EIH Ltd

Good day, ladies and gentlemen. On behalf of EIH Limited and SKP Securities, it's my pleasure to welcome you to EIH Limited's Q2 FY24 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 certain forward looking statements which must be viewed in conjunction with the risk that the company faces. We'll have the opening remarks and a presentation by management followed by a Q&A session. Thank you and over to you, Vikram.

- - Thank you so much, Navin. Good afternoon, ladies and gentlemen. Thank you for joining us on this call. You may have already seen our results for Q2 of this financial year and also our half yearly results which were also published. And I would just like to highlight that we've had a record Q2 and a record half year. And of course, one is because of the buoyancy in the market, people are traveling again, we're seeing there's a slide which Kallol would share on foreign travel that's still not at pre-pandemic levels, but we hope it'll get better. So, there's significant upside with foreign travel, but our business continues to be strong. And I would just like to thank our guests who are loyal to our hotels. Kallol will present some SDR data which shows that and also our colleagues who work so hard to make our guest experiences special. So with that, I'll just pass over to Kallol to go through the presentation and then we'll be more than happy to answer your questions. Thank you very much.

- - Thank you, Vikram. Good afternoon, ladies and gentlemen. It's a pleasure to be back again. So, the quarter and the half year has certainly been very good. We will begin with a brief highlight of the global economy. Obviously we are going through a very complex set of environment and set of factors with rising interest rates, with monetary policy tightening, financial sector turmoil, supply chain disruptions, elevated inflation and so on and so forth. And amidst all this, it seems like, as pointed out by Hotelivate in one of their recent reports that the Indian economy seems to be in a Goldilocks zone, where we are looking at quite a few factors which appear to be buoyant, including the GDP growth, the private and public investments, our streamlined tax systems, bolstered digital infrastructure and so on and so forth. India obviously also has a lot of demographic advantages which really augurs well for the Indian economy and, certainly it appears that the Indian economy is in good shape right now.

Within the Indian economy, the Indian tourism and hospitality industry is poised very well and throughout my presentation, there would be cues where one could see or one could pick up where it's easily visible that there are certain opportunities which are yet to play out and those are probably opportunities that one could capitalize.

So to begin with, let's say when talking from an industry point of view where the contribution to GDP was 7% in 2019, it's still a shade below 6%. Employment is still lower than what it was pre-pandemic and obviously, these are all opportunities for the industry as a whole. As per the WTTC, the industry is expected to grow at 8.4% and generate about 19 million jobs. Of course, the airport connectivity and infrastructure in general is really going through a boom phase in India. And of course, there's a lot of impetus on several objectives that the tourism policy has really taken forward. But to speak on more specific terms, if one were to look at the operational trends in FY30, one would see that in the hotel industry on an overall basis, room revenues have, for instance, the ARR has increased by about 13%.

Likewise, RevPAR has also increased by about 13%. But when one were to look at the five star deluxe category, which is the luxury category, there, one finds the RevPAR has increased by 23%, and this is the same trend that we notice in our business. Because as an organization, as a company, we primarily play in the two uppermost segments, which is luxury and upper upscale. And it seems from the trends that these are the sectors where or these are the categories where the growth is really buoyant. In terms of future supply also, again, as per Hotelivate Report of 2023, about 55,000 new room nights are to be added in the next five years, which will take the supply to 220 – 2,20,000. But within that also, again, the majority of the supply, two thirds of the supply looks like will below the upscale categories, which

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means that the supply in the luxury and the upper upscale categories will be slightly lower, which in fact, from a defined supply scenario augurs well for an organization like us.

On an overall basis, EIH has consistently shown or demonstrated RevPAR which is growing faster than the industry. It's evident in the chart, in the line chart, where the top three lines are EIH and they seem to show an upward trend. The numbers from HVS Anarock Report of October shows that in September where the RevPAR generally of the industry rose between 19% to 21%, the RevPAR of EIH Limited taking all domestic hotels rose by 48%. So, this again is a reiteration of the point that we saw a slide before. So, far as operations are concerned again, this is an ongoing chart which is there in every analyst or earnings call presentation and it keeps getting added. And, so far, there has been not a single period barring that one month in 2020 when the RevPAR index was not above 100. Which means that the competition set that EIH plays with has consistently enabled EIH to maintain a RevPAR leadership.

This is a new dimension that we thought we'll present to all our investors and analysts where each of our categories, the different brands, the two brands that we have and the different categories where we are positioned, how they have moved between last year and this year in so far as Q2 is concerned. So, what you would notice from this chart is the green colours are the ones which represent the current year in the various categories. It starts with the Oberoi Leisure, International, Oberoi, Metro, Trident Metro, Trident Leisure and the two other hotels which are not part of Oberoi and Trident. In all these cases, there is a RevPAR growth effectively either through increase in occupancy or through increase in ARR and we can see how the positioning is in each of these categories. By far, going by industry standards, this definitely is one of the best. On RevPAR in general again, when we consider owned and all domestic hotels, the blue line represents the owned hotels and the golden line represents all domestic hotels, including managed hotels, the RevPAR has grown by 23% and 19% respectively.

