Ladies and gentlemen, good day and welcome to The Third Quarter ended FY 2024 Earnings Conference Call of Chalet Hotels Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sanjay Sethi, MD and CEO, Chalet Hotels Limited. Thank you, and over to you, sir.
Thank you, Rayo. Good morning, ladies and gentlemen. Thank you for joining us for the Chalet Hotels earnings call for the quarter ended December 2023, and for being a part of Chalet Hotels' journey of growth and innovation. Allow me to provide you with some key highlights of the last quarter. Globally, the hospitality industry is witnessing an uptick in occupancy and rates led by increasing international tourists, which as per WTO, is 88% of pre-pandemic levels for the year 2023. This was aided by improvement in business travel, stronger group activity, and resumption of large events. This comes against the backdrop of a volatile geopolitical environment. Our India story continues to be of resilient growth, and the country remains as the fastest growing large market. Corporate demand in the country has also seen consistent improvement.
Office space absorption and increase in business travel is expected to grow at a CAGR of 8% over the next eight years as per IMARC Group. We also see tier two cities emerging as key hubs for new ecosystems, with a slew of infrastructure projects in the pipeline. Chalet Hotels continues to ride the uptrend, and I'm pleased to report that our Q3 revenue has reached a record INR 3.8 billion, representing an 18% increase compared to the same period last year. The results are a testament to the strength of asset portfolio of Chalet Hotels, backed by overall resurgence in the hospitality industry in the country. In Q3, our RevPAR, or revenue per available room, grew by 18% year-on-year to INR 7,838.
Average room rates grew to INR 10,974 and grew at 8% for the portfolio. However, on the same store basis, the average room rates grew by 11% year-on-year to INR 11,253. The occupancy for the quarter was at 71%, an expansion of six percent points over Q3 2023, and this is despite higher inventory of rooms in the portfolio. This was led by an accelerated improvement in the Mumbai market, further supported by growing demand in Bengaluru and Hyderabad. Our Powai hotels saw several large events and high demand from groups, which led to eleven percentage point increase in Lake Mumbai occupancy for our portfolio. F&B revenue also did very well with 27% growth over last year. During the quarter, hospitality segment achieved a revenue of INR 3.5...
Three point four billion, and our EBITDA for the quarter was INR 1.6 billion. A robust 29% growth in revenue and a 46% rise in EBITDA when you compare it with the same quarter last year. We continue to be diligent in managing costs and optimizing operating efficiency, contributing to healthy EBITDA margins. Employee costs continue to be stable at 12% of revenue, and utilities as a percentage of revenue, improved further with a drop of 80 basis points to 4.8% of the total revenue for the quarter. Our hospitality EBITDA margin has expanded five percentage points over the same period in FY 2023 to 46.3% now. The consolidated EBITDA for the quarter was INR 1.7 billion, reflecting a 44% increase over the same period last year on a like-to-like basis.
A quick update on some of the projects. Leasing activity has picked up pace in Powai, and we've signed our first tenant for one floor there. Additionally, we expect a closure of two more floors very soon. We are also in advanced discussions with potential tenants for the rest of the spaces in Bengaluru and Powai. Our ongoing renovation and inventory additions at Dukes Retreat and the Marriott Bengaluru are as per schedule. As you're aware, the work at the new hotel, the Taj New Delhi Airport, has commenced. Work at Hyatt Regency in Airoli will commence next quarter after receipt of the revised construction approvals. Sales velocity has been very promising for our residential project at Raheja Vivarea at Koramangala, Bengaluru.
We have sold 38 units since the last earnings call, and Milind will share some more details in a little bit. On the ESG front, I'm pleased to share that the Westin Hyderabad HITEC City has recently been certified as USGBC LEED, LEED Gold. Ladies and gentlemen, with a strong pipeline for expansion, healthy operating performances, and a team that continues to excel, I remain excited about the foreseeable future of our company. I'm now going to request our CFO, Milind Wadekar, to take you through some of the finer aspects of the financial results. Milind?
Thank you, Sanjay. Good morning, ladies and gentlemen. We have been consistently delivering strong performances and are well poised and confident in continuing the same going forward. The last quarter has been one of the best quarter for Chalet, both for revenue and EBITDA. RevPAR had a double-digit growth of 18% to reach INR 7,838. We also continue to work on our core competencies of optimizing efficiency in our existing portfolio. A testament to the same is four of our existing big box business hotels, that is JW Marriott and The Westin Powai in Mumbai, The Westin Mindspace at Hyderabad, and Marriott at Bengaluru, have reported their highest ever quarterly revenue in Q3 FY 2024. These hotels are expected to reach new peaks as we move forward.
Total revenue in hospitality segment grew by 29% to INR 3.4 billion for the quarter ended December 2023, led by strong occupancies, improving ADR and aided by strong F&B trends. Reported hospitality EBITDA for the quarter was at INR 1.6 billion, with EBITDA growth of 46% year-on-year basis. The margins for the quarter were at 46.3%, which is an expansion of 500 basis points over the last year, through continued focus on variable costs and on the back of robust revenue growth. Our other hotels, including recent additions, are on growth trajectory and are expected to contribute significantly to company's growth. Consolidated revenue for the quarter was at INR 3.8 billion, a growth of 18% year-on-year basis.
