Good afternoon, ladies and gentlemen, and thank you for attending this virtual meeting. It's my pleasure to welcome you on behalf of EIH Limited and SKP Securities to EIH Limited's Q1 FY25 earnings webinar. We have with us Mr. Vikram Oberoi, Managing Director and Chief Executive Officer, and Mr. Kallol Kundu, Chief Financial Officer. This meeting is being recorded for compliance reasons, and during the course of discussion, there may be some forward-looking statements, which must be viewed in conjunction with the risks that the company faces. We'll have the opening remarks and a presentation by the management, followed by a Q&A session. Thank you, and over to you, Vikram.
Go ahead. So do you want to make the presentation?
Sure.
Good afternoon, everyone, and thank you for joining. I'll ask, request Kallol to run through the presentation, and then we'll be happy to answer any questions you have. Thank you.
Thank you. Thank you, Vikram. Thank you, Naveen. We'll quickly run through the presentation. This is for quarter one, FY 2025. The general outlook of the hotel sector continues to be good for now. It poised for significant expansion, key growth drivers, and these are as per analyst and consulting reports. Inbound tourism, wedding, MICE, sports tourism, et cetera, all segments are looking towards positive growth. Next slide. The Indian hotel market, this is based on HVS Anarock report of July. The occupancies in June have been more or less similar to what they were last year, and the ARR has also been similar, but slightly higher than last year. The RevPAR is actually about 2.5% higher than last year.
The market size, one assumes, as per this IBEF report, will go to about $31 billion by 2028. The industry, in so far as India is concerned, with the average revenue per user going up from 163 million to, sorry, 163 dollars per room, per room per user to 174. Next. This story continues. This is a chart that we present in every meeting. We have been presenting since the last several years, and the story continues unchanged, where EIH maintains consistent RevPAR leadership over STR competition set. So the RevPAR index, overall RevPAR index for the period is 197%.
And so far as the positioning is concerned of the various segments of our business, Oberoi Leisure is slightly down compared to last year on a RevPAR basis by about 2%. Trident Leisure is also slightly down as compared to last year, same quarter again. Oberoi Metro and Trident Metro... Sorry, just go back. Oberoi and Trident Metro has gone up. Trident Metro has actually gone up by about 9%, and Maidens Hotel has gone up by about 7%. Next, please. For the international hotels, also, it's a mixed bag, with UAE doing better than what happened in the past. Egypt is slightly off because of the effects of the war.
Indonesia is doing much better, and Morocco is more or less at the same levels, but rates are slightly down than last year, and that's again has some impact from the Middle East war. The quarter one RevPAR grew by 5% and 3%, although more or less, if this is taking the owned hotels as well as all domestic hotels into consideration. But if you were to take the entire market, including international and all, it's almost similar to last year. For the three months within the last quarter, obviously, the month of May was something where the occupancies were down, room rates were similar, and this, the effect of this is mainly due to the impact of the elections.
Rest, I think we were higher in April, and June is almost similar as last year, and of course, the period ahead is not looking bad. City-wise, RevPAR year-on-year, Agra, Hyderabad, Bangalore, Mumbai, Chennai, these have all done well. Delhi, some of the satellite cities, Bhubaneswar, Jaipur, Shimla, Chandigarh, Cochin, Udaipur, these are on the downward side. The strong room revenue tailwinds across segments, they continue. Of course, this part of the year is the downward cycle, and, from second, third quarter onwards, we should look at a upward cycle again. I think, corporate does show some kind of buoyancy here. Direct is similar to what was happening last year. Leisure is also slightly higher, but levels are still to go up as compared to pre-COVID levels.
The flight catering and airport lounge business continues to be very robust. Margins have also expanded, and total business has also expanded and so has the total EBITDA growth been for this part of the business. The financials and results have been declared, as you all would have seen it. On a standalone basis, revenues were up from INR 455 crore same quarter last year to INR 498 crore. The EBITDA is slightly down. Sorry, the EBITDA is slightly down, and the PAT is also slightly down.
That is more to do with a sort of rates being at similar levels, so therefore, obviously, profitability, while expenses are slightly inching upwards, rates are at similar levels at what they were last year, and therefore, there is a slight reduction in the PAT and EBITDA, but this is not anything appreciable and something that we hope we can recover in the balanced three quarters. The story is the same with consolidated performance, so trends are pretty much similar. We obviously continue to build on very strong funds position. Basically, we've now got a sort of war chest of about INR 650 crores, which is net cash, which is currently awaiting deployment in the various projects that we are going to undertake. Two of the major projects were announced in the stock exchange.
The new project for Hebbal at Bangalore, where planning is on at a very advanced stage, and also the renovation project for the Oberoi Grand, where we will get a brand-new renovated property in about three years' time from now. Next, please. So the consolidated funds position is now at INR 818 crore. Obviously, many of these funds are parked overseas in our various subsidiary companies. But the total converted into Indian rupee, the total amount converted into Indian rupee is about INR 818 crores. The financials I won't run through. This has already been declared, and it's available to everybody. So this is more or less something that we have discussed from the various quarters, starting from 2022-2025, quarter on quarter.
