EIH Limited (EIHOTEL) Q2 FY23 Earnings Concall Transcript

EIH Limited (NSE: EIHOTEL) Q2 FY23 Earnings Concall dated  Nov. 03, 2022

Corporate Participants:

Navin Agraval — Investor Relations

Vikramjit Singh Oberoi — Managing Director and Chief Executive Officer

Kallol Kundu — Executive Vice President and Chief Financial Officer

Vikas Ahuja — Senior Vice President

Saurabh Patwa — Head of Research

Sumant Kumar — Senior Vice President

Rajeev Gupta — Independent Director

Analysts:

Baidik Sarkar — Unifi Capital — Analyst

Unidentified Participant — — Analyst

Prateek Kumar — Jefferies — Analyst

Presentation:

Navin Agraval — Investor Relations

Good afternoon, ladies and gentlemen. On behalf of EIH Limited and SKP Securities, it’s my pleasure to welcome you to EIH Limited’s Q2 FY ’23 earnings remit. We have with us Mr. Vikramjit Singh Oberoi, Managing Director and CEO and Mr. Kallol Kundu, CFO. All participants have been placed on mute and this webinar is being recorded for compliance reasons.

We’ll have the opening remarks and a presentation by the management, followed by a Q&A session. Thank you, and over to you.

Vikramjit Singh Oberoi — Managing Director and Chief Executive Officer

Thank you so much, Navin. It’s nice to be on a call with everybody again. I’m sure many people on the call earlier are on the call today as well. So a very good afternoon to everybody. I’m always asked to make opening remarks, and I wish I didn’t have to do that. But in this case, that there’s at least it’s nice to share positive news. I think the most important thing for our industry is that the industry is doing well. People are traveling on work.

And on leisure, we’ve seen that — we’ve seen that in Q1, and we’ve seen that in Q2, and I’m sure it’s an industry-wide phenomenon. From an EI perspective, our hotels, in fact, all our site hotels are — and many of our leisure hotels overall hotels are ESR1 or SDR 2, whether we have a concept. There’s some locations where actually unfortunately, you don’t have a concept for example, on legals in Renton. But that hotel has had unprecedented levels of performance, strain demand, good rates as well. as has the last. We also see our foreign trouble returning to our hotels, and that is also a very encouraging sign.

So I think as we look to the future, we’re certainly optimistic that this trend will — or this will continue. This isn’t a trend, but it will continue into the future. And just our colleagues, I must recognize them as well or that this is an investor call. They are really the true heroes who every day go out and try and make experiences for our guest special services, something which is so close to our hearts. Our value system is something which is so close to heart. — and they live by those principles, those values of our founder, Rihter and are so committed to delighting our guests. And that for me is more rewarding than anything else.

So with that, I’ll pass it on to Kallol for the presentation, and we’ll be happy to answer any questions. Thank you very much.

Kallol Kundu — Executive Vice President and Chief Financial Officer

Good afternoon, ladies and gentlemen. I hope my screen is visible.

Navin Agraval — Investor Relations

Yes, as Kallol. Go ahead.

Kallol Kundu — Executive Vice President and Chief Financial Officer

Thank you. So to start with this, some industry highlights from HVS Anoro the latest report. This, of course, report is a month delay. So it basically gives a trend for the month of August. — where average run rates and RevPAR continue to be higher than the 3 pandemic levels generally across the industry. India’s domestic air traffic has also grown Mumbai, as per the industry estimates is — has had his occupancy rate in August, followed by Nederland idea. In case of our hotels, of course, there is a slide going forward that you can get to see where occupancies are growing and the Reboot is coming from Just — sorry,

So in general, — this is again for the month of August because of nonavailability of information for September, industry buying. We’ve just shown the August figures where growth at our hotels has been higher in general than the industry. Pay taxes relative to competition shows a pickup in market penetration index in the average room rating debt and the revenue — RevPAR growth index as is evident from the graph — our balance sheet continues to be strong as before.

Net worth pretty strong, strong asset base. The debt has substantially come down from INR270 crores as on 31st March to INR217 crores. And — and with once business, this is expected to go down even further. The weighted average cost of debt, we are happy to share that despite inflationary trends and base in interest rates, we’re able to hold — in terms of financial agility, I think the come has taught us quite a few lessons where we see when we compare with the recover quarter of ’20 — we see that while revenue has increased by 17%, the expenses have increased by 2%.