Consolidated EBITDA was at INR 1.7 billion for Q3 FY 2024, with a growth of 44% and margin of 45%, an expansion of 5 percentage points over last year's like-for-like performance. PAT for the quarter was at INR 0.7 billion, as against INR 1 billion in the corresponding quarter, which had one-time exceptional non-cash adjustment to the tune of INR 0.86 million. Adjusted for this, the PAT grew 3x. The net debt of the company declined by 314 million from March 2023. The company spent around INR 300 billion in CapEx, which was largely made out of internal accruals. Reiterating confidence in our debt, India Ratings and Research upgraded our credit rating to A -, sorry, A- with positive outlook. This is the second instance of debt upgrade in this financial year.
Out of the net debt of INR 24 billion, around half is allocable to capital work in progress and assets yet to be operationalized, leaving the company at healthy leverage and return ratios on invested capital. The cost of finance as on thirty-first December 2023, was at 8.74%. The company has CapEx plan of around INR 8 billion for the next 15 months for the projects which are already announced, and this CapEx will be largely funded through internal accruals. The details of the projects are included in our investor presentation. The company has available lines of credit and undrawn overdraft limits of INR 6.3 billion. Lastly, a quick update on our residential project at Bengaluru. We have received occupancy certificate for 4 residential buildings in Q2, and expect OC for 5 more buildings in next few days.
Construction for 2 new residential buildings is in full swing. The project had unsold inventory of 238 flats measuring 5.7 lakh sq ft, adjusting for 83 flats sold earlier. Sales commenced from September 2023, and we sold 42 flats till December 2023, with a total area of 1.1 lakh sq ft, which is around 19% of unsold inventory. We see a strong demand for residential flats in Koramangala and expect to close entire sales much earlier than our original estimates. Faster sales will accelerate our cash flows from this project, which is expected to fund significant CapEx for next financial year. The company has collected INR 76 crore from this project as on date. The commercial tower of 1.5 lakh sq ft will be sold post receipt of OC in FY 2026.
With this, let me open the floor for questions and answers.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone.... If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Archana Gude from IDBI Capital. Please go ahead.
Hi, sir. Thank you for the opportunity, and congrats on very strong set of numbers. I have three questions. Firstly, Sanjay, you spoke about Mumbai markets. Can you also give some insights on the other markets? How the 16% growth in ADR was driven? Was there any particular market behind it, or it was more of broad-based growth in the ADR?
Archana, thank you for the question. Look, we don't give individual city ADRs because then that becomes, you know, sensitive information in our, within the concept that we have. So we're sort of clubbing the ADRs for Mumbai together and the rest of the cities. We've had, you know, largely 4% growth in MMR on the average room rate, and all of it almost driven by the JW Sahar. And then, on the Powai hotel, where we focus on occupancies, given that it's a 777-key property, we focus on occupancies, and we've been able to drive up occupancies quite sharply over there, resulting in the RevPAR growing at 21% in the Mumbai market.
Hyderabad, Bengaluru, Pune, have all done their bit, but we are not in a position to give you a breakup of each city, because there's just one hotel in each of these cities.
Sure, sir. Sure, that's okay. So secondly, on this corporate contract renewals for calendar 2024, so how has been the growth in the rates on year-over-year basis and overall demand for the number of rooms?
You know, from our perspective, we've said that we'll target double-digit rate growth from corporate contracts. Thus far, the RFP process, the contracts have been negotiated within a range of 12%-20%.
Sure. And sir, any guidance on the demand front?
Demand continues to be strong, Archana. I mean, you know, the corporate travel is really doing well, especially the domestic corporate travel in India. Of course, aided by a lot of MNCs within India. And then the MICE segment is just doing brilliantly well. And so combined together, we're in a position to continue to grow the rates and at the same time optimize occupancies. I think there's a lot of headroom for growth in occupancies also on, in most of our hotels.
Sure, that helps. Last, one question to Milind, sir. Sir, how we should look at this debt repayment for Q4 of this year and the FY 2025 and 2026?
So annual repayment ranges between INR 350-400 crore. And then, if there is bullet repayment for any of the loans, we normally get it refinanced. Excluding that, the average is around, Sorry, INR 350-400 crores.
For 2025 and 2026 together, right? Like, each year.
Yeah.
Sure.
Should be in the range of INR 350 crore.
Okay. That was helpful, sir. So thank you so much, and all the best.
Thank you.
Thank you. The next question is from the line of Karan Khanna from Ambit Capital. Please go ahead.
Yeah, thanks for the opportunity, and congrats, Sanjay and team, for another record quarter. My first question, just continuing on the previous participant's question as well. If you look at your Mumbai portfolio, so a couple of other listed hotel companies, listed real estate companies, have reported performance for their hotels also in Mumbai, and we've seen double-digit ARR growth for their portfolio. But in your case, Mumbai has seen 4% growth, and we've seen corresponding supply addition in the Turbhe and at the airport area. So going forward, how should we think about, you know, your earlier guidance on double-digit ARR growth for continuing for next couple of years in light of more supply getting added in these micro markets?