Naveen, we can proceed because this has also been published. We are extremely happy to announce and report to everybody that the recent Travel and Leisure rankings have rated the Oberoi Rajvilas, a hotel managed by EIH Limited and owned by Oberoi EIH Associated Hotels Limited, as the best hotel in the world. And of course, there are many other list of awards that the group has been showered with. These are all listed here for people who wish to go through the details. There is no change in the footprint as of now, except the new projects that are going to come up, as has been announced. That's all in the presentation that we have here, and we are really happy to answer any questions that you may have. Thank you.
Thank you, Kallol. Friends, we now start with the Q&A session. Anyone with a question, request you to raise your hand, and we'll take it up. We take the first question from Vikas Ahuja. Vikas, please go ahead.
Yeah, hi, thank you for the opportunity. My first question is, you know, post-COVID, we have witnessed a strong double-digit rates growth. Now we saw some moderation in Q4, growth of 10% and low single digits growth this quarter. Is it fair to assume that base is catching up and events like World Cup and G20 closings, which are missing in September and October, then achieving mid to high single digits rates growth would most like... would be a most likely scenario this year? Or you think the momentum will improve from maybe this month onwards?
Hello, Vikas. Nice to have you here with us today. Really is a function of supply and demand. We had the election this year, and I think at least our analysis shows that when compared to previous elections, which we looked at, or the previous election we looked at, the impact on this election has been more than in previous, in the previous election. We looked at the last election as well. That's one. And I think the other thing is, unfortunately, in many cities in Rajasthan, where we have leisure hotels, and in Agra, temperatures have been extremely high this summer.
We still remain optimistic that foreign travel is bouncing back, and with strong Indian demand from the domestic market, for luxury hotels and luxury travel, we should be able to take rates up. But that's really a prediction of, or that's under the assumption that demand remains strong. This was just a temporary circumstance, which I've explained, and therefore, we should see strong demand and occupancy, both reflected in rate and occupancy, particularly in Q3 and Q4 of this financial year.
Okay, I understand. So, is it fair to assume what your larger peer has also called it, that from July onwards, we have seen a very strong recovery? I mean, they even quoted a number of more than 20% growth they saw in the month of July. Is it more of we are also witnessing a similar kind of a trend, that's a fair assumption?
Yeah.
And, yeah.
Sorry, I didn't mean to interrupt, Vikas. Please go ahead. I apologize.
No. No, sir, you go on. I mean, I'll ask my other question once you're finished. Thank you.
No, so, business on books, that's what we look at, the pace of reservations, and it does vary across hotels, but overall, we remain positive.
Okay. Secondly, on margins, you know, the decline in EBITDA, and I mean, this is in line with what you have anticipated earlier or, you know, any particular cost which has come as a big surprise to the management that led to this decline? And how should we look at, you know, the margins from here? What are the puts and takes from here onwards? Are you seeing any other particular costs which expected to be elevated this year?
Yeah. No, sure. I think that's a very good question, Vikas. If you see, in the details of Kallol's presentation, I think it's there, and also in the other declarations that we've made, employee cost has gone up, and that's for two reasons, really. One is that, in Q1 of last year, at the same time, we had a number of positions that were vacant. So to- this year, fortunately, we're not in that position. I'll talk a little bit about that further. The second aspect is that we've also, you know, our industry faces a challenge of attracting people. I think across the industry there is feedback on work-life balance, and as an organization, we're committed to addressing that.
So there have been some increasing increases in numbers in frontline junior managers and staff as well. Now that's one aspect, but the other thing I just want to talk about is that we as a organization select people who are hotel school graduates. Most of them are, it's their first time job, and so you will see a spike in the summer months because we take people on board, we train people so that when occupancies pick up in winter, we're able to have consistent and good levels of service that we provide. So I think this will even out in the rest of the financial year. But one reason why margins have been suppressed is because of the higher labor costs.
Now, there are other things, for example, Trident Nariman Point is operating with fewer rooms because we are renovating some floors, and these things happen in our hotels. Trident Nariman Point probably being the most pronounced in that. Bandhavgarh was impacted because we are adding a certain number of tents there to increase room inventory, and we had to therefore remove the tents which are closest to that and not sell those. So those blips, of course, happen, and this is the time to do it. It's the time to do it is in the summer months when demand isn't as strong, so that we can really capitalize on business in H2.
Sure, sir. So, is it fair to assume the 17% increase in the employee cost, it's partially because, you know, we are anticipating strong demand and we are just, we have filled up most of the open position, and, and that's why we just want to have enough people to start with to cater that demand going forward. That is my last question, sir. Thanks a lot.
I would say that's a reasonable assessment, Vikas. Yeah.
Okay, sir. Thank you.
Thank you, Vikas. We take the next question from Sanjay Kohli. Sanjay, please go ahead. Sanjay, please unmute yourself and go ahead.
Okay. Am I audible now? Thank you.
Yes, you are. Please go ahead.
Hello, Sanjay.
How are you, sir?
Very well, sir.
Mr. Oberoi, can we have a little bit of a discussion around Wildflower Hall? And you know, so our understanding is that basically there's about only a year left now for us to manage this property, and there is a carrying cost in the balance sheet of a mere INR 26 crore. So is this management sort of conservative estimates of all the claims and counterclaims, and then we arrive at a sort of a net asset value, and hence this number? That's-
I'll let, I'll let Kallol answer that, but our initial investment was INR 26 crore. And just to also answer that, the property, based on the Supreme Court ruling, is it'll revert back to the government on the thirty-first of March. So, Kallol, I don't know if you want to add anything.