And there’s a 11% reduction has also some reduction in parent — our company continues to march on with ESG initiatives. And while a lot of initiatives are coming by here is something to share what we’ve already been able to achieve, basically commissioning of solar plants with a total capacity of 3 megawatts which is expected to be generated about 4.2 million units. We’re 47% on an average of the laxity consumption is being net to solar, which also reduces — I mean, apart from the environmental friendly, — the average cost has also reduced from 10.9% to 5.9% at these locations. At our other locations, also, it’s a combination of hydro as well as wind energy. And as we move ahead, this is only going to increase. the various hotels where different kinds of renewable energy is used is highlighted here. And of course, tenders to just keep increasing use of clean energy. This is heartening. Like Luca mentioned, the RevPAR of quarter 2 surpassed pre-pandemic levels. This is a quarter-on-quarter performance. But if you see the areas which are rated with the start, you would see that quarter 2 of FY ’23, the RevPAR has been if you take OE-owned hotels, 919 versus 6,750 in the same period of ’19, ’20. Similarly, if we take all hotels, including management the RevPAR 84 as compared to 6,151. — so so substantial growth that I can see. In Q2, the ARR and occupancy performance is also very similar as well as the quarter. So monthly performances occupancies continue to rise. Monthly ARR continues to rise. The same story goes when we compare the whole quarter into account. So against an overall ARR of $9,562 in quarter 2 of FY ’20 with an occupancy of 64%. We have already achieved 11,047 at an occupancy of 70% when we were to include domestic hotels in tubing manage returns. I mentioned a while earlier about the trend that we have noticed in our city hotels in our terms across cities. So when we compare with the quarter 2 of FY ’20 with FY ’23, the highest growth has, of course, been seen in Shimane followed by Bangalore, Mumbai, Gary, Zetor, almost all these patients Calcanasseen a relatively lower growth in RevPAR, 8% and Rubenstand Agra has actually seen a growth. Occupancy and LR performance at domestic hotels is truly managed in all the parameters, whether it’s an occupancy or RevPAR you would see, in most cases, it’s grown under all the categories in case of our Opera Metro properties, over leisure properties, tridemetro properties, trialeisure, identity and others. So if we look at RevPAR, for instance, in case of Obra Metro, it’s grown from 6,956 to 9,867.So a lot of traction there. the same follows for leisure properties from 7,823 to 10,000 for 44. And the story is quite similar in every other segment as well. So I think what is very effective here is to see that the Oberoi brand, which is stands for luxury, the maximum growth is happening in these segments. Food and beverage also has seen an increase, and we are doing a higher by about INR35 crores, about 28% as compared to the same abandonment. So this is a question that normally counts to everybody’s minds, what is the percentage of for tourist — so here is a month-to-month comparison. In April 22, if we were to take operates, the percentage of foreign traffic was 29%. — which is now about 40%. So as we speak, this is September. So obviously, for the second half of the year, possibly the trend looks going up for which are well for our rates and our hotels in general. But the same story is in the case of the Titan brand as well, going up from 13% to 31%. And on overall basis, PC, it goes up from 30% to 35%. We’re happy to share with everybody that we voted the best hotel brand in the world yet again, at Travel and Leisure world’s Decimal 2022 with Negroni being ranked the number one city hotel in Asia, the presenter ranked number one result in India. — the primaries ranked number one resort in North Africa and the East. There are, of course, many other awards, but these are the highlights that I wanted to mention. We continue to maintain the highest levels of safety and health. I will request within to share some information on strategic development.

Vikramjit Singh Oberoi — Managing Director and Chief Executive Officer

Thank you, Kallol. We also thought it would be prudent or wise to share with you what we’re looking at in terms of growth — so this is broken up into — from this financial year up to financial year ’27. And this year, later, in fact, this month, we’ll open a club in Mumbai. — and followed by a restaurant in Mumbai in March of 2023. In financial year ’25, there you can see the list of hotels lytics that are given for opening, along with the number of keys.

And then in 2026, also the hotels that will be opening. So that’s in terms of hotels that are already underway. We’re planning, design, etc, and in some cases, construction is all restarted. In — additional to that, I would share, if you look at financial year ’27, these are also projects that are on the active consideration. And this includes the overall in Goa tried to go and the overall Zoro. In fact, these are all in the design phase. Some work has already started at our second hotel just adjacent to the site with the same owning company. And then most important of all future pipeline. Sorry, I’m getting — I can’t quite read that composition.

Kallol Kundu — Executive Vice President and Chief Financial Officer

So additionally, there are 11 hotels, 3 overall branded vitals, 7 Trident branded returns and 1 service apartments, which are in active discussion stages. So overall, we’re talking about hotels, apart from the one plant in the strontAnd as we progress through the quarters as and when these discussions materialize into planning and construction stages.

Vikramjit Singh Oberoi — Managing Director and Chief Executive Officer

Yes, absolutely. We’ll be happy to share. So I mean, just in conclusion to that, I’m sorry, I couldn’t — I know that there were 20 projects the bottom part of my screen was so I apologize for that. To give you the exact breakup between overall and Trident and of course, one service department, which is in Mumbai as well. But I think the important thing to highlight is that we’re focusing on growth. We’d like to be as aggressive as we possibly can on growth.

We still want to operate managed hotels of the highest standard, whether they’re under the overall brand or the Tribbrand and offer our guests unpeg levels of service that they are accustomed to at our hotels. So that remains an uncompromising commitment and at the same time, focusing on growth, which is important for really 3 reasons. And I’ll just articulate that. Obviously, from a a shareholder point of view, growth is important for value creation.

But equally, we should be mindful that the growth is also important for our gas when our guest travel, we should be in locations in India where they travel and where we have our hotels. And of course, for our colleagues, it’s also very, very important because we promise our colleagues learning development and growth. And we would like that growth to come from within the company. So for all 3 reasons, this is something which is very important, and we will continue to focus on this and hopefully have even more news to share with you, I hope, in the future. Thank you.

Kallol Kundu — Executive Vice President and Chief Financial Officer

Thank you, Vikram. I’ll just add something to that. This is in addition to the renovation projects that are also underway. In some cases, there is addition of capacity. For instance, the dense or the fanfare Avon point. There are several other renovation projects which are underway, which also are essentially will be contributing to incremental revenue for the organization. And the third thing that I would like to add before I move on the right slide is we are committed to looking at our noncore assets. Two of them we have already taken decisions that we have.

One of them has been disposed of and are at the apintingpriss. — at the conclusion in the last financial year. And the other one, the plan services to issues, which was also led to some changes. This transaction is almost towards its end, and this will be concluded very soon. So I think overall, from a company balance sheet point of view, it’s all very strong for the company. Coming back to the presentation, we see strong tailwinds in corporate as well as a direct business.

The mice, this is our quarter-to-quarter kind of performance from quarter 1 of FY ’20 to quarter 2 of FY ’23. But the last drop in minus is because of lesser number of prespecious states for weddings, etc. But otherwise, generally, there’s a higher traction. What is — also heartening to note is that as compared to all the previous quarters, where the slope was downward in the first 2 quarters, in case of 23, it’s upward, most of quarter 1 as well as — these are the stand-alone results. I won’t really dwell on that.