So Karan, thank you for your question. Number one, the double digit indication that I'd given was pan-India growth rate, but I think I see no reason why Sahar shouldn't grow similar rates. There will be aberrations in markets and cities. As I mentioned earlier, Powai was on a base of very low occupancy last year, and our attempt has been at stabilizing occupancy at Powai. So if we were to sort of stabilize or exclude Powai, the growth within Mumbai market is in the range that we were talking about. More importantly, as you will see, the 16% growth in the average room rates in the other cities, which is a combination of Hyderabad, Bangalore, and the Novotel in Pune, tell the story to you.
This, despite Novotel adding 88 rooms in its portfolio in this quarter. The whatever ADR growth that's come out of it is on enhanced inventory, which typically when you open new inventory out, you try to grab market share by lower rates, which hasn't happened in our case.
Sure, this is helpful. Second question, you know, have you narrowed down on any micro market where you could possibly look to add more leisure or commercial supply, by inorganic growth?
So several conversations are on. As I said last time, we have a busy business development team that's looking at opportunities. Chalet's theme for some years has been inventory addition and growth, inorganic growth. We'll continue to go down that path, whether it's in form of greenfield acquisitions of land parcels or opportunities to acquire ready hotels. But you must also keep in mind, we have a fairly large pipeline that is under development now, and if you add all of them together, our vision or my vision of hitting 5,000 rooms in the next three years is gonna pan out fairly easily.
Sure. The second question, Sanjay, you know, you've received a board approval for possibly raising funds up to INR 20 billion, but to, at early stages at this point, but assuming you get the shareholder approval and go ahead with this, how should one think about deploying this, towards paring down debt, as well as, you know, organic and inorganic growth?
So, Karan, as you said yourself, early stage, there are certain steps to get to actually starting the, you know, capital raise process. All in good time, as we stated in our press release, the intent is to, of course, pay down some debt, and more importantly, look at opportunities that come our way in the next couple of years.
Sure. And lastly, Milind, if you could reiterate the leasing timelines for your commercial assets, and what kind of revenues are you expecting over the next two to three years?
If we have three commercial buildings, which are almost ready, in Bengaluru, a tenant has moved in. So Bengaluru, we expect entire building of 6.5 lakh sq ft to be leased out by this end of financial year. The mall converted to commercial office may take three more months. Leasing for Powai building has started. We expect around 4.5-5 lakhs to be signed by this year end, and balance in the next financial year. In Q4 of next financial year, and then everything will be leased out, and we start earning rentals from the same.
Sure, this is helpful. Thank you, and all the best.
Thank you.
Thank you. Before we take the next question, we'd like to request participants to please limit your questions to two per participant, so that the management is able to address questions from all participants in the conference. We take the next question from the line of Vikas Ahuja from Antique Stock Broking. Please go ahead.
Hi, good morning, to the management, and congratulations on strong quarter and execution. My first question is again on the, you know, the ADR growth, we have seen this time. If I look at the first half, we did almost 29% and, growth in ADR, and now I understand, you know, the base is also catching up, and, and on apples to apples, we grew, like, 11% ADR. Just, just want to, you know, understand, because in the opening remarks, you also talked about 12%-20% increase in corporate rate. And with this overall momentum which is going, is it reasonable to assume, you know, this kind of a growth, looking at maybe 12, 12 months from here, maybe somewhere at the start of double digit?
Vikas, thank you for the question again. Yeah, look, the segment that we spoke about, which is a 12%-20% RFP segment that we're looking at, is only part of the business. There are several other segments that come into play. For example, the contract or the airline crew segment, which typically comes at a lower rate. Although the rates have grown, they've grown by something between 65%-80% from where they were pre-pandemic, actually. And in larger hotels, we'd like to get a base occupancy of these contracts, which support the overall RevPAR for the portfolio. Then we've got big city hotels that need to be supported by MICE. We've got convention centers and banquet halls.
And then we have value periods every week during the weekend and the holiday seasons, whether it's Diwali, Christmas, Easter, all of them come into play. And when you blend all that together, and you look at the segments that we use as a mix to optimize the RevPAR for the hotel, you may not see on the base that was there already last year in Q3, Q4, in the rate increases of what you've seen in the previous quarters. But, you know, all these blended together, we're still targeting to get to RevPARs, which are very interesting. We reported 18% growth on RevPAR with additional room inventory this year. 88 rooms over here in Novotel, 168 new hotel in Hyderabad, and we had the Dukes Retreat that got added to the inventory.
So despite all those additions, an 18% RevPAR growth is a healthy growth, coming on a base of Q3 last year, which was a very good quarter.
So, this is helpful. And my last question is, you know, if Mumbai ADR was around 4%, right? So if I could, if I understood it correctly, this is one, because there was a Novotel room addition. And secondly, the Powai Westin mix was higher because occupancy there was higher. So if I look at Sahar and Powai Westin on standalone basis, the ADR was still in double digits. And finally, is there any one-off in the margins or it was all off?
So one correction there, Novotel is actually in Pune, it's not in the Mumbai metropolitan region. And as I explained earlier, it is the Powai hotel, which is the Westin and Marriott Executive Apartments, which has an inventory of 777 rooms, where we had occupancy was very low last year. It was in the 50s. We were tempted at doing, going the occupancy route in that hotel in the last quarter to get it to normalize occupancies, and therefore, the focus was on filling up the hotel. In terms of margins, I think all hotels have done extremely well and contributed very well to the portfolio. JW Sahar, I think, is the rockstar hotel within that, but overall, all hotels have contributed positively.