Sure. No, Sanjay, so the fact is that, as per the accounting standards, we have classified the property as an asset held for sale. T hat is what you would see in our year-end accounts as well, and therefore, you won't see the numbers separately. So the initial cost is the initial cost of investment, which is different from what the property is. So obviously, that is our investment into the company, and that continues to be, investment, which we are going to receive back.
However, the claims that you talked about, those are, yes, those are in court. We have already filed our application, quite some time back, actually in May. There was a hearing on the 25th of July. On the same date, the state, is known to have filed a rejoinder, which we still don't have a copy of. So that, that part of the, the case is ongoing and is sub judice, and it will be difficult for us to comment.
But as we've mentioned in our year-end annual report, if you see, there's a very detailed note where we've laid out what our claims are and the reasons as to why we have taken a prudent accounting measure to spell it out, but not to recognize them into our accounts.
Just to follow up to this. You know, in all these years of litigation, is this, you know, in hindsight, in hindsight, you know, it's easier to analyze and, you know, taking on, what are the key learnings from this, you know, about our relationships with state governments on projects like this? And, is it just prudent to surrender at some point in time?
Sanjay, I think, first of all, this goes back to well over 20 years, if I'm not mistaken. Am I right, Kul?
Yeah.
It goes back-
More than that.
More than 20 years. And at least many of the people who were there 20 years ago, let me not even try and speculate on the reasons, what happened, why it happened, et cetera, and what we could have done differently. I think what we need to look focus is, rather than looking at the rearview mirror, rearview mirror is important to learn, I completely agree. But I think we should look forward, and with any partner, it's very important that we have the best possible relationships, whether that is a supplier, whether it's our guests, whether it's our colleagues, whether it's the investment community, whether it's government. So... And that's what we're focused on, to maintain the best possible relationships, the relationship based on strong foundations and values in all these relationships.
That's what we will, what our focus is and will be. I don't know if you want to add anything, Kallol.
That's fine.
Thank you. I'll rejoin the queue and very excited about the development in Bangalore, and so but I'll rejoin the queue and-
Sure, Sanjay, and we're equally excited with Bangalore. It's a great opportunity for the company.
Thank you.
Thanks, Sanjay.
We'll take the next question from Tushar Nishal. Tushar, please go ahead.
Yes, sir. Sir, I would like to ask you, in the last conf call, someone asked you to comment on the 6% revenue per available room, specifically from Bombay. Would you like to comment on that now?
Sorry, Tushar, my memory isn't as good as yours. Could you just remind me the 6% of room revenue? I'm not sure what that you're referring to.
The 6% revenue-
Oh, sorry.
Available per room.
I beg your pardon?
6% revenue per available room.
6%. Is it 6 or 6? 6 what? Sorry, Tushar, we are-
Sir, I'm saying 6.
6%. It doesn't strike a bell.
Yeah. Tushar, sorry, could you just remind us? I really apologize. I can't remember, but if you could give us a little bit more detail, maybe it'll help, you know, us remember better. 6% of room revenue in Bombay.
Sir, 6% revenue per available room.
That's RevPAR.
6% revenue, yeah, 6% revenue per available room in Bombay. I'm sure our RevPAR would be stronger than that.
Yeah.
So, I'm not sure, Tushar.
Maybe if you can come out with the question a little more clearly.
Yeah, if you just tell us specifically what you-
Okay. I would be specific in that. But how do you see it improving in the next coming quarters?
In Bombay?
Yes, specifically Bombay.
Okay. So in Bombay, actually, Tushar, we added, and there was a slight delay in completing the 20 residential suites in The Oberoi, Mumbai. And they were completed. The delay was caused because obviously we have a fully occupied hotel, and we don't want to delay or disturb guests, so we had to be careful in the work we did, and whenever there were any guest comments on noise, then we had to respond to that immediately. But those have been completed. These are long-stay residential suites, and that will help enhance RevPAR. We're doing around a. The last figure I saw was we were running about at 80%, so it's built up already fairly quickly to an 80% occupancy. I haven't seen the figures as of today or yesterday.
But a couple of days ago, we were doing 80% on these 20 suites, with an average room rate of over INR 30,000. So this will enhance the RevPAR of the hotel. In Trident, Nariman Point, 4 floors are under renovation, and this is along the same lines as the floors done earlier. And I'm sure this will also help in driving both demand and rate. And Trident, Bandra Kurla continues to have very, very strong demand both in terms of corporate demand, MICE demand, et cetera. So I remain optimistic for both external and internal factors on the Bombay hotel operations.
Thank you, sir. That was it.
Certainly. Thanks so much, Tushar, and I apologize I couldn't remember that, but thank you for clarifying the question. So much appreciated. Thank you.
Thanks, Tushar. We take the next question from Pratik Maheshwari. Pratik, please go ahead.
Hello?
Hello, Pratik. Good afternoon.
Yeah, good afternoon. Please tell me, what is the current demand trend, and how is the July and August growth?
So, I think demand has really actually—sorry. So, we saw April was touch wood, very good. May and June weren't as good, both because of the elections and the high temperatures in many locations where we have hotels.
No, no, I'm asking about July and August, current demand trend, Q2.
No, and I'm Pratik, please, please allow me to-
Okay.
Yeah.
Sorry, sorry. Yeah.
