Indian Hotels Company Ltd (NSE: INDHOTEL) Q1 2026 Earnings Call dated Jul. 17, 2025
Corporate Participants:
Puneet Chhatwal — Managing Director & Chief Executive Officer
Ankur Dalwani — Executive Vice President and Chief Financial Officer
Analysts:
Binay Singh — Analyst
Karan Khanna — Analyst
Shaleen Kumar — Analyst
Sumant Kumar — Analyst
Achal Kumar — Analyst
Prateek Kumar — Analyst
Unidentified Participant
Sameet Sinha — Analyst
Prashant Biyani — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Indian Hotels Company Limited Earnings Conference Call for the quarter ended 30th June 2025. On the call we have with us Mr Puneet Chadwal, Managing Director and CEO, IHCL; and Mr Ankur Dalwani, EVP and CFO, IHCL. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchstone phone. Sir, please note that this conference is being recorded. I now hand the conference over to Mr Puneet. Thank you, and over to you, Mr Chattwal.
Puneet Chhatwal — Managing Director & Chief Executive Officer
Thank you. Good evening, everyone, and thank you for joining our global conference call for Q1 ’25-’26. We are pleased to inform you that we have continued our record performance for the 13th consecutive quarter, driven by sustained growth and strategic execution despite multiple Industry headwinds. I will now outline the 10 key highlights of this quarter. Number-one, Taj is rated again as world’s strongest hotel brand and India’s strongest brand across all sectors by brand finance. We are very delighted to inform you that, and this is for the fifth time that it is India’s strongest brand across sectors and world’s strongest hotel brand for the fourth time by independent brand valuation consultancy brand Finance. Taj has truly positioned itself as the crown jewel of India and it continues to fly the flag high for Indian hospitality on the global stage. We are grateful to our loyal patrons and dedicated colleagues who have played an integral role in making Taj the epitome of hospitality and luxury. Number two, robust performance in Q1 with key financial highlights. Our consolidated revenue grew 32% year-on-year to INR2,102 crore. EBITDA grew 29% year-on-year to INR637 crore, yielding EBITDA margin of 30.3%. Our bottom-line grew by 19% to INR296 crores. Hotel segment revenue and EBITDA grew at 14% and 15% respectively, resulting in 30 basis-points margin expansion over the last year. On the standalone basis, we continued to deliver strong performance with revenues, growing 13% year-on-year to INR1,099 crore and EBITDA margin expanding by-10 basis-points to 38%. Our standalone PAT margin stood at a healthy 22.2%. Number three, outperforming the industry and sustained margins despite temporary headwinds. The Indian hospitality sector faced multiple headwinds in Q1. Demand was impacted by geopolitical tensions along the India-Pakistan border following Operations Hindur and the unfortunate incident in Paralgam. The impact was further compounded by the Israel-Iran conflict, which led to partial airspace closures and disrupted flight routes, resulting in numerous hotel cancellations. IHCL strong brand equity, diversified portfolio, customer trust and consistent focus on performance helped us remain resilient and outperform the industry in all key markets. While revenue got impacted due to aforementioned headwinds, operating efficiencies ensured that the hotel segment margins were sustained at 31.4% for the quarter. This was despite an additional impact of change in payroll increment cycle, which we brought up from July 1 to April 1. Also, as an example, I would like to point out here that when we had the operations and 33 airports were shut-down, we were very close and present in a lot of locations as an example with Taj in Amritsar, Taj in Mir, Taj in Jodpur, Taj in and Vivanta and Jammu, etc, etc. The list can go on. Our number four is our portfolio growth. We continue to demonstrate industry-leading growth with 12 hotels signed and six hotels opened in Q1 ’25, ’26. This includes three luxury wildlife lodges in Krukul National Park, South Africa, expanding our presence in the African continent. With 249 operational hotels and over 143 hotels in the pipeline, we are nearing the milestone of 400 plus hotels portfolio. We remain confident of achieving this milestone during this month itself. And as a reminder, our guidance under Accelerate 2030 is to have 700 hotels portfolio by 2030. Number five, traditional business continues to be strong. RevPAR for our consolidated domestic hotels grew by a strong 11% on a like-for-like basis and 13% for our owned international hotels. Key business cities, which are important for our consolidated performance continue to benefit from limited supply growth. Our international hotels performed very well, led by strong growth in US hotels, especially the peer, which closed the quarter with a positive profit before-tax. Number six, new brands and reimagined businesses. Sales new businesses vertical comprising of ginger, cumin, stays and trails and now also tree of life continued to showcase strong growth of 27% year-on-year. Ginger grew 25% year-on-year, enabled by the stellar performance of the flagship Ginger Mumbai Airport Hotel as well as a strong growth in F&B revenues driven by what we call humanization of ginger. That means having human branded restaurants in our ginger properties. All this was despite revenue curtailment for the reasons I have already mentioned. Cumin has grown to 93 outlets across multiple formats. Ama Stays Trails has reached a portfolio of 309 Bungalows with 138 in operation and three of life is now a 20-plus resorts portfolio with 18 in operation. Number seven, management fee growth through capital-light strategy. Our capital-light not like-for-like growth has helped grow our management fees by 17% from INR114 crores last year to INR133 crores in Q1 ’25, ’26. Management fee growth, despite temporary headwinds underscores the strength of our capital-light strategy. We expect this growth in management fees to sustain with higher flow-throughs through the EBITDA, thereby also assisting and supporting our margin growth. Number eight, strong balance sheet with healthy cash reserves. Our balance sheet continues to be healthy with gross cash reserves of over INR3,050 crores. This is enabling us to reinvest in brand and revenue-enhancing capex through upgradation, expansions as well as investment in new