We are happy to share that the performance this quarter has been among the best in the recent years. There is, of course, an exceptional item. — which is on account of some impairment. I mean that’s only about INR13 crores. But we don’t expect any further inquire month in that account anymore. And on the consolidated accounts, also there is an additional item, which has been reported along with our financial figures. — which is on account of a legal case, which is on, which we have accepted the award as a company. And in general, that we believe is a good decision for the company. So these figures would already be with you. I won’t take your time on this.

If there are any questions, we are happy to answer. Thank you so much.

Questions and Answers:

Navin Agraval — Investor Relations

Thank you, Vikram. Thank you Kallol. Thank you — we’ll just wait for a minute for some questions to line up. Whoever wants to ask a question, request you to raise your hand and we’ll have you and take your questions.

Okay. The first question is from Baidik Sarkar from Unifi Capital. But I think — please go ahead.

Baidik Sarkar — Unifi Capital — Analyst

Good evening and congrats to you and the team on the continued execution. My question is really around the narrative around the cycle in the industry and the context of the fact that ADRs are still sub 100, 1,000 with occupancies around the 70% mark. Do you think the numbers add up with the narrative? I mean I know Q2 isn’t the strongest season for us.

But given the noise around pent-up demand, pricing power, lack of supply and all of that One would have assumed that these numbers were significantly broken on the upside. So would you reckon the super cycle is still some way off? Or would you recognize midst of it. And would you say that beyond the certain ADRs even in the space that we cater to price elasticity will probably set at some way?

Vikramjit Singh Oberoi — Managing Director and Chief Executive Officer

So I would just like to colon you could just.

Kallol Kundu — Executive Vice President and Chief Financial Officer

Your ADR figure for our hotels. So a metro hotels for quarter 2 was 13,047, overall leisure was 7,170. Trigen metro locations was 9,156 Trident leisure was 345 and Trident cities. And if you take a more combined co, what are they? This would be above Dental. I don’t have I think it’s about, if I’m not mistaken, it’s well over the 12,000 mark, we can calculate and give it to you.

Vikramjit Singh Oberoi — Managing Director and Chief Executive Officer

11,467. So first of all, Nice to be on the call with you. Thank you. The — we’ve already crossed the 10,000 threshold as Carol as explained with the numbers. And I believe if demand continues to be strong, there is still upside left in average room rates and in RevPAR without compromising occupancy levels. Typically, in — in the second half of the year, financial year, we see the stronger demand.

We hope that will be the case this year to and led by overall leisure and in Oberoi City, followed by Triton City and Trident leisure as well. So we continue to see this trend. More specifically, I think there are opportunities that we need to explore in some of our hotels where occupancies are very, very high. This would be, for example, Tritan BandraKurla and Triton Nariman Point and the overall Bangalore amongst others. But as we go into winter we will be looking at maximizing our rates to the largest extent possible with demand still being strong.

Baidik Sarkar — Unifi Capital — Analyst

Sure. Thank you for that Mr. Vikram. Could you perhaps throw some color on how scalable this is, is this a space that you think we will scalable? I mean we will scale up as a chain, some color on that?

Vikramjit Singh Oberoi — Managing Director and Chief Executive Officer

So first of all, we’ve been operating a club in our hotels for many, many years. This is the Belvedere Club. And it has a a strong loyalty. It’s a sort of to club for membership. And so we’ve been doing this for — I don’t know when the body first started. I don’t recall exactly but that does exist in city hotels. So that was the first point I wanted to make. The second point is on the cover we opening now, which is a much larger club — it is approximately 150,000 square feet.

It has facilities for the entire family. — whether that’s for the parents. From a business point of view, we have meeting rooms. We have multiple restaurants and bars. There are 2 pools in the rooftop tennis pad tenants, golf simulators, spot cores, a whole host of facilities, quite extensive food and beverage as well. And for children, an incredible children’s facility, which is really designed to ensure a well-balanced growth of child for transformers. So this is certainly quite different to David, and you’re absolutely right to be pointing that up.

I would like to say that let us make this a success. — let’s provide the exceptional levels of service to our members. — facilities are — I mean, I would really say that I have not seen a club, not that I’ve seen many private clubs, but I’m not aware of any club anywhere in the world that is of the standard and we’re committed to filling members an exceptional experience. And if we do that well, perhaps we can look at other opportunities. But I think our focus is on the club today, on getting it right today and providing membership with facilities and service that are second to none.

Navin Agraval — Investor Relations

Thank you, Vikram. Thank you, Kallol.. I think Baidik has got locked out. He just message me, and he’s asked you to thank you on this behalf. I’ll share your remarks with. Next, we have Vikas Ahuja. — please go ahead.

Vikas Ahuja — Senior Vice President

I hope you can hear me.

Navin Agraval — Investor Relations

Yes.

Vikas Ahuja — Senior Vice President

Okay. Sir, my first question is regarding the RevPAR trend. How it has been in the month of cube taking from strong improvement in super. And secondly, how should we look at corporate demand coming back now in second half on 23 Finally, we did give a break up of foreign travelers coming back. If we can get some color there, that is what part is in the region and what is the corporate — that’s about.

Vikramjit Singh Oberoi — Managing Director and Chief Executive Officer

So one was on corporate demand. So let me — I don’t know if I could — I got all your questions. Sorry, your voice — the cost was difficult for me to follow — but I can start and maybe Kallol can assist. We’ve seen strong — the direct segment is very, very strong. But equally, the corporate has a strong recovery in corporate as well. And I don’t know if Kallol has any numbers that we can share on corporate as well and how that’s been growing. — for our hotels.