No, no problem. No, but I will come. I just wanted to put it into context. And what we are seeing is greater buoyancy after a somewhat subdued demand for the reasons that I've explained. So we are seeing a pickup in pace of reservations.
Okay, thank you.
My pleasure, Pratik.
Thanks, Pratik. Take the next question from Hriday Choksey. Hriday, please go ahead.
Good afternoon, sir. Thank you very much for the opportunity. So my question would be for the future of our company and in terms of growth. You'd given an interview a couple of months back, where you spoke about how we're looking to add about 50 more properties by 2030. So my question would be, is how do you envision the portfolio six years out from now? How many hotels would be managed, how many would be owned, and how many are you looking at adding in India versus how many are you looking at adding overseas?
So, our focus will continue to be in India, although we are looking at opportunities outside India as well. But our focus will be India. We hopefully will be able to share more news on our expansion, I hope, soon. And as and when things develop, we will announce those. I hope we'll have more news to share with you in the not-too-distant future.
Got it, sir. Thank you for that. Sir, and the second question on the room rates, do you... What is the headroom for growth there? Do you foresee them increasing more towards the end of the years and towards the festive season, or do you think that would be stagnant and flat?
So, I always remain optimistic. I think, again, it really, if demand is strong, I still believe, which I've said many times before, that for the quality of hotels that we have in our country, rates need to be much, much higher than they are. But that really is a function of demand, and I continue to be optimistic to say demand is strong. You typically see that in India, in the winter months. Rates will continue to rise. We've already seen last year a sharp increase in rates, at least in our hotels, and we still believe that that will continue. There's nothing that would cause that to change, no external forces that will cause that to change, based on what we see today.
Got it, sir. Sir, just a clarification on the first question. You said you'd like to continue with the majority of the focus in India itself. How are you looking at the model in terms of owned properties versus managed properties going forward?
We, we're looking at both. I mean, our preference is to put in either through partnerships, through joint ventures or our own hotels. So Goa, Hebbal, et cetera, are our own hotels. We have, through our subsidiary companies, it's, Gandikota, Vizag and Tirupati. And, we, we will look at joint ventures. Oh, and Bandhavgarh, this is opening this year. Rajgarh is opening, this year, this financial year. So, and Bandhavgarh is a, management contract. Rajgarh is, an EIH hotel. The, the, advantage you have with a, an owned hotel is, a profitable owned hotel, is what it brings, the, the value it creates for the organization. You need to sign up many, many management contracts to achieve the same results.
But having said that, we want to be in locations where our guests travel to. We want to give opportunities for growth to our colleagues, and for that, we will pursue both options, both managed and owned options, and of course, JV opportunities as well.
Just to add to what Vikram said, if you see the seven projects that are currently in pipeline, which are under construction or about to start construction, out of those, three are our own properties, three are owned by our subsidiaries or associate and managed by EIH, and one is a completely, it's a management contract entirely. So that's the current composition. We've talked about 50 hotels. Seven are already in the pipeline as we speak.
Thank you very much. So that, that, those are all my questions. All the best for the future.
May I just add one other comment to say that we, in city locations, mixed-use developments are, in our view, the really the only way forward. Hebbal is one of those examples. Just because of the very high price of land, so that's something that we will continue to pursue, is development through mixed-use developments.
Got it, sir. Thank you very much. Best wishes for the future.
Thank you. Thanks so much. Really appreciate it. Thank you.
Thanks, Sudhir. We take the next question from Deepak Verma. Deepak, please go ahead.
Hi, Mr. Oberoi. Hi, Kallol. So, just wanted to check what is the impact of quarterly seasonality in the financial performance this quarter?
I think more than seasonality, Deepak, the seasonality has been more prominent because of the elections.
Mm-hmm.
So really speaking, if theoretically, if the elections weren't there, then we would certainly had looked at numbers which were better than last year's same quarter. And that was also a record quarter in all our history. So while seasonality continues to exist, and Vikram made the point of extreme heat in various cities, in not only in places like Rajasthan and et cetera, but also in places like Delhi, for instance, and then rains. So it's anybody's guess, but by and large, I think the business is becoming more evenly spread-
Mm.
with even our first and second quarters now doing much, much better than what we used to do, or anybody, any hospitality player used to do in the last, let's say, ten years ago.
Yeah. Yeah. I think if you take... Just to add to Kallol's comments, Deepak, if you, and I'm sure this data is with you, if you look at old data, and you go back, you know, let's say 10 years, you'll see far greater seasonality variations than you will see today, which is, I guess, a positive development for hospitality in general.
Yeah. So, I think this quarter's performance may be, although it's not bad, it's good still, taken as an outlier.
Indeed.
Thank you.
Thanks so much, Deepak. Really appreciate it. Thank you.
Thanks, Deepak. We take the next question from, Rajiv Bharati. Rajiv, go ahead.
Sir, thanks for the opportunity. So, can you split Oberoi Grand? In a sense, what are the CapEx there, renovation CapEx?
When we're in a position to share that, Rajiv, with you, we will. The hotel is, as you know, a grand hotel. Sorry, I'm using the word grand, and-
Heritage.
It's a heritage hotel. We really want to redevelop that hotel to make it a very special hotel. We will do everything possible to preserve its heritage and to bring it back to beyond glory. This will involve a complete renovation of rooms, public areas, food and beverage, back of house, all MEP, et cetera. The Chowringhee wing, which is the part right overlooking Chowringhee, the main road, is not occupied right now, so that will be the first part of the renovation with about 50 rooms. Like I mentioned, all the...