greenfield projects. We expect to invest INR1,200 crores in FY ’25, ’26 for assets under-construction, renovations, expansions and very importantly, strong digital initiatives, which we have shared in other investor meetings and calls, be it with SAP or be it the new ERP system. We continue to assess several inorganic opportunities while maintaining a disciplined and strategic approach to any potential investments. One such opportunity that was closed during the quarter is an under-construction hotel near the Kolkata Airport that was jointly evaluated by IHCL and the Tata Group. The asset has been purchased by the Tata Group and on completion will be operated as a revenue-based lease under the Ginger brand. Over-time, this could potentially lead to the creation of an asset platform, which could become a big strategic enabler for IHCL. And even without that, this is also strengthening Ginger Brands presence in key airports after Ginger Mumbai Airport, we are under-construction in Ginger Goa, the new Mopa airport, we will be opening within the next one year at the Ginger Bangalore Airport and now we are adding Kolkata Airport besides the flagship properties in and the recently opened Ginger in, Delhi. Number nine, Pathiya, staying aligned with our ESG Plus initiative, Pathiya, the journey towards our 2030 targets remains on-track. IHCL now uses 38% energy from renewable sources and has installed 371 EV charging stations across 163 locations in India. Continuing our journey of eliminating single-use plastic, IHCL has installed bottling plants at 69 hotels and achieved 49% recycling of water used in Q1. IHCL currently partners in operating 52 skilled centers across 20 states in India. Since 2020, we have trained over 31,000 youth and are well on-track to reach our goal of skilling 100,000 youth by 2030. Finally, number 10, looking ahead to the remaining year, despite base effect for July, which had five auspicious wedding dates last year, overall outlook for Q2 also remains robust. As we have guided earlier that overall for the year, we remain confident of achieving double-digit revenue growth driven by continued momentum in mice activity And high-profile diplomatic visits. We had a great April, that is what we said in the call for the full-year. Then we had the temporary headwinds with the operations in Dur and the unfortunate the situation of geopolitical tensions, Iran, Israel, our airline tragedy, etc. And with notwithstanding that, we are expecting a strong performance in August, followed by an equally strong September. In summary, we are well-poised to deliver our revenue guidance with sustained margins. We are well on-track to achieve our committed target of opening 30 plus new hotels and this momentum will really accelerate as of September this year. So you will see that when we announce the results that the projecting — projected openings will really start picking pace as of September. And we are also opening three hotels on our balance sheet this year, of which two are in and this also includes a very important opening for us of the Taj Grand Hotel Hof in Frankfurt. We remain very confident that our new businesses will continue to grow strongly over the coming years, delivering not like-for-like growth. Our focus also remains on evolving our brand scale or continuously evolving and evaluating our brand scale and strengthening our competitive advantages with extremely prudent capital allocation and strategic opportunities. Ladies and gentlemen, thank you very much for your attention and we now open the floor for questions.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star then 1 on their touchstone phone. If you wish to remove yourself from the question queue, you may press then to participants are requested to use handsets while asking a question. Ladies and gentlemen we will wait for a moment while the question queue assembles our first question comes from the line of Binay from Morgan Stanley. Please go-ahead.
Binay Singh
Hi, team. Congrats on a good quarter despite all the events that went through. Sir, my first question is that in the presentation, we are talking about two major assets under innovation and we’ve taken that out-of-the RevPAR calculation. Could you share a little bit about what are these two assets? What has been the impact? Is this regular renovation or is this an upgrade? Any light on that, how to see that?
Puneet Chhatwal
Yeah. We have been a — thank you. We have two very important assets for us historically. That’s the Taj Palace in Delhi, which is undergoing 150 rooms renovation as we speak. This will be on for at least a few more months and hopefully, the entire inventory is back as of 1st of October. And the second one is Fort Aguada in Goa, which recently celebrated 50 years. So we have 40 rooms near in the main block also under complete renovation. This is not soft kind of renovation. This is complete refurbishment where all those rooms have been taken out of order.
Binay Singh
And is it fair to say this is more one-off and more secular, which is why you are calling it out at time?
Ankur Dalwani
So, hi, this is Ankur here. Thanks for the question. I think, no, this is something which we do it regularly. But anyway for whenever the assets are out of operation for six months and above, basically they are adjusted in RevPAR and that has always been the case. It’s not a new sort of practice. Just wanted to bring that to your attention.
Puneet Chhatwal
This is a typical industry thing that if you have soft or temporary out of order, you don’t take that inventory out. But if it’s permanently out of order for a period for a longer period, then it is taken out?
Binay Singh
Thanks. Thanks. And just to follow-up on the commentary that we made about July, I think it’s a robust month. Can you quantify it is at high-single-digit or RevPAR that we are talking about?
Puneet Chhatwal
I think we should not look into a month. Each quarter or the year has 12 months and quarter has three months. The trend is positive. Everything moves in the right direction. We feel extremely confident. I mean, I can’t be more direct than this when I use the word extremely confident of delivering on double-digit growth for the hotel segment for the year. And despite all the turbulences in the airline sector, we still feel very confident about delivering 20% top-line growth in the airline catering business for the year.