Okay, there was no one-off in margins. Thanks a lot. Thank you.
Thank you. The next question is from the line of Jinesh Joshi from Prabhudas Lilladher. Please go ahead.
Yeah, thanks for the opportunity. Sir, I have a question on our foreign guest mix. So if I look at the nine-month number that we have reported, I think we are at 34%, and this is despite the fact that we had G20, World Cup, etc. So what exactly is the issue? Because if I compare this number with the earlier year, we were at 35, and I think the pre-COVID base was at about 50% plus. So any specific reason why we are still short of the earlier years despite these events?
One follow-up again is, in the opening comments, Milind sir mentioned that we have had two upgrades in our debt rating, but if I look at our interest rate from the last financial year to this year, I think it has come down only from 8.75 to 8.74. Also if you can highlight the reason behind that?
Sure, Jinesh. Milind will come in immediately after I give you my answer on the mix of nationality. Look, in my opening statement, I did mention that the foreign business travel globally hasn't come up to pre-pandemic levels yet. And one way to look at it is, as that this is for potentially the upside going forward, right? As that stabilizes. You've got to remember that there are two conflicts going on globally, which hinder flight paths for long-haul flats. The Ukraine-Russia situation has created a longer flight path into India from East and West Coast of the US, and then the Middle East situation is not helping that.
We did expect that this at some point in time, this is sorted out, and there'll be stabilization of, foreigners, foreign segment within our hotels. It has grown. As a percentage, it may not show us it's grown too much, but in absolute numbers, it has grown by, I think, about 7,000 room nights on a base of 62,000 room nights last year. So it is a 10%-11% growth still. The other thing is, the domestic demand in India is just so strong. It seems to be coming at a price point that there is really no reason to prefer one over the other. We'll take business from wherever it comes at the price points that work for us.
So Jinesh, on this, interest rates, so one of our lending banks has increased PLR for last few months, and we expect that to stabilize as we move forward. What is going to happen in next two or three quarters is, we may get further upgrade from rating agencies, and part of our loans will get converted into LRD, so which will bring down our cost. So this is temporary phenomenon, which we expect to get stabilized in next quarter or so.
Sure, sir. One last question from my side. So if I look at our leased area, I think that has increased from about 0.5 million sq ft in FY 2023 to about 0.8 million sq ft as of the last quarter. But if I look at our quarterly revenue run rate over the last 3-4 quarters, it has more or less remained stable in the band of about INR 28 crore-INR 30 crores despite increase in the leased area. So if you can just explain the reason behind that. And also, in your opening remarks, you mentioned that for Powai, where the leasing has already begun, we have signed one tenant and closure for two more floors is expected very soon.
So, explicitly for Powai, in the next quarter, how much additional area are we planning to lease out?
Jinesh, I mean, if you look at quarter-on-quarter movements in our lease income, which was in the range of INR 20 crore in first three quarters of last financial year, it is averaging to INR 26 crore, and last quarter it was INR 29 crore. So what we do, and whenever we sign lease agreements and tenants move in for fit outs, we start recognizing revenue. We straight line the revenue and start recognizing in books. This is a requirement as per accounting standards. And to answer your question on Powai, so last quarter of the next financial year, everything, the revenue will start kicking in, in the books. So we expect from Q3, there will be some revenue, and Q4 it will- Sorry, I mean, it will pick up from, it will start, we'll start accounting it from quarter one, and it will peak in the quarter four.
So, sure. Actually, I was looking out for the exact amount of area, because I think in the, in the presentation, we have mentioned that out of the 0.9 million sq ft, we have leased out 0.04. And Sanjay sir mentioned that first floor, I mean, first 10, it has been done, and then two more floors are closed out. So I was trying to get a sense that this INR 30 crore run rate, which we saw in Q3, can we see a big jump in Q4? So that was the thought behind asking the question surrounding lease area, especially for Q4.
So you will see major jump in Q1, FY 2025. There will be increase in last quarter, but major jump we'll see in quarter one, FY 2025, and it will go up every quarter after that. There will be significant increase on quarter-on-quarter basis. Dilip, basically, we don't give forward-looking numbers, and that's the reason Milind hesitated to give you the exact numbers. But as he said, we expect a sharp pickup in Q1, while there'll be some pickup in this quarter also.
Sure, sir. Thank you and all the best.
Thank you.
Thank you. The next question is from Sumant Kumar.
Yeah, hi. So, yeah, so this quarter we have seen a 27% growth in F&B. So, might be a reason of Powai Hotel, we have opened the room and, so can you talk about any other reason for the higher growth of 27% in this quarter?
So, Sumant, typically Q3, which is the October to December period, is a high demand period for weddings and MICE events. So this is a playout of that. Personally, I felt we underperformed in Q3 of last, the previous year, and now this, this is sort of normalization of the numbers that we see. We are seeing a tremendous demand on, large banquet events, weddings, social events, in the last year, year and a half or so. In the supply side, besides the Jio World Centre that opened out or convention center that opened out, there's not much that's come up, and unlikely to come also. And follow after the Jio World Centre, there are just two or three hotels which have the banquet halls that we have, that are there, that are there in our portfolio. So the natural flow then is to us.