In the stock exchange declaration that we made all the other areas, and then the balanced rooms will be done subsequently, with room inventory from 209 coming down to 200 keys, with the addition of Chowringhee as well. So room sizes will increase, we'll preserve all heritage aspects of the hotel.
So just directionally, is it possible that this can go, of a similar order like the Oberoi New Delhi renovation?
I, I think as far as cost goes, let me not get into that. But what we have seen is... Well, first of all, let me take one step back. We each market is different, and therefore, we need to assess our capital expenditure on the hotel, based on which the, and, and based on the market in which we operate. That's number one. But having said that, what we saw with The Oberoi, New Delhi renovation was a The Oberoi, New Delhi, and I don't know if I can give these figures, it dates back to a long time, used to do about INR 60 crore GOP, 61, 62, 63 crore GOP.
This increased substantially, and when I mean substantially, I'd say maybe not doubled in the first or then the second year of operation after the renovation. But we saw a sizable increase in GOP, and what we would like to do is replicate that with the Oberoi Grand.
Great, sir. So with regard to your Hebbal project, is it possible to segregate the commercial commercial real estate part of CapEx out of the INR 1,350-odd crores?
Rajiv, you are aware of our numbers, which we speak of our per square foot, our per key, cost for Trident Hotel, for Oberoi Hotel, and today our Executive Chairman and his team-
Yeah, he covered it as well.
He covered it as well as to what is our cost per key for both, so it's a simple mathematics for you.
No, sorry, I missed the entire opening remarks, so sorry about that. Lastly-
Well, he said, he said the cost of a Trident is-
One point.
is around INR 1.4 crores, a key. Although we internally would like to refer to cost per square foot as the more appropriate measure. The cost of an Oberoi room is about
INR 2.5 crores - INR 3 crores .
Between INR 2.5 crore-INR 3 crore a key.
Depending on city or leisure or-
Depending on city and all of that. So if you do the math, then the balancing figure is commercial.
Great, sir. Thanks a lot. Lastly, on this, you are looking to get an investor on this project, or this entire thing will be done by us?
No, no.
No.
It's entirely our own project.
Entirely done by us.
Sure. And last, on the profitability part of it, the margins, so assuming that, you know, the hiring is now frozen, the 18% hike, so these margins are going to be stable, or there is more, you know, employee cost related hikes which are coming in subsequent quarters?
Sorry, I didn't understand.
No, I think Rajiv is asking that with the increased manpower cost that we have now, is it reasonable to assume that this will now be stable, or is there more-
I think that would be a.
I think a good way to state that, and this is Vikram's part, but I'm taking the liberty of answering.
Yeah, please.
See, the good part of this increase that we have done is we have seen our attrition come down. And what we see as a direct cost sometimes comes back to us as an indirect cost, because with more attrition, there's more costs, associated costs, which does not feature into the payroll cost. So when you look at that increase, you should also look at the benefits that are there. Vikram-
Yeah.
You may want to share the figures of attrition.
Yeah. No, I'm happy to share them. Or should I share-
Yeah
A ttrition figures?
It's come down, so basically-
But our attrition has come down in, not on a percentage of, or I can do a percentage of 100, I just need to calculate. But let me just say, it's come down.
By about 20%.
Yeah, maybe slightly less than 20%. So we... I'd say about 15%. I'm not sure on the math. I'd have to use a calculator to give you an exact number, but let's say in a ballpark figure of 15% amongst colleague attrition. We've also seen a decline in executive attrition, which is very important, because that's really the, helps drive culture, helps drive our service. They mentor our younger colleagues. So we're seeing positive results in attrition, both at the executive level and at the team level, with the changes we've made. And like Kallol said, there are a number of costs that are hidden, that typically don't get measured, which are a result of high attrition.
So those, we should see improvements in those as well. But to answer your question, Rajiv, directly, the bulk of our hiring happens in the summer months, because we need to get people up and running for the winter. And our industry is, you know, 40% attrition in team level is not unusual for our industry. We do better than that, our attrition isn't as high, but that's a number that I'm told is the norm. That's all that I can say. And you know, we really want to. We have young team members in our hotels, and today, you know, people do care about a balance between their personal life and their work life.
As an organization, we have an obligation to respect that.
Great, sir. Thanks a lot. That's all from my side. All the best.
Thanks, Rajiv. We take the next question from Sunny Sarkar. Sunny, please go ahead.
Hello, am I audible?
Yes, you are.
Yes, you are.
Hi, sir. Actually, just regarding this Hebbal Bangalore project, I just wanted to know whether the land we are already owning that land?
Yes, sir.
Okay, okay, okay. And for the commercial portion, what would it entail actually? Would it entail like retail, the malls or office space?
It'll, it'll largely be commercial office space with so about 50, 55, 57 thousand sq ft of retail and F&B.
Okay, sir. And sir, lastly,
So about 700,000 sq ft , 700,000 sq ft of-
Got it.
-commercial office space, and the balance 55, I'm just rounding numbers off.
Hotel.
No, no, no.
Hotel.
Of retail, which includes food and beverage.
Okay, okay.
And the hotel is the balance.
The hotel is the balance. And so, a general question, how much do you expect the revenue growth to be in this financial year, given that the, we have had a very tough, first quarter? So, just an estimate.