Binay Singh
And lastly, Puneet, we saw the news, you joined the Tata New Board. What incrementally like and we’ve talked about Tata New in the past conference calls also and you have a slide where they do see revenue from there growing. How much of the opportunity has been tagged? How much more can RHCL shareholders look to gain from this partnership? Anything you want to share on that side?
Puneet Chhatwal
I don’t know if I should answer this very serious or on a lighter note. I think only you can — IHCL can only benefit by me being on the Board of Tata Digital as we are the first founding member of Tata New. We have always communicated and always believed that this kind of capability for a hotel company to bring on its own with our size and capabilities would have been very difficult. We are very blessed to have this opportunity. And you know the Tata new membership, which was for us stagnating at around — not at a new loyalty membership from 2005 till 2020 or ’21 was somewhere between 1 million to 2.2 million was the maximum it reached. And in the last three years, by end of July, our loyalty members has crossed 11 million, which is less than 10% of the total members — active members of the Tata new system.
So these are 11 million who have transacted with us, with Indian hotels on that platform. I think it’s just the beginning. This will be a very interesting and a very important competitive advantage, both at a group level as well as at IHCL level in a few years from now and already three years behind us, we see how our base has increased and our loyalty-led revenue is very-high. And the — just in the quarter, we had a 46% growth versus previous year-on the app revenue itself. So points earning revenue had 17% growth and went up to INR545 crores and app revenue had a 46% growth and went to INR75 crores revenue. So we are very pleased with this development even before I joined the Board, we have always been very, very strong advocates of.
Binay Singh
Thank you I’ll come back-in the queue. Thanks.
Operator
Thank you. Thank you. Our next question comes from the line of Karan Khanna from Ambit Capital. Please go-ahead.
Karan Khanna
Yeah, hi, good evening and thanks for the opportunity. I had three questions, Puneet and Ankur. So first, if you talk about the RevPAR growth of 13% that we’ve seen in the international portfolio. This seems to have surpassed that of domestic growth for the first time in a while with United Holdings NPM hotel seeing a sharp growth. Can you throw some light on this? What’s driving the growth here? And what’s the outlook for rest of FY ’26? Do you expect the international portfolio to in fact do a higher RevPAR growth compared to the domestic portfolio in FY ’26?.
Puneet Chhatwal
Karan, it’s a very interesting question and a very good observation. The likelihood is there because of the investments over the last few years we have undertaken in London. And also our undertaking this year, we are spending another between now and March of this financial year, something to the tune of almost GBP22 million in upgrading and increasing the size of our private membership club, the chambers, renovating the meetings meeting space out there, having a new lobby in the St. James and a new bar and a new whiskey lounge and a new cigar lounge and you know everything that goes with it. These continuous upgrades have already happened in the rooms area. And because the room renovation is finished, as an example, London is showing a very big increase in the month of July. I think it would be fair to say That if we looked at just July, London could be anywhere plus 20% for us. And also where we are seeing some benefit is in San Francisco. The problem is San Francisco had crashed as a market because of whatever we have been reading and seeing in the news, as you know. But slowly, slowly, it’s coming back. Maybe to get to its old potential, it’s still a few years away. But it has shown strong recovery in the quarter gone by and the increase based on that has almost been 50%, but it had fallen so badly that even that 50%, it does not make us very happy. We need another 20% or more in the important months going-forward. Also, what has been good for us is that Cape Town continues to remain resilient and has performed quite well in terms of gaining market-share. So these are the ones which are in a way where we own the P&L or own the assets. The others are on a capital-light strategy on the management fee business, most of them except for some joint-ventures or associates. So main impact, obviously, when you multiply pounds into rupees could show a positive result for us in London if the market remains that way, because the elections are behind us, the new government is there. A lot of things are changing in London as we speak.
Karan Khanna
So this is helpful. Just talking a bit about your domestic portfolio. And if I look at Slide 8 and 19 of the presentation, so about 74% of your revenue — domestic revenue comes from business cities. And if I look at Slide number 19, where you highlighted the growth that you’ve seen particularly in most of the key business cities. So help me reconcile these numbers because, 11%, 12% growth on a consoled basis, but some of the markets particularly Slide number 19 are seeing almost 19%, 50% kind of a growth rate. And so are there some cities or some markets or some hotels where the RevPAR growth or possibly the RR growth is lower than what we have seen for the rest of the portfolio. If you could identify that. And also on Hyderabad, what’s driven such a sharp 50% growth during the quarter?
Puneet Chhatwal
So it’s again a very good question, Karan. And the one which you see IHCL consolidated is the Palace and the Palace has done very well. That’s — the other assets are in the entity called Taj GBK. So when you go into enterprise-level, it drops to 20%. So Falaknoma has done really very well for us in the quarter. It’s been doing very well for the last two, 3/4 now, 3/4, I would say. Our places where we expect a significant improvement going-forward will be as and when Goa gets renovated for us. And Goa in general has been at a low-level, but in terms of growth, but it had — if you look at the numbers, 10,700 on that slide is the Goa’s number, which is number three among the top markets, but we think it can go up further once the Fort Aguarda renovated rooms come back. And also when we start the season, which is as of October, an increase is expected.
We also have our own event, which also has an impact. We have a very large event of our annual business conference, which is usually Q1, but because of operations Hindur, et-cetera, we changed it. It’s happening next week, 20th, 21st and 22nd in Goa that will also help the enterprise-level numbers in Q2.
Karan Khanna
Sure. And a third, if I look at the openings during the quarter, so there was Taj, Alibag and Gateway Kurg and these hotels were essentially affiliated with other brands in the past. So are you seeing a trend where more-and-more asset owners are perhaps looking to partner with top brands such as Taj and Indian hotels? And what sort of an impact are you seeing on the take rates in the management contract because of this?