That along with the, you know, very good quality hotels, given that we now renovated the Powai Hotel and rebranded it to Westin, the response has been very, very positive. The banquet halls come out very well. We've got large pre-functions over there. We've got multiple rooms to work with. All of that aids large MICE and wedding business. And then, of course, the room inventory is high, so that allows large conferences to come and use us for that businesses. But it's largely demand on weddings and MICE.
When we talk about 12%-15% corporate rate hike, so can we, can we see a double digit year as growth in, in midterm, or maybe in the next year for retail segment?
I have always stayed away from speculative numbers on this. The retail segment will play the rate, the revenue management route, depending on how the demand is looking like, 30 days out, 60 days out, 90 days out, they will decide the retail rates at the hotel levels. But clearly, the supply side being weak, on the inventory, every hotel will take advantage of the current situation.
Okay. Thank you so much.
Thank you. Before we take the next question, a reminder to participants to please limit your questions to two per participant. For follow-up questions, you may rejoin the queue. The next question is from the line of Hrishikesh Bhagat from Kotak Mutual Fund. Please go ahead.
Hi, good morning. Thank you for the opportunity. Just, if you can break up the debt number between what is backed by commercial and what is on the hotel side, that would be helpful. That's my first question.
Well, Hrishikesh, so-
Yeah.
Our net debt position as on March 2024 is INR 2,400 crore. So out of that, December. Sorry, my bad. As of December, it's INR 2,400 crore. As on date, I mean, not more than INR 500 crore, we have taken the LRD route. But 50% of debt, which is around INR 1,200 crore, is used for assets which are under construction or not yet operationalized.
Okay.
I hope that answers your question.
Yeah. So my, when I look at this, the backdrop of this question is largely the fundraise proposal that you have put. Now, when I look at it and based on our past commentary, clearly, we used to say that the LRD route will bring some cost of debt lower and incrementally, clearly, the potential, if I look at it, once the Taj Delhi starts and coupled with this probably the real estate portfolio maturities, so the surplus that we could accrue whenever it happens. I'm just saying that incrementally, and in your commentary also, you said that internal accrual should take care of our growth CapEx here on. So just thought that how should we look at this then, fundraise proposal of somewhere around INR 2,000 crore? Concern.
So is it that probably we are looking at fairly larger CapEx beyond 2027 or 2028? That's how we should look at it, because I believe the cash surplus will be significantly better, cash flow will be reasonably better, at least based on the current growth plans.
So, Hrishikesh, the idea is not necessarily to activate and sit on new capital without it being productive. We would like to keep the gunpowder dry for inorganic growth opportunities. And that's one of the reasons for this fundraise. And remember, it is an approval up to INR 2,000 crore. We'll clearly be prudent about how much we finally end up raising and how the deployment will be. We don't think it is productive use of capital to, you know, come to a zero debt situation, especially not equity returns. And therefore, we would only use draw down this capital or take advantage of the capital that we can potentially draw down.
That provided there are good growth opportunities available in the market, I'm not talking about just standalone hotels, we could also be looking at platform deals at some point in time.
Okay. So just one feedback. I would still believe that it's simply considering the comfortable cash flow situation, we will be likely post-2026. I still believe replacing the cheaper cost of debt with higher cost of equities is not something, or a good financial decision.
I completely agree with you. All of us at the table over here and across this speaker, this Polycom, are aligned with that.
Thank you. Thank you.
Thank you. The next question is from Prashant Biyani, from Elara Securities. Please go ahead.
Yeah, thanks for the opportunity. Sir, what would be the airline crew segment mix for this year? How much was it last year, and how much it could be for next year?
Okay. I'll have to dig out this number. Just give me a second.
Sir, in the meantime, I can ask a second-
I've got the number in front of me. So I'm giving you a contract segment. There may be some non-crew, very small amount that could be in that.
Mm-hmm.
Our room nights, if you look at the data sheet, oh, you will not have the data sheet. Our contract room nights in Q3 FY 2023 was 10,600 odd room nights. It is now 15,500 odd room nights. And whilst there may be small deviation on that on other contracts, majority of this is gonna be airline crew. So overall, 5,000 room night growth on a base of roughly 10,000, so that's a 50% growth on room nights from the airlines.
For next year, sir, how much would we be looking at?
I think we've more or less optimized the rooms that we have let out to crew now. Now, we don't want to continuously add to that part. A large part of all growth will now come out of our other segments.
And secondly, sir, what would be your plans for increasing presence in leisure tourism, especially religious circuits, that have been developed and are also developing? So if you can, throw some light on that.
Prashant, you know, we look at all opportunities with the lens of returns on investment.
Mm-hmm.
And, you know, we do not want to dilute the returns that we are able to deliver right now. So any opportunity that comes, whether it comes in the on beach resorts, hillside, hill resorts, or leisure resorts, needs to be able to match up to the expected returns or the what we're delivering right now, for us to look at it seriously. There is some amount of aggressiveness in the recent weeks in terms of announcing assets or growth in Ayodhya. We've got to remember, religious tourism is not necessarily the highest paying tourism. Ancillary revenues have their own restrictions. I'm talking about F&B here, and leisure activities, spa, et cetera. So we'd like to really study opportunities in any of these destinations very carefully before we step into them.
We've been doing well with what our strategy has been thus far, and we are not likely to tweak it unless there's very compelling opportunity on the other side.