And of course, throughout the various second quarters for the last four years, the trend is visible on the slide.

- - Sorry. Kallol, if you could just on the previous slide just highlight Shimla because...

- - Yeah, thank you Vikram. Yeah, that's true. So one of the factors which we have mentioned here is although the RevPAR is 9543 in case of all hotels taken together, what must be noted is that this includes Shimla hotels which were severely impacted by negative environment conditions. So if this kind of force majeure situations weren't there, then the RevPAR for the golden line too would be much higher. Thank you Vikram for pointing that out.

- - And really Q2 was terribly impacted for Shimla. We saw really demand fall off cliff as far as our Shimla hotels were concerned and I think that applied to us and applied to other hotels in Shimla.

- - Yeah, that's right. Now for June, July, August, different months, again the trend is upwards the same reason which we just mentioned. The drop in occupancy and maybe slightly muted ARR is also because of the Shimla hotels. Having said that, generally the average room rates have grown from 11,177 to 13,736 which is a very positive trend. And mind you, in Q2 of last year really speaking, business had already started picking up. So, the comparison here is very pertinent. When we look at city-by-city again, the various increase, the growth in RevPAR in the various locations or geographies within India are as shown here. Shimla of course is because of repetition is the only one, apart from a small de-growth in Cochin, which has seen a de-growth in RevPAR.

Strong tailwinds continue across all the segments. In fact, what is heartening to note is also corporate is pretty stable, direct continues to be very robust and there is an upwardly trend in MICE as well.

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Foreign room nights, as Vikram was earlier mentioning, as a percentage of total room nights while this has picked up over last year same quarter, this is still to cross pre-pandemic levels. So, in case of Trident it is still at 32% as compared to 45% in so far as Q2 is concerned, Oberoi is at 40% compared to 53% and on an overall basis it's 35% compared to 47%. When viewed in terms of absolute foreign room nights also, it is the same picture here where it's really evident that on the left hand side, the axis shows the total number of room nights for Trident hotels and Oberoi hotels in India. So as we can see, the recovery levels are still to happen completely. And as I mentioned a while back, that these are certainly opportunities for the company to generate even better business in the third and the fourth quarters respectively. Oberoi Flight Services and airport lounge, there is a strong comeback and as is evident in the last five years, this is the highest revenue and amongst the highest revenue of course in many years with a very, very robust margin. This is industry leading margin at 37% and the business is looking really good.

- On the financials, it is our strongest quarter ever. Q2 with a revenue of Rs. 490 crores, EBITDA of Rs. 148 crores and PAT of Rs. 85 crores. On a consolidated basis also it is the strongest performance. And of course, here you can see six years because prior to that quarterly consolidation, as you would know was not in place. But in this quarter, in case of consolidated accounts also it's Rs. 552 crores of revenue with Rs. 165 crores of EBITDA and Rs. 94 crores of PAT. This has really enabled and strengthened our funds position both on a standalone and consolidated basis. And we are today net cash positive at Rs. 227 crores on a standalone basis and Rs. 509 crores in so far as consolidated accounts are concerned. The marginal drop that you can see from the previous quarter to this quarter is on account of an investment from one of our international companies in terms of an equity infusion. So, that's one of the primary reasons for this decrease. And the other reason is, of course, the payment that has been made for our Mashobra case.

- Performance highlights really strong quarter, revenue up by 33%, EBITDA up by 66% with almost a 6% point margin expansion and profit after tax up by 213%. Quarter-on-quarter position is provided here. On a consolidated basis also, revenues increased by 32.5%, EBITDA by 64% with a 5.7% point margin expansion and profit increase by 256%. This is again a quarter-on-quarter sort of performance.

- The premium positioning continues to be reflected in awards and accolades, of course, from Travel and Leisure, Telegraph Travel Awards and the Robb Report. But also a pleasantly surprising addition to the list is the CII DX Awards for our Centre of Excellence. The business footprint is for those who would like to have a snapshot of our structure. Thank you so much.

- Mr. Navin Agrawal – Head Institutional Equities, SKP Securities: - Thank you, Kallol. That was quite comprehensive, as usual. Friends, we now open the floor for the Q&A session. Anyone with questions, please raise your hand and we'll take it up. We'll just wait for a couple of minutes while questions are being lined up. And friends request you to please come on the Q&A with your hands raised rather than putting it on the Q&A.

Okay, the first question is from Vikas Ahuja. Vikas, please go.

- - Thank you for the opportunity. This is Vikas from Antique Securities. My first question is, and before that, congratulations on such a strong quarter. This year we have been reporting very strong numbers and it is given Q3, Q4 is also going to be pretty strong. But how should we look at next year with election coming in Q1? Mostly, we normally see a decline in areas during that time. So from Q1 onwards, how should we look at the quarter? I mean, should we see this strength we have been seeing to continue barring that quarter? That's my question number one.