Puneet Chhatwal
Karan, another good question because if you look at those six openings, five of those six were not planned as one of our hotels. So the was the. Alibagh was another brand, was another brand and so was in those two properties. So of course, we are doing some things right that we are — and these are all different owners that we are becoming a preferred choice of owners when it comes to rebranding to another brand. And we don’t see any change in this trend. Actually, we see it in — we would actually like to accelerate on that trend, especially in the boutique segment as was outlined during our AGM or with ginger. I think the country and the sector within the country and with all the locations coming, we are very well-poised to help grow the mid-market, which is the fastest-growing segment in India.
It’s gone from 7% from 25 years ago to now 28% is a 4x growth. So I think with the Ginger brand, we are very well-positioned. And that’s why you keep hearing we have invested in the Kolkata Airport asset. We have invested in the Goa airport asset. We invested a few years ago and opened last year in the Mumbai airport because it gives your brand both the visibility as well as the presence and these are also all large hotels. Even in Bangalore, we have some small amount of skin in the game of the combo hotel, which will open 750 rooms, 400 rooms Vevanta and 350 rooms ginger. So — and also, which I said earlier will open-end of September as a ginger and Vivantha will open in October. So these are — these are the assets that are fueling the rebranding preference towards our brands.
Karan Khanna
So and my last question to you, Puneet. How does the mice pipeline look like for you, particularly in the social wedding segment, et-cetera, because second-half again has a lot of auspicious dates. So other contracts are getting negotiated at a higher-rate compared to last year and the number of contracts, how is that trending for you? That would be my last question..
Puneet Chhatwal
Yeah. I think we don’t see much change or any kind of pressure on the rates, let’s put it this way. But some of the high-profile weddings just take the rates up. At the moment, I can’t think of any, which is there, but those high-profile weddings are also not planned several years in advance. They just come. So we are hoping that something will come. But on the slide 15, you will see we have outlined certain events that are happening between now and March and whether it’s a women’s World Cup Cricket or the convention facilities on AI impact summit, etc., etc. They’re all outlined on Slide 15. So we do see a very robust second-half of the year.
Ankur Dalwani
Plus the diplomatic visit which are also planned and.
Karan Khanna
Sure. This is helpful. Thank you and all the best.
Puneet Chhatwal
Thank you.
Operator
Thank you. The next question comes from the line of Shaleen Kumar from UBS Securities. Please go-ahead.
Shaleen Kumar
Yeah. Hi, good evening. Thank you for the opportunity. And yeah, definitely good set of numbers given whatever is happening in the quarter. So Mr Chattwal, I have — can I audible?
Puneet Chhatwal
Yes, you are.
Shaleen Kumar
Yes, sir. All right, sir. So sir, I want to ask you first thing about the ginger, right, ginger, where we could see that Tata Sense is getting in. So I want to pick your mind here, like what’s exactly happening here? Like why not we are going ahead and building and why we are partnering with Tata? Is there some kind of plan over here or what is the thought process?
Puneet Chhatwal
Yes,, there is — we have been discussing with the opportunity, these things we started many, many years ago, they just don’t happen overnight that if we could have a platform as well, we would not like to invest in everything ourselves. So instead of going with a third-party investor, if the deals have good fundamentals, why not keep it within the group. And it is also the beginning of a nice journey where Tata Suns could gain from an asset platform and we still gain in doing revenue-share and we’ll stay capital-light, but benefit fully without having the other impacts of any kind of development risk, construction risk, delays, you know, depreciations, investments Going-forward. So we would choose that very carefully and wherever it is possible, we’ll leverage that. Wherever it is possible based on our cash needs, we will invest. As you know, we don’t have — we are net-debt positive and we have a good amount of cash, but we need cash for the construction of. We need which we call band stand now. We need — we need cash from many other commitments, including, which we have communicated to all of you. We need for that. We need for renovations, upgrades. So we are very pleased to have — we used to have a — we still have a platform with GIC, but we are very pleased to have another platform and another source of income and another source of capital, sorry, not income, capital. And I think it’s a very important strategic step for both the Group as well as IHCL and something very interesting to watch out for.
Shaleen Kumar
So sir, so it’s something like a platform, so we could see more happening in this direction.
Puneet Chhatwal
Yes, that is correct. You could see more happening in this direction, similar kind of projects.
Shaleen Kumar
All right. All right. That’s great.
Puneet Chhatwal
And it does not mean,, that we will not invest. It’s not that we will just keep sitting on cash and never invest. As I said, we are investing. There are many such situations when you have tenders and I think it’s important to understand that. Many — like another, we have invested. Now there are certain conditions in the RFPs that come in the tender terms in which you have to own it for a certain minimum number of years before you can flip over the asset. So there are many such places where we are tied-up and this is the time we’re in a high-growth phase as a company and it is good to have another source of capital. It’s also very good for the group because otherwise they would not have access to these kind of assets.
Shaleen Kumar
No, fair enough, sir. I understand. And I believe these will be like — you will taking them on lease, so the returns on our investment will be meaningfully higher in these kind of properties.
Puneet Chhatwal
Absolutely. Otherwise, we keep it and we invest also ourselves. So the risk-reward balance has to be there in at arm’s-length and keeping all those rules of engagement as you would have had with anyone else.