Sir, beyond religious tourism, I mean, in the larger leisure tourism market, you would have interest in Goa and Jaipur market, which are, I mean-
Yeah.
... almost 24/365-day tourism market now.
Sure.
So-
And I agree with you. In fact, it's our stated strategy to look at leisure. For example, Goa and Jaipur, that we've already spoken about in the last few calls. We've also continuously spoken about drivable distance destinations from Mumbai and Delhi. In fact, the acquisition of Dukes was in line with that. We continue to pursue opportunities in Goa and Jaipur, drivable distance from Delhi. All this is various conversations at our BD desk in terms of growth. But as I said, they'll all need to meet our return criteria before we start spending money on them.
Just lastly, the hindrance right now is meeting the return criteria or appropriate availability of assets?
No, I think it's a mix of both. I think Goa has been an elusive market for a while now.... on account of two things. Number one, this is an expensive market to enter, barriers to entry are high. And then there is also the barrier of getting the very, you know, getting clean titles sort of situation with the land parcels if we looked at. We are by nature cautious on all that stuff. And therefore, it's taken us a little longer time, but we will get there very soon.
Sure. That's it, sir. Thank you.
Thank you. The next question is from Meet Jain, from Motilal Oswal. Please go ahead.
Yeah, hi, sir. I have just one question. Like in our presentation, we have mentioned the Westin Powai rooms to be 604. And are there addition of 4 rooms in that?
Yes, Meet, when we were renovating, we reduced the suite count a little bit, and therefore, 4 new rooms have been added to the inventory there.
This has been done in this quarter?
Yes, they are operational now.
Okay. And just clarification on the Dukes. How many total rooms are we gonna operate there? Like, currently, we are running 80 rooms, so it is be 180, 150 rooms, target we are-
It was an, it's an 80-room property when we acquired it.
Mm-hmm.
More than half the inventory is out of action as we speak, for the last three or four months for renovation and expansion.
Mm-hmm.
End up somewhere between 140 and 150 rooms at the end of it, after we've completed the renovation expansion by quarter three of the next financial year.
Okay. This Bangalore Marriott wide scale expansion of 138 rooms. The expansion is in progress, and are we going to add in the existing room of 391, or it's a separate hotel?
The existing inventory. Part of that is that the fixed costs are already covered.
Okay.
These 130-odd rooms are gonna come with higher margins.
Okay, okay. Yeah, thanks for the answer, sir.
Thank you.
Thank you.
The next question is from Nihal Mahesh Jham, from Nuvama. Please go ahead.
Yes, thank you so much, and good morning to the management. So two questions from my side. You did mention the share of airline crew, which I think was around 6% for this quarter, based on the room nights. Just on the contracted corporate rates, what would be the approximate share and how that has moved versus pre-COVID, if possible, to give that ballpark sense?
Okay. So, Nihal, the contracted percentage of total room nights is actually 9% of total room nights that we sold in quarter three. Transient, which is a mix of RFP or GDS and locally negotiated trade contracts, and retail is 73%. At this point of time, we—I don't have handy the breakup of the 73% yet. But, I can share with you another data point, that is, that 11% of room nights came out of e-channels, that is the OTAs. 24% came out of Global Distribution System, or GDS, as it's popularly known. 13% came out of Marriott.com, which is a brand website. And 53% was came out of the channel of property, voice and others, which is basically closed at the property levels.
So this is a rough breakdown on the channels. Nationality is 61% Indian, 39% foreigners. And I've already shared the segment breakdown, which is transient 73%, groups 18%, and contracts 9% of room nights.
Got it. So the rates that are already pre-decided and negotiated, that is 9 + 6, which is 15% for this quarter. That is right, as an understanding?
No, no. So the rates that are decided will be in the transient, as a subsegment of the transient, which is 73% right now.
No, I was coming from the fact that I was counting corporate, negotiated and the airline crew, as the rates-
Airline crew is 9%, you're right. But the corporate negotiated rates fall within the subset of 73% of transient segment.
Right. And possible to give a sense of what that number is like, if you have it handy?
I don't have it handy. With our, you know, routine, I will be happy to share those numbers with you at some point in time.
I'll take, I'll take that, separately. Just one more clarification was that when you were giving a sense of the ADR of 4% for Mumbai-
Mm-hmm.
For the JW Marriott Sahar, did you mention that the ADR was in sync with the other cities, or the 4% increase was attributable to JW? Just-
No, actually, the Westin Powai was more or less flattish, so all the growth came out of JW Sahar.
So the 4% is more or less the reflection of the JW Saha's performance?
Yeah, and Four Points, but Four Points is also small. It's a small inventory, so it doesn't impact the average too much.
Understood. Sir, thank you so much. I wish you all the best.
Thank you.
Thank you. The next question is from Dhruv Agarwal, from Niveshaay Investment Advisors. Please go ahead.
Hi, sir. Congratulations for the good set of numbers, sir. Wanted to ask, like, what would be the RevPAR, like, 10-27, what kind of growth we can expect, sir, in the RevPAR, sir?
So, Dhruv, we really don't give forward-looking numbers. The RevPAR growth for the quarter was 18%, and this despite additional room inventory in the portfolio.
Like, sir, can you give some guidelines, sir, if possible, sir?
We don't give forward-looking guidance, unfortunately, Dhruv.