But we’ll come to that. So I think we see a strong recovery in — for example, I’ll give you the overall new Devi, corporate demand is back to pre-pandemic levels of the overed I would say that in some of our hotels, it’s still not back to pre-pandemic levels, but there Denison Direct is — continues to grow. And I would also like to point out that you can get people coming or guests coming and staying in our hotels. — coming through direct channels, but who are actually corporates coming on corporate-related travel.

So one shouldn’t look at just corporate in isolation at our city hotels, we really need to look at both corporate and direct. And if you take both of them together, there will be a strong increase. prepandemic levels. Now that’s not to say that all direct segments are corporate, but they are not mutually exclusive. So that was the point on corporate. And sorry, I also cover direct on that.

In terms of foreign travel, you’ve seen the trends — we’ve actually also break this data up to look at reservations for the rest of the financial year. And the U.S., I’m pleased to say has recovered to just short of pre pandemic levels. Unfortunately, the U.K. and some of you may have experienced this yourself with colleagues trying to come to India. EVs are not available from the U.K. and these processes can take time.

And the last figure I saw, which is, I think, 2 weeks ago, was the U.K. was still 50% below pre-pandemic levels. France and Germany also important locations. And there, it was in about the 70th percentile for future reservations. But at least I’m confident Covid,I believe is behind us. I think India in the winter is a very attractive destination. People have not traveled for a long time.

And at least I’m cautiously optimistic that we will see this trend continuing into the remainder of the financial year, which is when October to, in fact, beyond the financial year, October to April is when we see the highest levels of international travel into India. We — in hotels that cater to foreign gas visiting, particularly in Rajasthan, Agro, etc, for leisure. It varies from hotel to hotel. But it’s in about the — if I’m not mistaken, around the 60th percentile of what it was during pre-pandemic — and that’s as of now, I’m sure that will improve. So I hope because I answered your question. if I missed anything out that I didn’t hear feel free to repeat it in.

Vikas Ahuja — Senior Vice President

Yes, sir, that was very helpful. One thing which I wanted clarification was, if we compare October versus September, how the operating drivers has been led by IDR? I mean is it — it has improved further in October? And secondly, on the corporate travel, I also wanted some color that obviously, there has been a risk possession in the U.S., U.K. and second half or FY ’20 was more like that we will see a lot of pent-up demand coming in corporate travel. So any color around it. And the first one was October versus the September of the overall Is it optimize currently Yes, what does Yes.

Vikramjit Singh Oberoi — Managing Director and Chief Executive Officer

So we can trends.I think it’s fine to share — so I’m. So I’d say the trend is positive. I think for the reasons Cologne has explained and can get into any specifics. But that the trend is positive. On your question on whether corporate demand will continue, given all the problems that are happening in Europe and North America as well. Or in the developed world. Actually, my perspective, and it may be right, it may be wrong. First of all, I can’t predict what’s going to happen there.

So let me — but if I was an organization that was facing issues with demand in those countries in inflationary pressures, etc, a slowing economy, I would certainly be looking at opportunities in the developing or in the high-growth markets, India being one of them. So if that is followed by organizations in Europe and North America or in the Americas, I’m sure that will be something that India will see the benefit of and that will help with core travel to India to our hotels and to others as well.

Vikas Ahuja — Senior Vice President

Thanks a lot and best of luck for the next follower. — you.

Vikramjit Singh Oberoi — Managing Director and Chief Executive Officer

Thanks so much, Vikas. Really appreciate it. Thank you.

Navin Agraval — Investor Relations

Thank you, Vikas.

Kallol Kundu — Executive Vice President and Chief Financial Officer

I mean, there’s a question from Alon.

Navin Agraval — Investor Relations

Yes, yes. I’m just reading it out. Yes. we have a question from Ann Pasar, Head of Equities, IDFC Mutual — last two years, hotels in India did not have to compete with international locations. — and this could have helped raise ARRs. Indian tourists are no longer captive and Indian hotel rates have crossed hotel tariffs in Thailand, Vietnam, Bali and Malaysia. Could this limit growth in ARR going ahead, especially in the upcoming peak season?

Vikramjit Singh Oberoi — Managing Director and Chief Executive Officer

So first of all, hello, No, thank you for the question. I think my kind of perspective on this is — and this is my perspective. Again, you can see if it holds any ground. But for a comparable hotel suffer a top end luxury hotel, and let’s — if we were to talk about that, let’s take whether it’s the new deli the overall Mumbai, our leisure hotels, bevel, Homebase, etc. If anywhere in Asia, you go and you set a top top hotels, — in fact, I would say our rates will be lower.

They won’t be higher for the best hotels, a hotel of that quality, whether it’s to be over a new deli or with Avera as an example. So I don’t believe for high-end hotels catering to high-end travel, there’s certainly an opportunity for rate increases if demand were to go up. And I don’t think we are priced in any way higher than those hotels in our region, in Asia, in the Middle East, etc. So — and that’s easy enough to check if you see the top hotels in these, whether it’s a sees, whether Mandarin, Peninsula, Oman, etc.

If you see their rates in whether it’s the Middle East or Asia, they will be in excess of $1,000 on par, maybe even higher. So that was the first point in time I wanted to make it it’s really important we compare apples with apples. So is this trend going to continue? I remember working at the overall in Mumbai many, many years ago. where demand was very strong, and our rates in those days were 19,000 recruits.

So it’s really a function of — and in those days, actually, we were expenses at INR19,000, the repeat was not as hadn’t been valued to the extent it has today. And in dollar terms, we were charging in those days. which was expensive. I don’t think that’s the case today. So I believe there is at least for international travel when people compare our rates with other hotels in that same segment, they will not be unreasonably high. new I don’t — if I haven’t answered any part of your question, please let me know.