- - Good afternoon, Vikas. Thank you for your question. I can't recall at the previous election what impact it had on individual hotel performance and unless we refer to data,

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I'm reluctant to provide any insight. But could I request you Vikas, we'll look at that and we're happy to discuss it offline. I don't want to just hazard a guess unless Kallol has specific data. But I think we really need to look at previous elections, typically lead time pace of reservations this far out wouldn't be an indication. So, I hope that's all right? Kallol, do you have anything further to add?

- - No, I think the elections are still some time away and with the dates etc., still to be concretized, it's I think, a major event. So, obviously closer to the date, we'll know better.

- - Sure, that's fine. Secondly, any early indication on how rates have moved during the current World Cup because there have been so much of hype, especially coming from the media? Did we actually see any material improvement in the business because of the World Cup or it was a few hotels here and there? If you can maybe answer this.

- - I think wherever matches have taken, we're not in all locations where cricket matches have been held and will be held. But in certainly our understanding, not only for us but for others as well is, there has been a strong increase in rates and we also experienced that during G20 in Delhi in particular. Kallol, is it okay to disclose the average room rate we achieved for the Oberoi New Delhi during that period?

- - We don't get into hotel-by-hotel, Vikram. But I think yeah.

- - Sure. So, what I could make out is, there is, we should see some improvement because of the World Cup, okay. And my final question is, in one of the slides you have talked about that there is a 10% points better RevPAR growth for five star deluxe versus the others. Demand-supply, I could make out.

Any other particular things which led to such a strong growth in that particular segment.

- - Kallol, I'm not sure which slide this refers to. Do you want to take that question?

- - Yeah. Are you talking of the scatter chart where in the various categories we've shown, Vikas?

- - No. So, there was slide number four, on that there was a five star deluxe where the RevPAR improved by 23% versus the overall…

- - Yeah, that's the reported numbers for the industry as a whole. That's not for EIH, that's for the industry as a whole, as was reported by…

- - Yes, sorry if I said EIH. I'm just trying to understand is that trend you are seeing in EIH also and any particular reason why the five star deluxe is doing particularly well compared to the overall the others?

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- Kallol it may be worth drawing Vikas's attention to slide number five, which shows our RevPAR, EIH domestic hotels’ RevPAR.

- - I was about to say that. Actually, the whole theme of the presentation you would see, and at least the way you look at data, is the fact that the more luxury and the upper upscale segments are the ones which are performing better both across the country, I mean, that's a trend which is seen across the country as well as in our case. And one of the reasons why we have a very strong margin growth is also because of the higher rates that we are able to command and we operate in these two segments primarily.

So like Vikram said Slide no. 5 is one indication. Another one would be Slide no. 8 where you would see category by category what is the RevPAR growth that has happened. So, obviously what is evident is that the spending power of our guests have increased a lot and in accordance with, and one other point that I mentioned already was that the supply generally is stronger in the lower categories than in the upper categories, so therefore there is a demand pull on that as well. So, this looks to be a more fundamental aspect that hotels that operate in the higher categories are able to enjoy better growth in RevPAR. Vikram, do you want to add anything to that.

  No, I don’t have anything further to add to that, Kallol.

  Just one final…

  Vikas, I will have to interrupt you because there are a lot of participants with questions. Thanks a lot.

  Thanks a lot and good luck for the next quarter.

  Thanks so much, Vikas, thank you very much.

  Please request you to limit yourself to one question initially, and we will come back if time permits because Mr. Oberoi is committed to another engagement and we need to wind up and are time bound.

The next question is from Mr. Amit Agarwal. Amit, please go ahead.

  Good afternoon, everyone.

  Hello, Amit, how are you?



How are they doing in this current quarter, both the properties, Marrakech and Shimla both?

  Marrakech and Shimla. So, I will pick Shimla first. We have seen a recovery in Shimla after the floods and so the Cecil occupancy has gone up. The other thing with Cecil is and I know I am not supposed

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Marrakech there was the earthquake, before I answer the question on that, we were very fortunate that the hotel staff are well. There were no injuries to our guests, no injuries to our staff, their families were also unaffected. The earthquake had the largest destruction up in the mountain regions and we are some distance from that. Business is returning to normal but we did see strong cancellations. And I think Marrakech is also, Morrocco is also impacted by the crisis we are seeing in the Middle East. So, we are seeing some cancellations. I hope there is considerable pressure for a cease fire and although the Moroccans are still holding ground with Israel, I hope we will see a cease fire and that will help the loss of lives of course, innocent lives. And also I am sure this will impact our hotel in Morocco, in Marrakech.



 My question is more regarding the infrastructure going to these hotels including Chandigarh, has this been damaged, or there is no change now.

  Absolutely no damage in any of these locations.

  The same with Chandigarh?