A nicer flow, okay? And so like in 2022, 2023, the ROCE was around like around 9%. So what ROCE we can expect in like 2024, 2025, sir?
Let's see. Again, you're asking for forward-looking numbers on that. But let me - our, our ROCE for hospitality as well as commercial is around 14%-15%.
Okay. One can expect like 14%-15% ROCE in, like, coming years, right, sir?
So, Joe, let me, let me share this with you. So all process going forward, we try to hit ROCEs, which are in that, you know, in third year of 14, 12%-15%, but historical assets, the ROCEs are clearly higher.
Mm-hmm.
They're in the high teens. That's the number that you can go with.
Okay. So, like, like, like-
Commercial is at 20.
Like, commercial is like 20%?
20, yeah. Around 20, yeah.
And like, for hotel, it would be?
High teens.
High teens. Sorry, sir?
High teens for historical assets.
Okay, okay. Right, right, right. Also, like one last question, so like, like this Supreme Court case on this Hyatt Regency at Airoli, Mumbai, can you give some, like, throw some light on that, sir? Like, what we can expect in the coming years, like what is your point of view on that?
Are you referring to the Four Points by Sheraton Vashi, in Vashi?
No, sir. At Airoli, Mumbai, like the Hyatt Regency.
We don't have a Hyatt Regency in Mumbai.
Like, we are planning to have 20 rooms in 2027, right, sir?
Sorry, there is no, no litigation on that land parcel. Which one are you talking? You are talking about Airoli, right?
Yeah, yeah. Airoli, sir. Right, right.
There is no litigation on that.
Okay.
That's the site that we'll start work on shortly. There's no, there's no, litigation on legal issues with that.
Okay. Right, sir. Okay, thank you so much, sir. I'll get back in the queue.
Thank you. The next question is from Rajiv V, who's an individual investor. Please go ahead.
Hello.
Hi.
Good morning, sir. So, on your slide eight, the other segment, which is occupancy, can you give a like occupancy for the quarter against the 64% number which you have reported?
We've got... Just a moment. I'm just opening that page. Slide eight is, I think-
Yeah. Slide seven, actually. Slide seven.
So you're referring to the occupancy of the portfolio, is it?
Q3 FY 2024 others piece, which is 64%.
Which is, yes, because in quarter three, two things, material things happened in the other areas. One, Pune we added 88 rooms sometime in October, which will obviously have a natural time period for filling up the additional inventory. They were added, I think, the first or second week of October, if I recall correctly. And then we had Dukes Retreat, which we shut down more than half the inventory for renovation. So about Dukes Retreat, which was originally 80 rooms, is currently operating at 38 operational rooms. So and then we had Hi tec City Hotel also that got added. So these are the reasons why the occupancy may look a little lower on the other side.
But if you were looking at Hyderabad and Bangalore, we have let me put it like this, satisfactory occupancies.
So, my point, and just to clarify, this revenue mix with the pie chart which you share below, that includes the F&B part, right? Or this is only for room revenue?
This is all, all revenue, total revenue.
And this F&B bit, which is increased by 27% on a YOY basis, is this driven by any specific market or is this, you know, across the board?
Actually, Mumbai has contributed to the maximum, because of the high MICE and wedding business that comes out of here. The segment that's contributed is MICE and weddings.
Sure. So, I mean, if, if I reverse work from this pie chart, assuming that, you know, F&B, you know, ratio on a YOY basis across in the other segment has remained same, looks like your entire growth on the 18% number, or, you know, if you adjust it for a like for like maybe 22% kind of number, was largely driven by occupancy in Bengaluru, which was 50% in the base quarter, and now let's say there is another room for 15% more growth there. But beyond that, then ARRs, you know, going beyond 10,000, that market has, you know, has been a little resistant. Any thoughts on that, let's say, next fiscal year?
While I'm not able to share the numbers, I think we've broken the 10,000 barrier quite comfortably in Hyderabad and Bangalore.
We have, let's say, Hyderabad is the current growth is driven by ARRs as well? In the sense, there is ARR growth in Hyderabad, can you simply say that?
Absolutely. Significant growth.
Okay, great. Great.
See, in the others, when you look at the other segment, you've got to remember Bangalore and Hyderabad occupy most of the other segment, right?
Yeah.
The ADR growth you see in the other cities is 16%.
Yeah. So the point is, if I... I mean, if you use this pie chart and use it, the rest part looks like to be a 17% growth. And if we, you know, give the entire this rest part to occupancy alone, then occupancy, you know, touches close to 78% for Hyderabad also, which is slightly high, but then doesn't seem to be a much high problem.
Are not going the way they can, they should, right?
Yeah.
What stops us from going to Hyderabad a little more aggressively and on the rate front?
Sure. Sure. I hear you. Thanks a lot.
Thank you. Thanks so much, Rajiv.
Thank you. The next question is from Pranay Shah from Anand Rathi. Please go ahead.
Hello. Thank you for the opportunity. My first question to the management is, so in the absence of meaningful recovery in the FTA front, as compared to pre-COVID levels, how confident are you to say that there is growth in the room rates for the next couple of years? And what, according to you, will trigger the faster recovery in FTA growth and, would you also think of contributing the room rate growth in addition to double digits, which you have been talking about?