Navin Agraval — Investor Relations

I hope you can message me or you can move the question out here in case have things let the answer or I can it come up a song. Okay. Here’s a follow-up one. When you talk about new supply of hotels in key metros. Will it be limited? Or do you see a fresh way of hotel construction

Vikramjit Singh Oberoi — Managing Director and Chief Executive Officer

I really don’t want to comment on that because I don’t want to — I don’t feel I’m I don’t — I’m not aware of every project in every single metro. So — and I don’t want to say anything which is not based on fact and rather my perception. So if I could please excuse myself on that question. Perhaps Kallol may want to take a go. I’ll pass on that question, if that’s all right.

Kallol Kundu — Executive Vice President and Chief Financial Officer

Well, we can talk about our projects and we are quite happy to share I think investors and analysts have been asking us this question and we had promised that in six months’ time, we will start answering questions, and we have started with this one. So I hope in the coming months, we’ll have more to share from our.

Vikramjit Singh Oberoi — Managing Director and Chief Executive Officer

I hope that was fine with you on.

Navin Agraval — Investor Relations

Okay. That’s all — we have a question from KK, Christmas Kisan. I see you are high in occupancy. The pipeline of room additions from new projects for EIA is quite enable Point. Quite Minimum.

Kallol Kundu — Executive Vice President and Chief Financial Officer

If I can just answer that before you answer I think Kallol mentioned that there are hotels which are under active discussions. So I would request you to wait for that to unfold in the next few quarters. And hopefully, you will not find that figure in minimal anymore.

Vikramjit Singh Oberoi — Managing Director and Chief Executive Officer

I’m fine. I think you did a much better job at answering that it so I would leave it at that.

Navin Agraval — Investor Relations

Thanks, Kallol. Let’s take the next question from Saurabh Patwa. Sorry, please go ahead. Yes.

Saurabh Patwa — Head of Research

Audible. Yes, So I guess, partly you answered my question in the last response, which is that we need to wait still, I don’t want to specifically highlight one thing which we — I think Roy, the brand has been anonymous luxury, but India as a destination is gaining traction in — especially in in terms of these destinations, where we, as of now, don’t have any — I know you had in the presentation and Goibplanned, but upcoming Sumiden have antigen actually, which is supposedly going to be maybe a next model someday. So any specific reason or we — or is it like because of the Palace kind of hotels we don’t want to get into the destination?

Vikramjit Singh Oberoi — Managing Director and Chief Executive Officer

No. I think anywhere where, like I said, our guests travel to, whether they’re from India or overseas, we would like to be present. But we would like to be to have the right hotel and the hotel — before we get into a — whether it’s a management contract or own development, — we need to be sure that the hotel will be successful. It will give a return to our owners or to the company if we’re developing it or one of our other companies that is developing a ton.

So that’s very, very important for us. And we — Kallol hasn’t covered the locations that Intacta discussion we will be in all those were to materialize. And these are projects that are opportunities that aren’t just here, say, these are things that we’re firmly working on — and if they all materialize, most materialize, we will substantially be increasing the number of hotels we have. So I think one just needs to keep that in mind.

Saurabh Patwa — Head of Research

Question was you’ve seen in response to an earlier question, you highlighted about the club, which we are planning which is going to be launched soon. You also highlighted on restaurant over there. I think last year, we opened a cafe in in BKC. So is this a new strategy or new stream, which we are trying to evaluate?

Vikramjit Singh Oberoi — Managing Director and Chief Executive Officer

We opened Quand Cohu initially opened more as a French participate. What we’ve learned along the way is, in fact, this is work, which is as we speak currently underway. I think the opportunity is can morph a dining experience. And we’re reworking that right now so that we can cater to the needs of our guests to come to quickly — and by the beginning of next year, we’ll be making changes that I hope will help with Coke. I think it’s really important we had plans to expand but we’ll only do that once we are absolutely sure that we have a successful formula.

And I hope maybe by in the next 2 quarters, we would have learned we’ve seen what is working, what isn’t. And I hope what we’re planning to do will be well received by our guests who come to — so I think like I said, it’s important, we — whatever we do, we do well. We do successfully, and we learn before we pursue active growth in that segment. Of course, hotels is something that we know very, very well. and we have a proven track corona. So our focus will be on growing the hotel business, and that’s reflected in the projects that we shared earlier with you.

Saurabh Patwa — Head of Research

Thank you.

Navin Agraval — Investor Relations

Thanks, Saurabh. Thank you so much. We have a question from Amit Agarwal. Amit, please go ahead.

Unidentified Participant — — Analyst

Good afternoon, everyone, and congrattion for turnaround the company after cohort. My first question is related to in floor. So — it’s great that you have given a pretty brief about the court. So what is your take on the duct. I’ve gone through many news articles. And the thing — as a layman have come to know that this is — now this property is converted from freehold to lease, and it’s a 40-year old lease. So is it a bit negative on the property? What is your take?

Vikramjit Singh Oberoi — Managing Director and Chief Executive Officer

Okay. I’m going to pass this question on to Kallol. You’ll do a much better job answering it than I can. And in addition to that, Amit, if you have any further questions, — we’ll be happy to take that up. But if I could just request Kallol to give a brief on what the current position is, and then we can take further questions from that.

Kallol Kundu — Executive Vice President and Chief Financial Officer

Okay. Sure. Thank you, Amit. I’m glad to be talking to you here. So this was a long pending litigation, and it was, for various reasons, we have chosen to appeal — but at this stage, the division bench charter came out. It’s definitely not a negative. It’s a positive for the company. But I would refrain from commenting too much because our proposal back to the government has already been shared. — and we are waiting to further steps. But this is pursued to an arbitral award that was already announced in 2005.