I'm not going to give you that number.
Sunny, maybe it's a little well.
But Sunny, the tough quarter that you talked about, that tough quarter also, revenue has grown by 10%. So,
Yeah.
Over the last year. If we can just throw some light on the ARRs, that would be helpful. Because, I mean, you have already said it should increase, but, I mean, whether... I mean, just wanted to know, where is the more headroom, the city hotels or in leisure destinations?
Again, Sunny, it's really a question of demand. You know, sorry, I'm gonna give you a long story. I worked in South Bombay at the hotels at the Oberoi Mumbai many years ago. And this is just after India. This was after the first Iran-Iraq war in the Middle East. And the Indian economy started to open up. This was when Manmohan Singh was Prime Finance Minister, and we saw an unbelievable increase in demand. In fact, we had never looked at such, and it happened very quickly.
Demand surged at a phenomenal rate, and in those days, I think we used to charge, I'm trying to remember what they were, but I feel like saying The Oberoi, Mumbai used to charge, I'm gonna say, you know, INR 13,000-INR 14,000. The dollar was much, the rupee was much stronger against the dollar. So you can do the math.
Mm.
Really, rate is a function of supply and demand. And if there's strong demand, which you're in a better position to judge, on what's happening with the Indian economy. But we remain very bullish, and if there's strong demand, both in leisure and in city hotels, we should see strong increases in average room rate. I think the propensity to pay in leisure hotels is greater. So if you look at our leisure hotels, Udaipur, and I don't know if I can give the average room rate. Can I give it or...?
Okay.
Okay. So Udaipur, for example, the Udaivilas does double the rate of, in fact, slightly over double the rate of our highest city hotel, Oberoi average room rate. So it's a multiplier of two. That's what I can say in terms of your city versus leisure rates.
That's very helpful. Yeah. And lastly, just a question on the international operations. What is your... Currently, what is your most profitable international hotel, given the current scenario in the Middle East and all? So, which one of your hotels in, like, Mauritius and this Indonesia and the Middle East ones, which one is the most profitable in our group?
So, I would say, some of them are quite close, but the Oberoi Bali has, or in Bali, has seen a strong surge in demand. And believe it or not, actually, a lot of that demand is coming from India. The figure I read, not for the Oberoi Bali, but for Bali in general, is, I think India is the third largest inbound destination to Bali. And at the Oberoi Bali, we also have, fortunately, strong Indian demand. That hotel has seen very high occupancies and good rates. I think the potential for the Oberoi Bali is significant, and that's another hotel where we're looking to renovate.
I think we can easily achieve what we did in The Oberoi, New Delhi, with doubling of our average rates and while maintaining or even increasing occupancy, maybe reducing room count a little bit. That's something that we are working on as we speak today.
Also, I would add to what Vikram is saying. I think, Sunny, you didn't specify what you meant when you said profitability. Was it operational profitability or-
Very well.
the last net profit after all kinds of
Mm-hmm.
corporate costs? But I'm assuming it's operational profitability, if that is the-
Maybe ROC.
Yeah. If that is the question, then I think, our newest property, Marrakesh, is pretty doing good with high rates, et cetera, and it's still in a growing phase. Egypt typically does extremely well. Our cruise on the Nile extremely profitable, but currently it is facing-
Mm.
difficult situation because of the Middle East. Equally, Mauritius, is-
Good rates.
Yeah, from a rate point of view, it's good. So I think our properties are, by and large, profitable hotels. We need to undertake some restructuring and some attention and care, which we are in the process of doing. And obviously, then that will help us to really turn around the international operations completely.
Okay. And have you finalized the CapEx for Koh Tan in Thailand, or that is not yet finalized?
This is a management contract, so it's basically-
Okay. That's okay. Thank you, thank you, Mr. thank you.
Thank you, sir.
Thank you, Sunny.
Thank you, Sunny. We'll take the next question from Rushabh Doshi. Rushabh, please go ahead.
Yeah. Am I audible?
Yes, you are. Please go ahead.
Opportunity. So, recently I read that, you know, IndiGo for the business class has chosen Oberoi. So and our airports and the aircraft catering business also doing quite well. So if you could, if you could just tell us, you know, going ahead, do we see the demand still sustaining there? And also, could you just give an approximate split of how much is coming from the airways, airlines, and how much is coming from the airport lounges?
Do you want to take that?
Okay, so airport lounge, we have just one lounge. Currently, that's a very profitable lounge.
It's extremely profitable, yeah.
And it contributes about almost 40% of the GOP that the OFS and the OAS units together generate. Having said that, the airport lounge is a limited lease period. So obviously, at some point of time, this lounge will not be there. But on the flip side, the flight catering business has been bouncing back in a strong way. And with the growth in this sector, especially with new aircraft being procured by two of the most prominent airline players in the country, this looks really robust to us. And we believe that despite the lounge business not being there next year, let's say, we will still be able to sustain the profitability through increase and growth in our flight catering business.
Okay. Yeah, that's all from my side. Thanks.
Thanks, Rushabh.
Thanks, Rushabh. We'll take a question from Amit Kadam. Amit, please go ahead.