Let me answer what will trigger the FTA growth. I think what will trigger FTA growth is some amount of normalcy on the conflict in Ukraine, Russia. And therefore, the airlines, international airlines, especially American Airlines, starting direct flights to India. Right now, besides Air India, we don't have direct connectivity from Mumbai, Bangalore or Hyderabad, from East and West Coast of the U.S. And we must remember that two-thirds of the FTA arrivals in our portfolio at least used to come from U.S. So therefore, that market is critical to us. Having said that, we are not so concerned because of the domestic demand that's been so strong, buoyant, both on our room nights demand as well as on the rate front, that we've really not missed it too much.
When that comes, it will be, you know, let's see, let's say it's gonna be the cream on the cake.
Okay. My second question was on Novotel Pune front. So with that bunch of 82 rooms, with the addition of 82 rooms, what sort of ARR are you looking at inventory? Because I believe these are more premium rooms, and what occupancy is expected once you wrap up this investment?
So, currently they are very cool looking rooms, and the room size is the same as the other previous ones. But they're brand new, so they're clearly, there's a sheen to them. We are trying to sort of charge a premium for that. We've seen, roughly, I think double digit rate growth there. It's quite the norm. Pune market has unfortunately not been a very strong rate-driven market and tends to typically pull down our portfolio, a blended ARR of the portfolio. But we've seen growth, and the 88 rooms that have been opened there, they received very well. They're really nice rooms. You must, if you go down to Pune, take a look at these rooms.
Okay, sure. Thank you, and all the best.
Thank you. The next question is from Saurabh Jain, from HDFC Life Insurance Company Limited. Please go ahead.
Yeah, thanks for the opportunity. So, two questions from my side. First is on the real estate project in Bangalore. So, can you give numbers that how much sale has been done till date in terms of amount terms, and what has the CapEx been done till date in this project?
Sorry, Saurabh, could you repeat that, please? I think we missed the early part of it. Which project are you referring to?
I'm talking about the real estate project in Bengaluru.
The resi one?
Yeah.
Or the residential one or the office one?
Residential one. The Vivarea one. Yeah.
Vivarea. Yeah. Sure.
I wanted to know that what is the sales done till date, and what is the CapEx till date for that project?
Okay. We have spent around INR 430 crore on that project till date. This is including the old, pre-litigation costs incurred, on that project. And sales as on date, is in the range of INR 200 crore. We have collected, 76 crores out of that.
Okay, your cash collection is INR 76 crore, you're saying?
Yeah.
What is the expected total sales from this project once the whole 1 million sq ft is sold?
So all put together, including commercial-
Yeah.
Should be north of INR 1,250 crores.
Okay. Okay. And just, just, a clarification on the CapEx. Of all INR 30 crore that has been consumed, how much is the promoter money in this through the preferential shares and, interest free loans?
We spent around INR 65 crore on incurred fees on this project, Koramangala, till date, in the current year.
No, I'm asking till date. You said INR 430 crore, including the litigation costs and all.
Okay. So promoters have funded as on date, around INR 290 crore. But this funding was used to pay for cancellations and all. I mean, a few flats were canceled in last four to five years.
Okay. Okay. Okay. My second question is on the F&B expense-
Just... Can I just come in here? Totally, roughly around 850,000 sq ft to 1 million sq ft. Is that correct?
Yeah. 8.5 lakh is-
Residential, and 1 point this thing is... Out of that, how much was sold before that?
We had sold around 2.8 lakh.
... We have 700,000 to sell.
So 5.7 on residential side and 1.5 on commercial.
Mm-hmm. The going rate, just as this thing in the market there, is north of INR 16,500-INR 17,000. This project is a premium project, and we expect to get premium rates for the project. So far it is trending and tracking in that line.
Got it. So this 1050, the total sales can be, that is upside just to that also?
Okay. Yes, that's right. We've got to minus the old sales, of course. Yeah.
Yeah, yeah. Yeah, yeah. And my second question is on the F&B expenses. If we see as a percentage of F&B income, that is significantly down this quarter at about 25%. Generally, we saw the trend in the range of about 29%, in the weak quarters, and then about 26%, 29%, 20% in the strong quarters. So just wanted to understand, this reduction in the F&B expense as a percentage of income.
Sure. Two things, two, three things actually. One is coming off a higher revenue base, so therefore, the percentage does improve with scale. Secondly, we've had, as I mentioned earlier, a lot of growth on the banquet side. And banquet typically comes with higher margins. And thirdly, in general, the average check per person has improved in our hotels.
Okay. Okay, so this trend, given Q4 FY 2024 is also a strong quarter, we can expect similar kind of margins in the F&B business?
Yeah. Again, I don't want to give any guidance, but, yeah, I mean, there's no reason why we shouldn't be seeing similar margins.
Got it. Okay. That's it from my side. Thank you.
Thank you very much. We'll take that as the last question. Any pending questions can be sent to the management directly. I would now like to hand the conference back to Mr. Sanjay Sethi for closing comments.
Yep, thank you, very much. Thank you, ladies and gentlemen, for your time. You know, we, as I said earlier, we're extremely pleased with the trend that Chalet Hotels portfolio is showing. It is...
Participants, please stay connected. We seem to have lost the line for the management. Please stay connected while we reconnect the management line. Thank you. Participants, thank you for patiently holding your lines. We seem to have lost the line for the management, so we shall close the call. On behalf of Chalet Hotels, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.