Unfortunately, the arbitral award is not in the public domain. So therefore, it’s difficult for me to share the lease agreement is entered into with the government. But by the way, let me just share that the lease events — the lease period is not just 40 years. it’s 4 plus 4 under mutual agile conditions. But overall, I can say that we’ve done the valuation and it’s definitely a beneficial decision for us to really accept the award and can it implement it is where we place it.

Unidentified Participant — — Analyst

Sir, the brief you gave was talking about INR120 crores — so will that be free? Or will that be shared by the company with the government?

Kallol Kundu — Executive Vice President and Chief Financial Officer

Well, as for the terms of the award, the company, if the lease happens and if this is obviously in the middle of a process, so I don’t really want to comment too much about it. But it’s clear that if the company becomes a 100% subsidiary of EIH, then all assets and liabilities, including all the cash and then balances the belong period.

Unidentified Participant — — Analyst

Just the last question I got the same dispute. So when a least what is the starting year of the lease period?

Kallol Kundu — Executive Vice President and Chief Financial Officer

That’s still under discussion with the government.

Unidentified Participant — — Analyst

Okay. And my second question is regarding — is that couples been converted into the restaurant or taking at all?

Vikramjit Singh Oberoi — Managing Director and Chief Executive Officer

Actually, nothing has been done, Amit, in terms of the deal. What we will be doing is making changes in menu — and for that, there’s minor changes in cicequipment, which is already underway, after which we’ll be introducing an additional menu or a new menu. It won’t be entirely different, but it will have many new — and the endeavor is that it becomes more for dining experience.

Unidentified Participant — — Analyst

Sorry.

Kallol Kundu — Executive Vice President and Chief Financial Officer

Yes. Sorry, just in case I’ve understood you correctly, are you saying — are you asking about the restaurant that we have listed out because that is in. Okay. There’s a different This is a restaurant.

Unidentified Participant — — Analyst

Any idea that you’ll be taking this club and restaurant to cities like Dadi?

Vikramjit Singh Oberoi — Managing Director and Chief Executive Officer

Amit, I’ve already answered that question. So beyond that, I don’t understand anything.

Unidentified Participant — — Analyst

And my last question is regarding Dubai, which left six months back, how much revenue that hotel was adding to a turnover?

Vikramjit Singh Oberoi — Managing Director and Chief Executive Officer

I don’t have that figure with me. So this was a management contract. And so if I don’t have that figure, which

Kallol Kundu — Executive Vice President and Chief Financial Officer

Well, it was a management contract or it was the therefore, not — in terms of revenue, that’s not such a significant figure to really talk of.

Unidentified Participant — — Analyst

So that was all managed properties, how do you give any revenue to the company, right?

Kallol Kundu — Executive Vice President and Chief Financial Officer

No, it’s about 10%. On an average, it’s about 10%. It values in many cases that has a base management fee or a couple of percentage points on revenue in addition to a percentage of the profit. But yes, of course, I mean, the flow-through to profits I mean whatever we precious management fee flows through to income, whereas in case of hotels, it’s a larger change of revenue mining expense. So obviously, the flow-through is — the quantum of flow-through is always lesser I mean the quantum receipt of the revenue is much less.

Unidentified Participant — — Analyst

And my last question is.

Navin Agraval — Investor Relations

It, I’d have to interrupt you. If you can request you to join the queue

Unidentified Participant — — Analyst

Thank you.

Navin Agraval — Investor Relations

Thank you, Amit.

Kallol Kundu — Executive Vice President and Chief Financial Officer

Thanks, Amit.

Navin Agraval — Investor Relations

The next question is from Prateek Kumar. Pratik, please go ahead. beginning. We can hear you, but there’s a lot of disturbance in the background. Okay. So my question is I think it’s difficult to understand what you’re saying.

Prateek Kumar — Jefferies — Analyst

Okay. Maybe I’ll get back to the queue. I’ll hand again.

Navin Agraval — Investor Relations

Thank you. The next question is from Sumant Kumar — please go ahead.

Sumant Kumar — Senior Vice President

How are you I’m good. So my question is regarding seen in the PPT, the Trident and over leisure destination or has declined versus pre-pandemic. So can you talk about the reason for that.

Kallol Kundu — Executive Vice President and Chief Financial Officer

Sorry. So did I understand your question.

Sumant Kumar — Senior Vice President

This is regarding Trident and Obra lease occupancy rate versus pre-pandemic has declined. Okay.

Kallol Kundu — Executive Vice President and Chief Financial Officer

So in Q2.

Vikramjit Singh Oberoi — Managing Director and Chief Executive Officer

Kallol, do you have it for half year. Half year still if you have it for half.

Sumant Kumar — Senior Vice President

Q2. I’m talking about Q2. — so you can refer to page number 15. It’s from I think

Vikramjit Singh Oberoi — Managing Director and Chief Executive Officer

Was it 42% to 38 some.

Sumant Kumar — Senior Vice President

Page number inside.

Vikramjit Singh Oberoi — Managing Director and Chief Executive Officer

So overall, you’re talking about.

Sumant Kumar — Senior Vice President

Private leisure and Trident leisure and overall leisure. And you’re talking about occupancy Occupancy declined versus pre-pandemic. Q2 ’20, Q2, 20%.

Vikramjit Singh Oberoi — Managing Director and Chief Executive Officer

Yes, that’s true.

Sumant Kumar — Senior Vice President

40% to 38%. And then private laser is.

Vikramjit Singh Oberoi — Managing Director and Chief Executive Officer

There is a growth in web par. So the same period, if you look at overall, it’s 7,800 to INR1,444 — so effective revenue has gone up.

Sumant Kumar — Senior Vice President

So our strategy to hold the price, not focusing on occupancy. So industry is moving towards that, right?