Yeah. Hi, sir. So there are a couple of from my end. I'll just. So maybe just starting with the slide number 9, where we have said, like, that, how my ARRs have moved for April, May, June. And then above that, we have also mentioned how my occupancies have also moved for the domestic audience. So largely it could capture how my standalone business have, would have also moved. On that basis, when I just compare, it had been, ARR had been barely flat, and occupancy was also like barring April, we had similar dip in that particular thing. On that basis, still we were able to report some kind of a growth in our standalone business. Just to follow, question number one is that what attributed to still that delta in that business?
What are the elements which still were able to contribute, which led to that top line growth? Second, I just wanted to understand on the extension to this particular slide, that that how the the numbers are, or I would say, how the demand is looking forward in terms of July, August, September, because you would have a reasonable understanding about those particular things, and because some forward rate booking would have also happened. I just wanted to reconcile this number with our, one, one of your peer, which in the earlier of the month had reported them, and they had given a very strong commentary about-
Yeah, yeah.
a very healthy 20% kind of a growth. They were very, very confident on that thing, and they were also mentioned that how the future numbers have also, or the future months look like. So based on that, if we are—we don't want to call it, call out the numbers specifically, we being we, still, like, if we can help us to understand where we are figuring in that particular 20% range, because our key geographies are broadly like Delhi and Mumbai, figure into that particular predominant where the, strong demand recovery has been seen. So that's a question number one. And then there are a couple of two more. I'll just come back.
Go for it.
So I think, you know, firstly, it's a good question.
It's a very good question.
Yeah. I think what you would have noticed is that May was really down because of the factors that we mentioned. April was a really strong month. So I would attribute that increase that happened is mostly because of April. And if the May month's occupancy was to be normal, then obviously we would have surpassed the previous year's same quarter numbers by a much larger margin. So that's point number one. And on point number two, we, you, as you rightly said, that, you know, as an organization, we do not believe in giving forward-looking numbers.
The booking windows have also shrunk a lot, so therefore it's not right for us to give a number going forward in the next three months, when we know that really, booking really picks up, especially in the city hotels, in a much shorter span, especially post-COVID. Having said that, the overall trend is very positive, and this includes some of our international hotels also, where we don't have any reason as of today to believe that there is any reverse trend towards that aspect. So, while you would have got cues from our peers, I think we will refrain from giving any number, but it is healthy.
So at least on a confident basis, are we aligned to that, that particular thing, that, the momentum is again back in the second Q2? And in fact, they were so confident they were, that, it could be one of the better Q2s of... Looking to the usually Q2 is assumed to be weak, muted of all the four seasons, but they were like, of the thing that because there was some pent-up from quarter one to quarter two, there was some, like, higher wedding dates, hence some MICE events also like followed to in quarter two.
Good.
That kind of things we also would have observed in our business. At least on that basis, we can summarize the question number one?
Yeah, no, I mean, sorry, but we really, that's, you know, to us, that's a bit of speculating.
Oh, got it. Got it.
So, so we wouldn't like to give really numbers. But as we said, and we've been repeating this, Vikram said this in the beginning.
Right.
That it is healthy. There is no reason for us to believe that the trends are anywhere down. If you look at June also, June also has been, it's been one of the weakest months in the past, but this year was same as last year. So obviously, except the blip of the elections, the other two months are, have been good. So there's no reason to believe that... And given the business on books that we have, we don't believe that July, August, September will be worse or something. It'll definitely be better.
Okay. So I'll leave it there. I'll just go to my question number two, is on the like, as we had a few quarters back, alluded to this particular Vision 2030, where we have an ambition to double our rooms. So from there, the visibility, at least I have on my side, is just like 1,000 odd room kind of a visibility for the next two years. Where I assume, if I want to double my room, and so what I need little clarity on how much it would be owned, managed?
Second is that, when, like, the timelines of those things happening, I understand that because it will be largely back-ended, large part will come beyond 2027, because something like we have to act now so that after 4 years, a property comes. So I assume that large part of that additional upwards of 4,000 would be coming in the later part of the decade or maybe beyond 2027.
So just like, if not now, but some time in your presentation, through your presentation or some better forum, where you can actually share the insights on how you are trying to plan your capacity planning and what are the things already in place, be it land or be it some, like, some kind of a, if you need some, like, a resource from a JV or something like that. Just help us in that thing, which will guess the medium-term outlook of our business. I understand this ARR-related or occupancy questions are very near term, but, like, I'm from a medium-term basis, when we want to take a sense on this business, it will help us. And I think that has not been captured in any of our slides.
I'll appreciate if you add that particular thing in your presentation.
Sure. We've, we've once given, and I think you're basing your your calculations and your spreadsheets on what we have given in the past. Yes, it's true that we've not given now, because the, there's a conscious decision that as and when we, especially after the, the last LODR amendment, in 2023, a decision was taken by the company to announce projects as and when they concretize. And when we say concretize, it means that everything is done and dusted, and we are in a position to make that announcement. So unlike, you know, many other companies, we, we really, have chosen to follow this path.
But your point is well taken, and if there is a case in future for us to give more concrete visibility of what is the difference, I mean, what is the segregation between management contracts and owned hotels, et cetera, then we will certainly come ahead with it.
Okay. Just one final question.
I mean, I think-
Sorry, Amit, and I don't mean to-
Okay.
But just I think, number one, I think what you're asking is a very reasonable question. But I'd like to answer it slightly differently. I think as and when we finalize a hotel, whichever way, whether it's owned, managed, a partnership, et cetera, and we make those announcements, and we share that with the stock exchange and with you, I think that will hopefully, I hope, give you some level of comfort, because then you can see what we're saying and what we're announcing, and then extrapolate from there. So, that's what we are committed to doing. And as soon as we're able to share details, we will do so.