  The same with Chandigarh.

  How is the traffic compared to Y-o-Y in this particular quarter right now?

  Chandigarh fortunately is doing well. It wasn’t impacted by the floods in Himachal.

  Okay, my second question is regarding catering flights. Congratulations for touching 100 crores for the quarter. And how much is this business coming from domestic sector and how much from international sector?

  It will be largely from international. But, Kallol, do you have the numbers?

  Yeah, I think we don’t get into so much of details. Amit, it is not a separate segment for us. But majority of the airlines is international. Of course, in the domestic part I can generally tell you that Calcutta has done very well. Of course, we have a lounge in Bombay which does very well. And both Bombay and Delhi are reasonably good but in general it is more international flights for us.

  And my last question is regarding any updates on upcoming projects?

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  Actually, I just wanted to I think I saw a question from Sanjay as well, I will take that question now, Sanjay’s comment was on the strategy for 2030. And what I would like to mention is we have a vision - EIH vision for 2030 which is at a very minimum 50 more hotels with about 4500 additional keys and we are focused on achieving that. You will see there will be some hotels that you will see in our annual report, more recently we announced a Trident Hotel in Tirupati which is done with Mumtaz Hotels and with EIH Associated Hotels in Vizag. As and when we announce projects we will as per stock exchange guidelines inform the stock exchange but we have a number of hotels that are coming to fruition and we will be able to make announcements I hope on an ongoing basis.

  You said 15 or 50?

  50.

  50 in the next 7 years?

  That’s correct.

  How many will be managed and how many will be owned?

  It will be a combination of owned and managed.

  Any percentage?

  Kallol, should we give the percentage?

  Amit, as Mr. Vikram Oberoi mentioned that we will be adhering to the LODR guidelines we are very careful about the new disclosure norms etc., so as and when it comes we will give. For the two projects that has already been announced. These are owned by our subsidiary companies, meaning one is owned by our subsidiary company, Mumtaz, and one by company EIH Associated Hotels, and both will be managed by EIH Limited. And of course, being subsidiary and Associates, EIH will get a share of the profit. So, really speaking there are complications around the structures which are positive to our business and therefore we would want to make announcements as and when we follow the guidelines of LODR.

  Which is the other hotel besides…

  Amit, Amit, I have to interrupt.

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  It is my last question.

  No, please you have to join the queue. Let’s be fair to the other participants.

  Okay thank you.

  Thanks, Amit, thank you.

  The next question is from Bharat Sheth. Bharat Bhai please go ahead.



  Yes, Bharat Bhai please go ahead.

  Congratulations, Vikram and Kallol, on a good set of numbers. Vikram, just to take forward from the previous participant, from short term perspective and medium term perspective if I look without going in any hotel, just we look at past trend of our H1/H2, so H1 used to be around 40% of the top line of 60% is H2, whereas bottom is other way 25:75. So, do we expect that also to continue that same trend in this year also without going because this is before elections so we don’t know about elections?

  Bharat, I am sorry I didn’t understand your question. Kallol, did you understand Bharat’s question.

  I think what he is asking is you know the seasonality of this business, basically what earlier we used to see the revenues between H1 and H2 used to be 40:60 according to Mr. Bharat Sheth. And the profitability was lower in H1 and higher in H2, is the same trend going to continue. That was your question, right?

  The profit I mean bottom line used to be 25 in H1 and 75% in H2.

  Okay, now I have understood the question. So, I think in winter we do fairly accurate forecasts of business and our winter - touchwood is looking good. So, I would say that we will be very close to previous, again I don’t know I should give forward looking statements of not.

  Directionally if you can.

  I would say that business is looking good, let me just answer it that way.

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 Mr. Kallol Kundu – EIH Limited:  To add to what Vikram is saying already if you look at H1, it is very different from the H1s of the past. So, the EBITDA of H1 on a standalone basis is already 300 crores. So, therefore really difficult to say that the ratio will be maintained or not. But really speaking when you compare H1 of FY24 with any other year, it is very different.

  Kallol, I would say one other thing and I touched upon this last time we were on a call and I had highlighted that there is considerable upside on average room rate and we are already seeing that. So, we are seeing strong increases in average room rate in hotels of EIH where demand, in fact across all our hotels where demand is strong and that is being reflected by sharp increases in the average room rate. I just wanted to add that as well.

  As a veteran hotelier how do we see this ARR trend which is say after 10 years of say from 2008 onwards it was…, do we see, maybe growth rate in ARR maybe softer but do we expect it should continue in the coming years.

  So, Bharat, my perspective on this is that we have in India exceptional hotels in the five star deluxe segment and these hotels are relative to global prices particularly in city locations, maybe to a lesser extent in leisure locations. But in city locations to a large degree, and in leisure locations still underpriced but to a smaller degree, well below what you would pay for, a guest would pay in other locations across the world and therefore demand being strong we should see substantial upside in average room rates.