Shaleen Kumar
Got it. Got it. Sir, you mentioned about August, September. Is this that some of the cancellations are coming back to you? And I know you said let’s not look at the month, but like is there any confidence that we can deliver a double-digit growth in Q2? Is there a possibility given high base of July, but you’re seeing momentum coming back?
Puneet Chhatwal
I like the way you ask your questions. Basically, you want me to confirm to you that we’ll have a double-digit growth in Q2 also, right?
Shaleen Kumar
And if I can add then the momentum on the RevPAR, like it will be similar, like can we have a strong RevPAR also coming?
Puneet Chhatwal
The sector is going through a good phase. Demand remains strong, supply is constrained in the key markets and normally if all goes as we have seen in the last so many quarters. I think it’s the — and I’ve said it in the last call and I’ve said it in some television interviews, I think there will always be some headwinds. We don’t know what and when, but this is the beginning of a very long journey for a nation that is aspiring to become the third-largest economy. When there we compare the GDP growth and the infrastructure development that is expected to happen. The sector is very undersupplied.
Shaleen Kumar
Right, sir. So sir, I missed, I think Ankur’s remark or sorry, it was your remark, sorry. On the wage hike, you said something on the wage hike. We — so we have taken a wage hike this quarter.
Puneet Chhatwal
Yes.
Shaleen Kumar
Typically.
Puneet Chhatwal
So we always did — we always did it in the month of July, so and then we had the Nine-Month impact and then it would come in Q1 the same base. But we’ve tried to streamline now and done all the wage hikes as of 1st of April. So it has an impact of INR11 crores on our reported results and that shows in — when you look at the look at the wages, the payroll cost, you see a certain increase. But in Q2, Q3, Q4, because it gets distributed over 12 months, the increase level will be less.
So in Q1, there would have been nothing and everything would come for the nine-month period. Now it comes divided over a 12-month period.
Shaleen Kumar
Got it, sir. Got it. Got it. That’s it from my side, sir. Thank you so much. Appreciate it.
Operator
Thank you. Our next question comes from the line of Sumant Kumar from Motilal Oswal. Please go-ahead.
Sumant Kumar
Yeah, hi. So my question regarding license fee. In Q1 FY ’26, we have seen increase in — by 30 bps. So any specific reason for that? Because the — can we consider the license fee growth in-line with or higher — sorry, higher than revenue growth?
Ankur Dalwani
Okay. No. Three reasons. One is, of course, this also business model call-in terms of the organic growth on the ginger side, which happens, which is largely a variable fee, but also in this quarter, there is a one-off in the numbers, which is about INR2 crore INR2.5 crores of a license fee which was paid-for a particular hotel, which was actually pertaining to past license fee, which was sort of under litigation under dispute, that got paid-in this quarter.
So to that extent, the numbers have gone up. And also the base as mentioned earlier, was a bit curtailed. So the base effect is there in all the costs. So your funds to normalize for the denominator, but also the fact that there is a INR2 crore, INR2.5 crore impact of one-time, which I just mentioned. So ca
Sumant Kumar
So can we assume the normalization with the growth in H2 or maybe the Q2 onwards, this percentage Y-o-Y is likely to be flat or decline.
Ankur Dalwani
So it will grow in-line with revenue because this quarter also has the impact of CPI being reset, so which is — which in some cases there is CPA adjustment to leases that also comes in here.
Sumant Kumar
Okay. And now coming to the US business, good growth. So what is the mix of ARR and OR growth in US
Ankur Dalwani
And so US is very strong. Actually, if I look at the RevPAR growth in US, both the orders combined was about 18% RevPAR and with Camten actually close to 30%. So — and that was an incredible performance and PR also in the mid to-high teens.
Sumant Kumar
Okay. So what — the ARR growth is higher, right?
Ankur Dalwani
ARR growth is slightly higher. That’s right.
Sumant Kumar
So can we expect the — what is the RevPAR growth, 18% you said 18%,
Ankur Dalwani
18%.
Sumant Kumar
So can we — can we say 10% ARR and 8% occupancy?
Ankur Dalwani
Yes. So it’s a mixtures. Occupancy, for example, in Camden went up quite high to actually was a very-high quarter for Camten. So in campton were little lower in. So if you look at on a combined basis, RevPARs have gone up by 18%.
Sumant Kumar
Okay. In the room medicine, when we talk about owned room, in ginger, you have written capital heavy and capital-light. So any other brands do not have a capital-light like leasing model?
Puneet Chhatwal
Yeah. So capital-light is basically where the owner gives us a fully fitted lease and therefore, from that point-of-view, we don’t have to incur. We have leases in other brands, of course, but there we are incurring the capex. So that’s something which we do as a normal-course. But that’s the reason we classify these because this is important to clarify where when we talk about the business model, this is where the license fee kicks-in. This is a revenue-share model.
Sumant Kumar
But any hotel — except ex of ginger, we have a Taj Gateway and other brand ex of ginger, all are leasing our own hotel.
Puneet Chhatwal
If there are some, no Sumant, you’ll remember that Taj Man sing is like that. Taj Palace with DDA is like that. To some extent, Taj Palace and Colaba is also lease sold. So there are some like this where we — Malabar and Kochin is like that. We have another one.
Sumant Kumar
No, I’m talking with pipeline.
Puneet Chhatwal
In the pipeline, we have — we have many in the pipeline, but mostly it’s almost all exclusive to Ginger.
Ankur Dalwani
We have to incur capex in those situations. For the other brands, Taj and Gateway or, we have to incur capex. So that’s why they are not capital-light in nature.