Vikramjit Singh Oberoi — Managing Director and Chief Executive Officer

I don’t know what the industry is doing, but the objective is obviously certainly for us, and I would imagine fathers as well to drive RevPAR, which is a function of rate and occupancy. And I think for us, certainly, lowering our rates is something we don’t think in the long run is a good idea. We’re not a commodity and commoditization, which is price driven is the worst thing we should do because the commodity can demand a premium pricing. So certainly, we do not want to price route. We would like to keep our rates. I wouldn’t say high, but in Keeping in mind, I guess what are reasonable and fair rates for the quality of hotels we operate. And for our guests to see value in that and choose our hotels rather than looking at reducing prices.

Sumant Kumar — Senior Vice President

So at this price, can we expect the kind of occupancy we have in, say, Vilas 38%, we can improve this occupancy to optimum level and the price might increase from here also.

Vikramjit Singh Oberoi — Managing Director and Chief Executive Officer

Sure. I’m just going to cover maybe it’s a bit too much detail, but the occupancies are trite to fallen because of Drainage. Is it — should I get into that going forward? So there was a Triton Agra, there was a piece of business, which was trinaugura is just under 140.And we had 20 room nights, which was a long stay business that we had pre-pandemic that business didn’t actually come back. So if you look at the — that impacted occupancies at.

So that’s the first point I wanted to highlight I think in all fairness, we shouldn’t just look at a quarter because if we look at a quarter, we may arrive at the one conclusion and there so my recommendation is please also look at the half year I don’t know if Kalol has the figure ready, but I think we’d be coming to the wrong conclusion if we just look to the quarter. And in terms of rate, occupancy, etc. So that’s the other point I would make close on the half year bit broken up if we do. Otherwise, some will be happy to take that off-line — so I think — and the idea is to give you a true and fair picture of business. You may not get a true infant picture if you just focus on one quarter.

Sumant Kumar — Senior Vice President

Okay. And in the slide number 16, we were talking about increasing room night from foreign tourists. So it is showing a 40% from over — this is a 40% of prepandemic level?

Kallol Kundu — Executive Vice President and Chief Financial Officer

No, no. This is a — 40% is the composition of the foreign room rights as a

Sumant Kumar — Senior Vice President

So currently, of the total loans, Obra has a 40% is from foreign is 60% domestic okay. So can you talk about the versus pre pandemic, what was this number, the 31%, 35% and 40% versus Q2 ’20 or overall annual basis, what percentage of the business we have we got from the foreign to waste 50%, 70%?

Vikramjit Singh Oberoi — Managing Director and Chief Executive Officer

We don’t have that number ready, but we’ll be happy to share that number with

Sumant Kumar — Senior Vice President

Yes. Just Can you talk about the trend, it is below 90, 80 or some 20%, 30% business is still — has not come to India for the edge.

Vikramjit Singh Oberoi — Managing Director and Chief Executive Officer

We’ll be happy to share that with you cleave that with. Well, it will be in our previous presentations, but I can try and look at it while the call is still on, okay?

Sumant Kumar — Senior Vice President

But just give a color on how things are happening More than a

Vikramjit Singh Oberoi — Managing Director and Chief Executive Officer

So I don’t want to — it’s best we give the actual numbers. I can tell you that it hasn’t recovered fully, that I can tell you. But if you ask me to what percentage, and I don’t want to give you a figure, which is incorrect, — so let’s refer to the data and give you the correct figure rather than either one of us taking an educated guess because we may be off by 5 percentage points. We don’t want to make that error.

Sumant Kumar — Senior Vice President

Okay. And the last question, can you talk on the corporate rate hikes negotiation happening for?

Vikramjit Singh Oberoi — Managing Director and Chief Executive Officer

Yes. Again, our objective is to get the maximum rates possible. We have to consider supply and demand. And we also need to keep in mind the long-term relationship we have with our corporate clients. And keeping all that in mind our endeavors to increase rates to levels that are acceptable to our corporate clients and that don’t jeopardize business. but ensure we drive rep.

Sumant Kumar — Senior Vice President

The overall sentiment is positive and we can get a higher price increase from the corporate side? And can you talk about what is the mix of corporate in our total room night.

Vikramjit Singh Oberoi — Managing Director and Chief Executive Officer

Again, I think you need to someone, please just don’t look at for our city hotels, just corporate. Direct business is also a transient business through direct channels is also A large part of that is a business, whether that’s in Bombay or Banwa whether that’s in any city location. So you need to consider both. But we are positive that corporate demand will — corporate travel will continue to increase. The hotels would not be doing the occupancies they’re doing in our city locations. –

If it wasn’t for corporate demand? And I’ll give you a reason why the system is if you look at when business came to its stance to encode really, the only driver of business was leisure, and this is when travel had started again. And SIFI hotels, whether they were ours or others, did very low occupancy. So the change you’re seeing is being driven by corporate travel, whether they are companies with rates with us and on our corporate client list or other people who may not have a rate contract with us but who are traveling on business, that demand is strong.

And if you go into our hotels, you can see that it is corporate travel, the way people progress, you can tell they’re there for work. also single occupancy as opposed to double occupancy. So we are — we have good reason to believe that the corporate travel is returning. It’s still not at pre-pandemic levels. If you look at just corporate, but if you look at corporate and direct, it’s ahead, and we feel that trend will continue.

Navin Agraval — Investor Relations

Thank you, Sumant. — we just have time for a couple of more questions. We’ll take a couple of them offline. — nooses the foreign travel recovers, 80% to 90% in the second half — how do you see ARR and the revenue from current level?