  And last question on this expansion you said by 2030 we have a plan to add 50 hotels.

  50 hotels.

  15?

  Yes, 50.

  Is it possible to get some kind of how much would be say next 3 years and then balance how much will be there. If you can give because you must be working very closely on the plan and some maybe under pipeline for announcement. So, if you can give broad breakup or…

  So, I think two things, first of all we are confident of achieving that. and secondly as and when we finalize hotels like we did with the Tirupati and Vizag hotels we will make announcements and you can also refer to our annual reports there are some projects already underway. So, Rajgarh for example is one, so that’s covered in our annual report. But we have taken decision as and when hotels get finalized, we will make those announcements by informing the stock exchange.

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  Apart from that there is one more hotel we have mentioned in our annual report is in Andhra Pradesh which is for tourism.

  I don’t know which is the location mentioned. We are actively pursuing other opportunities in Andhra Pradesh and we will make those announcements.

  I think Bharat may be referring to some newspaper reports that came out. So, please wait for that announcement because there are two hotels which just got concluded and where we have intimated those to the stock exchanges. As and when that happens we will intimate to the stock exchange and let you know.

  Great. Thank you, Vikram and Kallol, all the best.

  Thank you so much, really appreciate your good wishes and your support, thank you.

  Thank you, Bharat Bhai.

  Next question is from Hari S. Hari please go ahead. Hari, please go ahead. I guess some connectivity issues. We will go onto the next…

 Mr. Hari S.– Participant:  Am I audible?

  Yeah, Hari, please go ahead.

 Mr. Hari S.– Participant:  Only one question, sir, regarding this occupancy levels like pre Covid and even compared to the previous year, the growth rate is very low, everything else is good. Any reason for that, sir?

  I think, Hari, one region Kallol mentioned is Shimla, Shimla did very, very low in occupancy for the entire quarter. Kallol, is there anything further you would like to add to that?

  Not really, I think pre-Covid wise it is fine what we are generally seeing if you compare with last year it is Shimla hotels which is really….

 Mr. Hari S. – Participant:  Okay, thank you very much.

  Thank you, sir.

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  Thank you, Hari. Let’s take a question from Jaiveer Shekhawat. Jaiveer, please go ahead.

  Thanks for taking my question. Good evening, gentlemen, firstly in terms of the rates what I hear from you, Mr. Oberoi, is that we understand that the global prices and where prices are in India I think there is a disparity there. But given that majority of your demand still continues to be driven by domestic guests how much for the room do you think there might be there to the ADRs before it starts impacting demand due to affordability.

  So, Jaiveer, may I answer your question a different way just to illustrate the point I mean on supply and demand. And I am going to give you a very specific hotel to answer that question. I am sure you are familiar with Gurgaon. When the Trident Hotel in Gurgaon, which is a managed hotel, opened there used to one hotel in Gurgaon which was the Bristol and that hotel was doing just under Rs. 20,000 average room rate. The hotel is now doing a lower average room rate than it was doing then.

So, to me, and there is more there is greater buoyancy in the market today than there was then. So, I think the key drivers are really supply and demand. And, of course, provided the hotels are quality hotels. So, I believe I will stick to what I am saying that I believe that is whether it is domestic or international I believe there's considerable upside and we see the Indian guests having a high propensity to pay as well. So, we are already seeing that today.

  And, sir, lastly on your vision as well Vision 2030, that there has been significant upgrade because as per the Four Key Presentation the plan was to open about 9 hotels. Majority of your hotels might come in let’s say 4 to 5 years down, I mean don’t you fear that the capital cycle the traditional capital cycle might be off for the worse by the times your hotel come up.

  So, I think there are a number of hotels that we will be able, it won’t just be that hotels will come right at the end. So, again I’d say the proof of the pudding is in the eating and we would like to take a more conservative approach in making announcements. But we remain confident, we remain driven, we remain focused on driving the right kind of growth and I remain confident that we will achieve our vision.

  Thanks a lot and wish you the best.

  Thank you so much, really appreciate it, thank you.

  Thank you, Jaiveer. The next question is from Karan Agrawal. Karan, please go ahead.

 Mr. Karan Agarwal – Participant:  Good afternoon ad congratulations for an extremely strong set of results. So, you spoke about higher propensity for an Indian consumer to spend. I was just curious to know over the last maybe 3 years 4 years or 5 years, are you witnessing any change in the demographics of patrons visiting your properties. Any tangible I mean are they getting younger or - I am just curious what drove you to make that comment.



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 First of all the age at Trident Hotels is younger than Oberoi, that was in the past and that continues to be the case today. We are seeing more women travelers if we go back historically we will see more ladies traveling particularly for business. We are seeing family demand - Indian family demand traveling in small groups at our domestic hotels. I am just trying to think if I have missed anything out.

And maybe I don’t want to certainly give you the wrong answer, but if my memory serves me correct, the Oberoi guest and the Trident guest have both become marginally younger.