Sumant Kumar
So incurred capex means own land, own building, right?
Ankur Dalwani
Yeah, it could Be a — it could be leased land, but building is where we take — on the structure we are incurring capex. So there are many such examples of those.
Sumant Kumar
Okay. Thank you. Thank you, Punit. Thank you and good.
Puneet Chhatwal
Thank you.
Ankur Dalwani
Thank you.
Puneet Chhatwal
Thank you so much.
Operator
Thank you. Our next question comes from the line of Ashul Kumar from HSBC. Please go-ahead.
Achal Kumar
Yeah, hi. Thanks for taking my question first of all, I just want to understand a bit on the balance sheet in the — and that’s in the context like when you mentioned that Ginger Kolkata Group is answering and then you mentioned that you need to spend a lot of money on other things. So just want to understand, are you — so for example,, are you still looking for some investor or somebody who could strategic investor or anything like that? And second, I mean on — and given that interest — interest rates are low, are you thinking about raising some debt because any you’re generating very-high ROI, see ROE. And so is — do you think it’s a good time to raise to raise some debt or you are just pretty well satisfied with what you have in the balance sheet.
Ankur Dalwani
Okay. So I think the first question is that whether we’re going to get a partner — an equity partner for Taj, I think the answer for that is no. We — it was a year-earlier. Earlier, I think the thinking was when our balance sheet was constrained, that is no longer the case. So that will basically be a contracting arrangement. We’ll try and do a contracting arrangement in which we are able to box the development risk onto the contractor, onto the general contractor. So that’s something we’ll explore, but not as an equity partner. So that’s question one. The other thing on — I think what was the second question?
Achal Kumar
About the — about the raising debt or are you very well satisfied with what — as of now, we don’t feel
Ankur Dalwani
We don’t feel the need and I agree with you, obviously, it enhances ROE. But at the end-of-the day, if your treasury is earning X and you have to pay higher than X on borrowing, that might make sense to sort of use your cash-flow, which you have availability. But it’s an ongoing thing. We keep our eyes open in case something interesting comes up. We will definitely explore. But as of now, we don’t feel the need to rush into raising debt on the balance sheet.
Achal Kumar
Yeah. Okay. Fair enough. And my second question about this Germany property. So basically, I just want to understand how do you see the German market? And I’m asking because so for example, and I cover Lufanza. So these guys — these guys, I mean, been facing some bit of challenges, Germany is any which way is in a bit of a bit of a trouble now. So generally, could you please give it a bit of a color in terms of how do you see the German market in terms of profitability, in terms of margin and obviously, there are a lot of strict controls in terms of employee poll the labor policy and laws so would be any color would be very helpful please
Puneet Chhatwal
130 room property which was very iconic in Frankfurt. And it’s expected to open-end of Jan and there is enough Indian Indian companies to give us the base business and the rest we’ll get anyways. We have a full Germanic team out there. It will not be people from Mumbai or Delhi going and running that place, maybe a few just to support in terms of values and culture part of it, but the majority of the team that is being hired are experts in the Frankfurt market. We have so many airlines flying into Frankfurt from India with so many flights, I mean, whether it’s Lufthanza or its other carriers.
We don’t see — think it’s a very important gateway which is next to the India House. It’s if you stand with your back to the property on the left, less than 100 meters is the Indian consulate and on the right diagonally across is the Messet which houses the head office of TCS for Europe and obviously the is next to the Messa which is your fair grounds. And that is the part of the city where all the development is coming and happening and the growth is there. And we feel very confident about doing a good job and very important, this will be also bringing in another chamber. So look at the private membership club proposition. London is doubling in size the chambers. First, there was no chambers in London.
Now it’s doubling in size. Frankfurt gets one. Dubai already has one in India, we opened in Bangalore, which never had one. So Hyderabad, Chennai, Bangalore, two in Mumbai. The Mumbai is also doubling in size in Colaba. The lands end, we increased the size and have renovated fully. Delhi, we already doubled in size three, four years ago. So it is in Kolkata, very beautifully renovated. So I think this whole club business internationally is also complementing the hotel, but also creating a lot of business opportunities for us.
Achal Kumar
Right. Okay. Fair enough. And
Puneet Chhatwal
Sorry, we will also have — sorry, Anshal, I forgot, it will also have Bombay. So like Cape Town Taj has Bombay Brassary, San Francisco has Bombay Brassary. We now even have standalone in Singapore. We have Bombay Brassary in Dubai and now the next Bombay Brassary will be in Frankfurt. So even there is brand equity being created in brands like this, which we have had for ages. Also. And London also we have, so. So there is a — there is some value to the brand also.
Achal Kumar
Right, right. No, fair enough. And finally, I also wanted to understand your thoughts on, you know the sort of overall changes probably terms of you know, so a lot of — I think I asked this question last-time also, there’s lot of international payers coming in and you can see that we have bit of a investment — equity investments coming through equity partners are sort of investing in the hotel properties as same as we have the structure in the US. So how do you see these kind of changes, you know in the structure, in the competition, you know, all that and would really appreciate your thoughts on that, please.
Puneet Chhatwal
See players, if we are also going to Frankfurt, the Frankfurt has also have a right to come here, right? If we go to New York, the New Yorkers can also come here. I think competition helps the sector to improve and it’s very good because you learn from each other. And everybody has some kind of a USP, both as brands, as companies, as organizations. So it would only be a challenge if you saw some kind of a slowdown with us because others were coming in, actually others are just following us. So we have had year-after year most signings, most openings. I see — I don’t see that trend changing even this year. So that’s how we look at it and we always say let our results speak for themselves.