Vikramjit Singh Oberoi — Managing Director and Chief Executive Officer

Again, I’m going a bit reluctant to answer that question. First of all, I can’t predict what foreign demand is going to return to. I think the trends are certainly positive. And I know the rates that we have, at least leisure hotels, we’ll be able to achieve those rates even with our domestic segment. and that’s certainly reflected in the ARRs that you see at our leisure hotels, particularly over, which Colon shared. So I think the winter rates will be maybe a little bit higher than they were at pandemic levels. And if demand is strong, you’ll see an increase in occupancy.

I also wanted to highlight how travel happens for leisure. So when people come to — and sorry, I’m stating the obvious many people may know this, — so please forgive me if I’m saying something which is you already know. But people come to India and go to multiple destinations. They don’t just go to one destination, whether that’s for, obviously, coming through Delhi or Bombay, etc.

The adds about a 10-day stand they’re going to at least 3 nations, if not 4, in that time. And although people book these itineraries directly with us, the vast majority or maybe I wouldn’t say vast majority, but about 50% of that is booked through destination management companies in India or to operators and travel agents abroad. And for those segments, we have rates which are negotiated rates, just like we have with our corporate net noncommissionable rates.

And so therefore, we can’t just change those rates. We’ve made commitments to our partners, we have to respect those commitments. And therefore, what you see is a surge in demand. Of course, the blackout dates, etc, Christmas, New Year and other high peak periods. But the — what we’ll see is rates for both India and yes, are strong. And any additional demand will help drive up occupancy further.

Navin Agraval — Investor Relations

Thank you, Vikram. Okay. Before we’re just running out of time frames. So before we wind up, I’ll take a last question from Rajiv. Rajiv, if you can please make it short. Thanks.

Rajeev Gupta — Independent Director

Yes,? Sir, I have a couple of questions. One is the in the note store outcomes, you have stated that the stapled consideration for the in the Manoa agreement. What is that to us net apart from the lease, is there anything else?

Vikramjit Singh Oberoi — Managing Director and Chief Executive Officer

So there is a — there was a lease — this is actually in the Machava accounts, not in the although we provided an exceptional item in the eye. So there were lease payments from 2005 from the arbitration award up till now. And that, if I remember correctly, so 7.9 INR9 crore. There was also INR3.5 crores, which is for the delay in the hotel being completed at 3.5%. And then the — there’s a INR7 crore, if I’m not mistaken, for the government share in the equity holding of Micra

Kallol Kundu — Executive Vice President and Chief Financial Officer

Once a loan if I got it, yes. Yes, that’s right. And Raji, I think it is INR37.9 crores of centerline is already in the comps, as you can see, which is there is an exceptional item. So you can do your calculation, 37.9% and 17 years. So I hope that gives you some some clue as to what the rental per year would be.

Rajeev Gupta — Independent Director

Right. And sir, if you can give an update on the Flight cater business, have you got any improvement there? And if you can highlight so what is the H1 numbers in terms of revenue and EBITDA?

Kallol Kundu — Executive Vice President and Chief Financial Officer

We don’t — Rajiv, it’s not a separate segment of business for us from reporting purposes. But yes, we are certainly better off than last year. And by the end of the year, definitely will not have a loss there.

Rajeev Gupta — Independent Director

Sure. And my last question is on the OTA dependence. Have we seen an increase in T dependence because when we see, let’s say, make my trip data there their take rate is going down, kind of indicates that they are basically skews towards 5-star hotels now. Is it an end

Vikramjit Singh Oberoi — Managing Director and Chief Executive Officer

To be Again, I’m reluctant until I can hazard a guess, but I don’t want to give any Trend is what Invest. Yes. So Rajiv, I don’t believe the proportion of OTA business as a percentage of our overall business has changed in any significant way. I think OTA business has increased in line with other business — so that would be my response to that question.

Rajeev Gupta — Independent Director

Thanks a lot. Thanks for an.

Navin Agraval — Investor Relations

Thanks Rajiv, we need to wind up because Mr. Oberoi and Mr.Kundu have a prior commitment. That was the last question. And before I invite Mr. Oberoi and Mr. Kundu for the closing remarks. Congratulations once again on being voted the best hotel and the your closing remarks.

Vikramjit Singh Oberoi — Managing Director and Chief Executive Officer

Thanks, Navin. I think I’ll pick up on what you just said. — on being recognized as the best hotel brand. We’re really proud of our Indian heritage. We’re an Indian company. Our roots are very strong starting with our Founder, Chairman in — similar and then at the grand and to take and fly the Indian flag around the world and to be recognized as the best is something that we’re very proud of. not only for — in fact, for the country first and then for ourselves.

And really, the true champions of this are everybody who work in the hotel who uphold Tamar values, the principles on which we run our business, the care we show to our guests can we show to each other I think this is what really drives the overall group culture, and we try never to compromise on that culture. And the true heroes, like I said, are our general managers, our executives at the hotels and all our colleagues they are — they deserve the credit. We’re there to support them if they deserve the credit. So I’m deeply grateful and express my gratitude to all of our colleagues above all else.

Navin Agraval — Investor Relations

Thank you very much. Thank you so much. On behalf of all of us at SKP Securities, I’d like to thank Vikram and Kallol for their time, and we look forward to hosting you okay — thank you, ladies and gentlemen, and have a wonderful day.

Vikramjit Singh Oberoi — Managing Director and Chief Executive Officer

To me. Thank you so much.

Kallol Kundu — Executive Vice President and Chief Financial Officer

Pleasure.

Vikramjit Singh Oberoi — Managing Director and Chief Executive Officer

It’s a pleasure to us.

Navin Agraval — Investor Relations

Thank you so much.

Vikramjit Singh Oberoi — Managing Director and Chief Executive Officer

Thank you.

Kallol Kundu — Executive Vice President and Chief Financial Officer

Well.