  Okay, that’s helpful. The second question was you know, if you could give us a consolidated occupancy and ARR for the hotel business, I mean including managed, domestic, international.

  Sure. Kallol, do you have that?

 Mr. Kallol Kundu – CFOIH Limited:  Sorry, they are in the presentation.

  And we have given EIH, EIH owned and managed hotels separately, have we provided that as well.

  We have given for all domestic hotels taken together.

  But I think, because EIH is impacted most significantly by the hotels we not only manage of course we manage them but we also own them would that be I don’t know if….

  Okay, if you want only EIH numbers I can share those numbers. So, EIH owned hotels the occupancy was 77.5% against 76.5% in the same quarter last year. And an average room rate of 14535 as compared to 12018 of the same quarter last year, owned hotels.

  Lastly, I might have missed it, if you could just give me the FMD revenue for this quarter.

  Sorry, the FMD revenue of the first quarter?

  Q2 and the same quarter in the previous year.

 - And while you are looking at that, Kallol, I just wanted to mention that a large contributor to banquet revenue comes from the Trident at Nariman Point, we have a ball room which is under renovation and rooms next to it as well. And, therefore, the ballroom has a significant contribution to revenue. So, when Kallol gives you that number, please keep that in mind.

- Yeah, it’s about 40%.

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- 40% for this this year, is it? This quarter? Of ₹531 crores?

- Yeah.

- And for the base quarter?

- 44.21 revenues as well, flight services revenue as well.

- Okay and for the base quarter?

- Sorry, which part…Can we just take it offline because these are, you know, reported numbers and we can help you definitely offline with the numbers?

- Sure. Okay. Thank you.

- Thanks, Ketan.

- Thanks, Ketan. Thank you so much.

- The next question is from Anuj Upadhyay. Anuj, please go ahead. Anuj, please go ahead. Seems to be having some problem with his audio. Let's take a question from Udit Sehgal. Udit, please go ahead. Udit? Hello? Can you hear me?

- Yeah-yeah, we can hear you.

- Surprising, all participants can't hear them. Udit, can you go ahead with your question, please? Okay, I guess they are having some issue. Let's take the question from Saurabh Patwal. Saurabh, please go ahead. Saurabh, your voice is breaking.

- Hello?

- Yes, Saurabh.

- Yeah. Yeah. So, thanks a lot for highlighting the big picture of your expansion. I just wanted your thoughts on two things. One is, our strategic partnership with Mandarin, which is the past you have highlighted, and also Reliance Industries announced three hotels in partnership with EIH. What would your thoughts and what's EIH contribution to that partnership?

- So, would you like me to answer for both?

- Yeah.

- Okay. Yes, that's correct, there was three hotels Reliance had made a press release and those details are in that and we look forward to developing those hotels and also other hotels with Reliance, I hope, in the future. As of now, it's only those three hotels that Reliance had announced. As far as Mandarin goes, really the objective was to bring benefit to our guests and Mandarin guests, to bring benefits to our colleagues. So, there would be learning opportunities from each other. And those were really the two objectives and we continue to work on those fronts so that we can offer greater value, greater experience to Mandarin guests and vice versa and also enrich the experience of our colleagues, both for Oberoi group and for Mandarin.

- Okay, yeah. Thanks a lot, Sir. All the best.

- Thank you very much.

- Thanks, Saurabh. We take the next question from Sanjay Kohli. Sanjay, please go ahead.

- Good afternoon. Thank you for the opportunity. Very nice, decent set of numbers. My main question has been answered, Sir, about the strategic plan. If you can elaborate on when you say the right kind of growth, if you can throw some light on this.

- Sure. Happy to, Sanjay. Sanjay, for us, our vision, our founder's vision and our Chairman Emeritus vision for the company has always been to be the best and, therefore, we want to be RevPAR 1 against our competitive set and we look that very closely and wherever we are not, we work hard towards being RevPAR 1. But I'm happy to say that in most locations our hotels are RevPAR 1 and in some cases RevPAR 2 in their competitive landscape. That's about vast majority of our hotels. So, as we look to the future, we would like to continue that. That's a very important objective of ours because higher RevPAR or higher revenue leads to a more profitable hotel with better margins. In Hotel businesses, a large part of the business is their fixed costs. So, once you cover those costs your margins have the potential to increase substantially.

- Thank you. Just quick follow up when we are looking at the next 6 years till ‘2030 and the expansion put into place, is there going to be a change in the philosophy on how you will manage the capital structure? And can we expect greater leverage and a certain amount of…so perhaps a little less conservative on the financial management, the way you manage your assets? Is that to be expected, perhaps, an environment where the cost of capital is now sort of uncertain and has spiked up in the last 24 months, for instance, and may continue.

- Yeah. No, Sanjay, very, very good and a very relevant question. So, thank you for that. Today you’ve seen Kallol’s presentation, our cash position both on for EIH standalone and for the consolidated but in order to drive growth, we will be taking on debt and the management’s internal benchmark for this

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has been 25%. So, we would like to remain within that. Kallol, is there anything you'd like to add to that?