See the growth in the management fee income. What we have in a quarter used to be the full-year management fee income six years ago or seven years. When — actually, you would recall when we did the first Capital Market Day the last six, seven years, that was our annual management fee. So all that is coming through that kind of growth and with 143 hotels in pipeline, even if we stopped growing today, we’ll keep opening 30, 40 hotels per year for the next three, four years.
Achal Kumar
Yeah. I mean you’re right. You’re absolutely right, Puneet. You know, competition is good, but I just wanted to understand because if competition, I mean, and I’m referring to the Indigos decision to sort of add so many key, so how would that impact your ARR? Because at the moment, industry is definitely in a very strong upcycle, but if you have so many people, so many, so many investors coming in adding the hotel, don’t you think that could add pressure on also?
Puneet Chhatwal
It’s a good question. It’s a good question, but there is a difference in this time and the last-time. See, we get this question all-the-time, the last cycle. See, the last cycle was limited to metros. The India’s landscape is changing and in our opinion, more than 50% of the new supply is coming in Tier-2, Tier-3 or markets which don’t even have any hotels at all. So that is the bigger difference on this occasion. Your main business is even today driven by those top-10 cities, whether this Delhi, Mumbai, Goa, Rajasthan, et-cetera, these are those top-10 markets, right? There the increase in supply is very limited or contained or constrained. Whereas you will suddenly hear including us, we are going to locations which we have a Vivanta in Pakyong in Sikim or we have a Vivanta and Arunachal overlooking the Chinese border.
We have opened — so these are all new markets. So this is not that there are many other hotels Coming into that market. So suddenly the revenue and the rate, et-cetera will drop.
Achal Kumar
Right, right. No, perfect. Perfect.
Puneet Chhatwal
And then another trend, which you should know. I don’t know the reason you might be knowing it better. Something has changed in India in terms of spiritual tourism. The number of people going to Chardham or to, you know what did we have just now Mahakum and these kind of numbers have never been witnessed in the history before. The way our property is performing in Banaras where we are adding another 100 rooms should open very shortly, doubling the size of the Taj Scanches and many other hotels with other brands that we have in our portfolio will also be opening in Banaras.
So there is something that has changed in terms of trips to spiritual destinations. We never had a hotel in Tirupati now. We have a Taj also and one under selections also. We never had a hotel in Puri, but since seven, eight months, we have a Taj in Puri also. So these are very resilient, I would say, in their performance.
Achal Kumar
Thank you. Thank you so much, Puneet. Those are really helpful. I’ll just come back-in the queue. I had one question, but I’ll come back-in the queue. Thank you.
Operator
Thank you. Thank you. Thank you. Our next question comes from the line ofPrateek Kumar from Jefferies. Please go-ahead.
Prateek Kumar
Hello. Yeah., sir, my first question is on your capex guidance. So you have talked about INR1,200 crore capex guidance like the highest in the past years. So how do we see with a bunch of other greenfield assets which have not been approved for rollout as of now? I see they add-up to around 1,000 keys and 500 fees also added to be added in ’25, ’28. So is this like sort of capex going to accelerate from INR1,200 crore to a much higher number or this is the number we should build for year beyond ’26? That is my first question.
Puneet Chhatwal
We would try to before we follow the policy of capex should not exceed depreciation, but now that we are in a high-growth phase, the capex will not increase or exceed the free-cash flow.
Ankur Dalwani
Yeah. I think the — we did give a long-term guidance on capex in our 2030, when you put out the plan, we said we’re looking at INR5,000 crores over the period of five years, four to five years. I think we are still online there because all these are assets which will get — take time to get built. They will not get built-in a year. So the typical time for an asset in India is about three to five years depending on which asset, which location asset.
So I think that’s how we are looking at the situation. I think INR1,200 odd crores this year, give-and-take, let’s say, 10% here in both sides. And I think it’s going to play-out in the range of INR1,000 crore to INR500 crores over the next two, three years. And then we’ll see how it goes depending on what opportunities are coming are. I think more importantly, Pratik, is that every asset we have to — we make sure it is ROC accretive and it makes the right IRR for us from a cost-of-capital perspective. So that is something we are very particular about.
Prateek Kumar
Okay. And mention of some 300 under lease finalization, is there some new additions to hotels that are not around?
Ankur Dalwani
Yeah. These are some of the leases which are not public, but yes, they are close to getting signed-up and we will be — as we sign them, we’ll keep on announcing them. Like you see also in this one, you have the Taj Pushwa Pantha pilot which got added this year, which wasn’t there earlier for the Ranchi is finally getting signed. So these — and we had actually announced this last year the Ranchi one, but finally it is getting signed now. So I think a lot of that is work-in progress.
And as they get to-market, we will be announcing that. But there is good momentum on that side. There is good interest from the state governments to sort of get an own hotel in the state capital and that’s — we are seeing that momentum continue.
Prateek Kumar
Okay. And one related question like the platform. So I know you talked about it, but how are we like sort of deciding like this capex will be done by us and something by platform? And another question on platform is like when you’re building hotel in platform, so management fees, are these management contract hotel that will come in our books or would that be a fully fitted lease?