Fair. And, is there-
Amit, Amit, we need to wind up quickly, so I need to take some other questions, if you don't mind.
Sure, sure.
I've shared my email ID, so for any unanswered questions, please write to me.
Okay. Thank you.
Thank you, Amit.
Thanks so much, Amit.
Thanks, management. Yeah.
We'll take the last question from Sanjay Kohli, and then we have a few questions on the Q&A board. Sanjay, please go ahead, but, please keep it short. Please go ahead, Sanjay. Okay. He put a question out here: Will the Hebbal Lake project serve as a prototype for more to follow?
I think mixed use developments. I hope there'll be more, more to follow. That's what we would like to work towards.
So, is there a possibility of getting a sort of a big announcement? Let's say hypothetically, these 100 industrial parks that are coming up, and government come, gets into dialogue with the, you know, leading hospitality chains and says that, "Look, we need you guys here." So, would the Oberoi Group be amenable to,
You know, that sort of big bang expansion suddenly and, you know, in the coming quarters, is that a catalyst to look for, for investors and analysts?
I don't want to speculate, but if, you know, we are an Indian company, we are committed to India, and if the government were to ask us to support the Indian growth story, absolutely we would.
But, Sanjay, I'll add, too, I think it's a good question to ask. And, I think one of the things that you would have probably followed is, since the last one year, there are at least two solid templates now which has been created and announced. One was the model where, we went with, a lease model with the state governments, where we were offered land, by states. And therefore, you know, we are able to reduce our cost of, acquiring or cost of creating that property. And that's a very good model to follow, and that's that template has already been established. This is the second one that we've now come out with, Hebbal.
If this can happen in one year's time, then obviously there's much more to come in the years to follow.
Okay. Thank you very much. Thank you.
Thank you.
Good luck.
Thanks, Sanjay.
Naveen, you're on mute.
Yeah. Thanks, Sanjay. Thanks, Kallol. We'll take the last two questions on the Q&A board. Manoj S: Can we please talk about blended rate hikes percentage taken in the beginning of January for corporates? That is, trying to gauge starting point of revenue growth year-on-year.
I think we can get that question. I don't... First of all, I don't want to give an answer which is not accurate. But if we could just get that question, Naveen, then we can. I don't have that data with me right now, and I'm not going to quote a number which may have some margin of error.
Sure.
If we can get that, we'll be happy to respond to it.
Just note, take note of that. Give me a second, please. Okay.
I think the question, if I understood correctly, is: What are the corporate rate hikes that operate for most markets on a calendar year? I think that's the question. Is that correct or not really?
Can we speak on the blended rate hikes in the beginning for corporates?
Yeah. Okay, so yeah.
Yeah.
We'll respond to that. And we'll do that.
Yeah.
I don't have the numbers in front of me.
Okay. One more question is from Deepak Verma: Please elaborate on our mixed development project, through process and city due to high cost of land. How will the other issues like commercial and retail yield better results for EIH?
Do you want just the cost of development, but maybe you can-
Yeah. So obviously the cost of development for commercial is much lower, much faster than a completed hotel, which has a large element of FF&E. But more importantly, as a business model, I think it works very well in risk mitigation because with long-term lease, et cetera, with offices. And we have a template before that because we have the Oberoi Center in Gurgaon, albeit a much smaller development, where we have commercial spaces. We have created that asset, and it appears as an investment property on our balance sheet, if you can look up that. And we've seen the model work very well as providing us steady inflows.
So, I think that in, sort of, that creates sort of a hedge for us, in, times of volatility, where at least, there is a free-flowing cash which comes in from the commercial side. And, along with that, we are coming up with two very prominent hotels and very, very good quality, hotels, which will, help us in targeting the upside that is there in the hospitality business. So it's basically capturing the best of both worlds. And obviously, the synergies between the commercial and the, hotels, the commercial element and the hotels, is really going to help, both, symbiotically. So, I think there is a lot of merit in the model that we are pursuing.
Friends, my apologies, but we've run out of time completely, and we won't be able to take any more questions. Any unanswered questions, please write to me. And before I hand over the webinar to Kallol and Vikram, many congratulations on Oberoi Rajvilas Jaipur being ranked as the best hotel in the world for you and your entire team. Thank you.
Yeah. Oh, thanks, Naveen. Credit to all our colleagues at the hotel. They really do all they can to look after our guests. And they are the true heroes. So, thank you. Thanks, Naveen. We really appreciate the opportunity, and thank you, everybody, for participating and for the questions you asked. And if there are any unanswered questions, please let us know. We're very excited about both Hebbal and The Grand, and also on other opportunities that we're working on, which we hope we can share with you in due course.
We are, of course, very excited to open the Oberoi Rajgarh and the Oberoi Bandhavgarh this year itself.
Thank you.
And those are pretty marquee projects that are going to come up.
Thank you very much. On behalf of all of us at SKP Securities, thank you very much, Vikram and Kallol, for taking time to interact with the investors. I look forward to hosting you again in the next quarter.
Thank you.
Thank you, and have a wonderful evening.
Thanks so much, Naveen.
Thanks, everybody.
Thank you, everyone.
Bye-bye.
Bye-bye.