- Yeah. I think, firstly, it's again I would echo what you said. I think, Sanjay, it's a very good question and very pertinent question. What is important is that, you know, the hotel sector, especially luxury hotel sector, will always be seen as a cyclical sector. So, we must be cautious and one of the hallmarks of our organization has been that we've managed our cash and debt and Balance Sheet pretty well and, therefore, we've been able to weather the storms. So, what is important is as we drive growth?, obviously, there'll be in these years in which there is a high EBITDA accrual and, obviously, cash generation is high and, therefore, our ability to take debt is also there. What we very closely look at is several parameters. When we embark on projects, we have our 52.22 internal rate of returns and those should necessarily exceed the cost of capital at any point of time. And, therefore, to your question on the increasing interest rates and therefore increasing cost of capital, obviously, we will go into projects that make sense for us financially. That's the first point.

The second point is, over 5-7 year period we look at Return on Capital Employed for each specific asset and towards that we see what kind of balance between the capital structure enables us to generate those kind of Returns on Capital Employed or return on invested capital.

And thirdly and most importantly, I think, while we embark on this path of growth and maintain our profitability what we also always keep in mind is what is our Debt Service Coverage Ratio and what is our Interest Coverage Ratio and we have our own hurdle rates for those as well. We will not go beyond a situation which makes us uncomfortable, if this somehow gives you some insight on how we operate.

- Thank you. Thank you. On behalf of Goldstone Capital, thank you very much.

- Thank you so much, Sanjay. Thank you.

- Thank you, Sanjay. Okay, we have just about time for the last two questions. Let's take this one from Nilesh Saha. Nilesh, please go ahead.

- Yes. Hi-hi. Thanks a lot. Are you able to hear me?

- Yes, Nilesh. How are you?

- Okay-okay. Good-good. Good. Thanks for doing this on Zoom. It is, yeah, nice to put a face on the voice. I joined a bit late so I perhaps missed a bit of your comments around expansion. We really appreciate your conservatism and your sort of philosophy towards maintaining your brand and RevPAR 1. I just want wanted to understand, as you look to expand now, right, and when you enter and as you expand whether you are entering a new market or an existing market, how do you manage your occupancies given that it seems that you want to really maintain your pricing? How do you sort of balance that that dynamic? You can comment on that.

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And the second question that I would have is that do you find other mechanisms such as, you know, manage hotel and stuff like that that can help you grow faster without necessarily taking on debt?

So, those are two questions, feel free to answer to the extent you can. And I look forward to meeting you guys at some point and having a more detailed discussion. Thank you.

- Thank you. Thank you, Nilesh. So, when we look at locations where we can potentially open hotels, we do the best we can to analyze what the market will be and our objective is to go into markets that have good occupancies and good average room rates. So, that has worked for us in the past and I hope that works for us into the future. So, I think, selection is very important, where are we going to build the hotels, number of keys that we will build and our focus is certainly also to increase the number of hotels we manage. But whether we manage them or own them, our objective is to be RevPAR 1 and to drive strong numbers for owners or for EIH. So, that doesn't change. So, Nilesh, have I answered your question?

- Yeah. Just given that you are, you know, entering into an expansion mode after some time and the fact that the industry is also picking up, so in your estimate now that if you were to…You know, I'm just trying to imagine, when you open a hotel and you are RevPAR 1 on Day 1 in that market, what is the path for that property to reach your company level occupancy? How long would that take in your…I mean, just at a ballpark, that's what I'm asking basically.

- Sure-sure, Nilesh. Good question. So, it takes typically 2, possibly 3 years for a hotel to stabilize.

Again, it could vary and it could vary based on a particular destination. So, if there's a greater competition in that location, it'll take longer. Largely, if you're more dependent on corporate business, it could take longer because you have the RFP process for rates, corporate rates will be a large part of your demand in city locations.

I just wanted to add, in our vision, as far as Oberoi is concerned, our focus will be leisure and to a large extent also Trident. Leisure hotels cycles are relatively short and I hope there will continue to be strong demand in domestic market where we have a loyal guest base. So, I hope the ramp up will be above what it normally takes.

- Right. Right. Right. The second thing what I asked…

- Nilesh.

- Sorry. Yes-yes.

- Nilesh, I request you to line up for follow up question, please.

- No, I'll go back in the queue.

- Yeah. Yeah. Yeah.

- Sorry, Nilesh. Sorry. I actually have to head off for another appointment, so I really apologize. And, perhaps, that's why Navin is limiting the number of questions.

- Friends, I have already shared the Investor Presentation and I've shared my coordinates. We have just about time for two final questions. Vikram, is that all fine?

- Yeah. No, please-please go ahead.

- Okay. So, we have the next question from Rajeev Bharti. Rajeev, please go ahead.

