth company, sometimes one gets carried away. I hope it does not happen. At least we will not let it happen, it's not a part of our strategy. You start buying assets or buying companies here or there. We don't have any such plan. If there was anything, it will be communicated.
That is obviously the risk because most of those mistakes in the sector have always happened traditionally at the top of the cycle. When you are in a cyclical business, everything is going great, you just tend to think you can, you know, dance on water or, you know, do things which are not normal, and then the next downturn is around the corner, and then it comes and hurts. It's not. I'm not talking about us, I'm talking across the globe. Across the sector's history, that has been the case, and that's why a lot of people call hotel investments to be anti-cyclical. You should try to invest when it's, the cycle is not that strong, so that by the time you finish building or renovating or reimagining, repositioning, hopefully you start hitting the upswing.
You also did not pay a fortune because you went when the cycle was weak.
Just conscious that people have been in the room for two and a half hours. Do you want to continue this over coffee? I mean, Online. Online, is there any question online?
No.
No.
No. No.
Okay.
One last question if anybody wants, then otherwise we continue over coffee. Yes, yes.
Good evening. This is Pratik from Jefferies. A couple of questions. Inflation in broader economy seems to be like sort of cooling off. Does that flow into our margins, given we are like looking at slightly higher F&B growth versus what inflation is trending currently? In that context, how is the staff shortage currently in the industry versus what was looked at a year back?
Good questions, Pratik. inflation cooling off is good. At least we don't have to work on the raw material cost. That will be a positive. More important, internationally, where especially because of the Ukraine issue, the energy costs have gone through the roof. I think that would be a big help if that comes down also. Shortage of... You know, there was always a shortage of people. Good people is very difficult to find, that's why what we have done is we have launched a series of programs and we have tripled our L&D budget. We have Gaurav, who heads our HR. We are even encouraging people from non-hotel training.
If they have a good business degree and have up to 5 years of experience to come and become within 5 years a general manager of a hotel, which was, you know, 10, 20, 30 years unheard of. I think we are doing a lot of things, apprenticeships, scholarships, sending people abroad, giving them exposure. Dubai, people coming here, our people going to Dubai. London, we just sent a task force because there was a shortage of people to London. We might be doing soon some of that in the U.S. That shortage is more applicable, the way I'm looking at it, is really in the West. I mean, you know, even now the airports, if you're having a connecting flight, the likelihood that your baggage does not make it is very high.
It's not 50%, it's like more like 70%, unless there is a lot of time for a connecting flight. Things are a bit difficult. A lot of people left the sector, but that's really for countries which don't have the kind of younger population and, you know, people very excited to go and do something. We don't have that issue here. On the contrary, we have seen the kind of loyalty that we have seen from our people. Of course, a few left when they were offered higher salaries or, you know, like they got better proposals from the outside. Most of the people did not, and they did not because of the way we treated them during COVID.
Them, their families, the community, everything, and I think, your generation and the one generation after you, these things matter to people a lot. They always mattered. They are becoming more and more important, including your commitments to ESG, all those kind of programs that we have in place. That's not a customer loyalty with Tata Neu. That is a employer branding and employer loyalty which you get by doing the right things.
Right. One last question. This is just to understand the trend line. On pricing, when we compare the current period versus 2004-2008 period, in terms of like-for-like pricing in various segments, where are we currently versus that period? Also, probably if you can understand the pace of growth, what we saw at that time in terms of, year-on-year growth in RevPAR or pricing, that and how does that compare to what we saw in FY23?
I see that you are always modeling when you are asking the question so what to put in a model. You know, there is one thing missing. At that time, if Bangalore had $400 as the pricing, the dollar was 40 or even less. If you took the rupee equivalent, we are there, almost there today. It's not adjusted for inflation. It's back there despite a humongous amount of supply that has gone in that, as an example in that market. There is, if you take it in dollars, then we are far behind. I think most of our costs are in rupees, so let's look at it in rupees only. We have a way to go.
I think, a further increase, if it was to come this year and next year, would get us closer to, the values which you could compare with 2006 or 2007.
Okay. sure. Thank you, and all the best.
Very good.
Thank you.
Thank you, everyone. If there... Oh.
Yeah.
Yeah. The only question...
Okay, this is the last question.
Last one.
Otherwise, later we take everything outside.
Yeah. The only question I had is, if you have an update for the Port Trust demand, is there a updated status that you have?
No, I think, no. I think, we are very clear. If you have seen, the balance sheets and all that, what we have been disclosing. I think what we pay is in line with an agreement with the Port Trust way back in 2004, and that's the basis of our entire case. There is no update. There's no update, and we believe, our case is very, very strong.
Thanks.
Thank you.
Thank you, everyone. If there are more questions, we'll take them outside. Thank you.
Thank you.
Thank you.
Thank you, Mr. Chhatwal. Thank you, Mr. Sanjeevi. Thank you everyone for your participation today. We now have a high tea outside in the pre-function area, and we would like to invite all of you there. Have a pleasant evening ahead.
Thank you.
Thank you.