- Yeah. Good afternoon, Sir. Thanks for the opportunity. Sir, so you have given the timelines of the two projects Tirupati and Vizag, seems to be four years; slightly aggressive from the history of what we have in terms of meeting that. So, are we building some conservatives in that thing also or is it aggressive? And is it going to be a thumb rule incrementally as well whenever you assign and take up a Greenfield project? This will be the kind of timelines you will have?

- Well, I'm hoping actually the timelines will be shorter than that. That's the outer limit but I hope we can finish the hotel sooner than that in both locations.

- And the land at Tirupati, is it leased or this is owned by us?

- It's leased from the government; from the State Government.

- And, lastly, in terms of let's say per key cost, which is 1.3-1.4 crores, for these two projects, this again can be used as a thumb rule incrementally plus let's say when you build an Oberoi what is the incremental premium per key cost?

- Right. So, you're right on Trident and Tirupati…Sorry, Tirupati and Vizag, And the lease terms are very favorable but hotel development costs will be roughly that. And, like I said, when we make announcements on Oberoi, we will share those as well with you at that time.

- Just if I can squeeze one, are you looking to participate in the Noida business for your OAS business as well? Flight catering business for the Noida Airport? You're one of the competitors as announced 1.01.39.

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- May I answer that?

- Sure, please. Please answer.

- So, Rajeev, in all the locations where we are present, we definitely evaluate but one must also look at what is the composition of the domestic business, what is the lead time and all of that. So, at the appropriate time and given if we see that business as close to our business model and it works in terms of cost, we would definitely look at any opportunity including Noida and Navi Mumbai.

- Thanks a lot and all the best.

- Thanks, Rajeev.

- Thank you, Rajeev.

- As we've run out of time completely, so I'll take the last question from Hinal Choudhary before I let Vikram go. Hinal, please go ahead.

- Yeah, are we audible?

- Yes, you are.

- Yes.

- Okay. Hi. So, this is Anuj Upadhyay. Sorry for my earlier chance, my voice was not audible that time.

Sir, quickly two questions. One is on the Shimla per se, so how exactly the situations are there now and when can we expect the normalcy of the tourism to be back to the pre-issue which we have seen earlier?

- Great. Good afternoon, Hinal. Oh! It's Anuj, right? You said…

- Sir, we both are there. Sir, it is fine.

- Okay, you both. Okay, alright. Well, we can hear you loud and clear, Anuj, now. So, the Shimla hotels are already coming back. Like I said, while whole is taking slightly longer because of us going into winter and us having various series blocked at Cecil. We've seen a very quick recovery at Cecil or a quicker recovery at Cecil but I'm sure both the hotels will recover in due course and, I think, that will be sooner rather than later I hope.

- Okay, fine, Sir. And on the expansion per se, you mentioned that by ‘2030 we expect to add incremental 50 hotels that, if I'm not wrong, would translate somewhere close to 4500 keys. Can you just bifurcate or provide any kind of guidelines among the proportion between the owned and the managed hotel for the same? And also, Sir, as these hotels will come up say after 5-6 years kind of a timeline, which probably we may see some kind of a moderation happening, so just to understand your view on the longevity of this cycle would there be any cyclicality 1.04.14 in this sector at all going ahead considering, you know, the way our economy is growing?

- Anuj, sorry, your first question was on owned versus managed.

- For the incremental capacity, Sir.

- Yeah, versus the incremental capacity. And please-please, my request is please be patient. As and when we're in a position to announce, we absolutely will. We would like to grow through both managed and owned hotels or hotels where we have significant investment. Yeah, so that's on the first part.

On the second part on cyclicality, your guess is as good as mine on what's going to happen in future.

And if demand continues to be strong, I hope we'll be able to do even better. If there is some events that cause us to relook, of course, we will do that.

- Fair enough, Sir. Thanks.

- Thank you, Anuj.

- Thanks, Anuj.

- Friends, we’ve run out of time and we’ve overshot the time that Vikram had given us. Request you to forward your questions unanswered and follow up to me. I've shared my email ID. And now on behalf of all of us at SKP Securities, thanks a lot. Vikram and Kallol. Vikram, Kallol, any closing remarks, please?

- No, I just want to say thank you Navin and also to Naresh. So, thank you both so much and thank you to all our colleagues who joined us for this call. Very much appreciated. I hope we can move the company from strength to strength going forward.

- Thank you. Thank you everybody, was our pleasure.

- Thanks a lot, Vikram and Kallol, once again. Thank you friends for joining us for this webinar and we look forward to hosting you again on the next phone call.

Thank you.

And have a lovely weekend.

- Thank you so much.

- Wish everybody a very Happy Diwali.

- Oh! Yeah, very Happy Diwali. Gosh, how did I forget that? I apologize. Very Happy Diwali to you and, of course, to your family as well.

- Thank you. Buh-bye and have a lovely evening. Buh-bye.

- Thank you. Take care. Buh-bye.

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