Puneet Chhatwal
No, so the first one, which we have started-off is a fully fitted lease. It’s a 195 room out, let’s say, close to 200 room ginger Hotel, Calcutta Airport. So if this is — it is similar to any other ginger hotel would have done with a third-party owner. We would have paid them a revenue-share lease. This asset comes with the land, which is fully being purchased as part of the transaction by the Tata Group. So we have that is also a good thing because then if tomorrow FSI changes, we can also add more room, et-cetera. So in-going forward, I think like it was mentioned, this is a first step-in the direction of creating a platform and over-time, it could open up another source of capital where there are assets which are strategic and synergistic with the group investments and it could make sense to do more of those there. It could also help us help in scaling up the ginger platform because like in ginger — in the case of Ginger, we work with lot of third-party owners and then why not that owner being the Tata Group itself.
So I think those are two sort of big areas where we think more hotels could get added under this platform
Prateek Kumar
And because it’s some form of related-party particularly, so how are the lease rate here versus like a 3rd party like or decided because it seems like a previously completed segment in case of management contract also like the take rate.
Ankur Dalwani
So this is not a management contract, this is a lease, so which is a revenue-share lease and like Mr mentioned earlier, it’s all at arms lens and from Tata Group, that’s the least you would expect. And so this will as well be as arms and leaves which will be entered into going-forward.
Prateek Kumar
Sure. Thank you. Thank you very much. All the best.
Ankur Dalwani
Thank you,.
Operator
Thank you. Thank you. Our next question comes from the line of Mohapatra from JPMorgan. Please go-ahead.
Unidentified Participant
Thank you for the opportunity. Just one question from my side. You have spoken about the international business. Wanted to understand how you see the UK market improvement or changes coming through. I think you alluded to a bit in your remarks earlier, but anything in particular with respect to margins that you are already starting to see or expect in the near-term?
Puneet Chhatwal
I mentioned that earlier that UK is performing well, especially this month of July with Wimbledon and the Cricket has been extraordinary for us because both of them have come together. And with our renovated rooms back-in operation and some public areas investment that we are making. So the renovated rooms will give us good average rate and occupancy. There will be some displacement in the public areas, but we see it as a very positive investment as London is among the top two lodging markets of the world. And it has always worked well for us and it has always been driving good margins also
Unidentified Participant
You. So anything in terms of the sequential improvement that you may see in 2Q or for the — for FY ’26 that you are expecting?
Puneet Chhatwal
It should keep improving upon the numbers that we did last year in a double-digit growth as we have said for others. And double-digit growth in-markets like UK or London is very significant number. Thank you. That’s all from my side.
Operator
Thank you. Thank you. Our next question comes from the line of Sameet Sinha from Macquarie. Please go-ahead.
Sameet Sinha
Yes, thank you. Couple of questions. First is, Puneet and Ankur, you can talk about the margins. How do you see that — how do you see the cadence throughout the year? Because this particular quarter was as impacted by, of course, you had, you’ve probably had some revenue shortfall and you had the pull-forward of the salary increases and you mentioned the digital spend. Can you talk about — obviously, understanding the fact that the wage hike, you’ve explained that. Can you talk about the digital spend? Is that going to continue throughout the year or is that going to-end at some point and we could see margins start to go back up? And I just wanted to double-click because you mentioned sustained EBITDA growth or sustained EBITDA margin on double-digit EBITDA growth. So I just wanted to get more clarity around how you see that working through the year. And then I have a couple of.
Puneet Chhatwal
I’ll let Ankur answer in detail, but very simple. You know, we have delivered 35% EBITDA margin last year. So given the nature of our portfolio, including assets outside of India, delivering 35% on consolidated is possibly an industry-leading figure on a global benchmark basis. And on a standalone, you know that relates to more than 40. So that way, if we can maintain or marginally increase those margins would be like a great situation to be in. And the initial trend of this quarter gone by shows that we are absolutely in-line with it, actually even higher than Q1 of last year. If we just made that adjustment for the wage — the wage increase that we have taken as of April, which will benefit us going-forward in Q2, Q3 and Q4.
So all-in all that is more important to see is that it is a sustainable increase, whether it’s on a top-line or it’s at the EBITDA level or it is at a PAT level or it is at a margin level.
Ankur Dalwani
Yeah, I think no, I think you’ve covered it. I think see the two, three drivers for margins in the short-term or the medium-term. Like you said, there is obviously costs which are going through the P&L, which are relating to technology. Even this quarter, we had some costs, which did go through the P&L. I think they will continue because the nature of the technology investments are more opex. But I think as the base gets built for the year, then obviously that comes into the base and therefore, I will not keep on growing from there at exponential rate. But this year, this quarter also, we had some costs going through the P&L.
The other thing is that on the — on the margin side is a mix of the business. I think the mix of the business, we have given you a breakup in the pie-chart, you can see the various sort of drivers. I think the growth rates for both new business and management fee is higher than the overall business and these are higher-margin businesses relatively. And also if you can add chambers to it, that’s almost like 15% 16% of our revenues, which is actually growing at a higher — a higher-rate and have a relatively higher-margin profile. In our existing hotels, we’ve guided towards a long-term RevPAR of high-single-digit. I think if we sort of get to that in the next two, three years, there is no reason why operating leverage will not kick-in. Having said that, there are always headwinds which also referred to and so we have to be prepared for some of these as they come in. So yeah, I think that’s the broad picture on margins, Amit. As you know, we don’t guide specifically for the year or for the quarter, but directionally looking okay.
Sameet Sinha
Got it. Okay. The second question is in terms of this wage hike that you have to pull-forward. I mean, there have been media reports talking about how there’s a shortfall in the industry qualified people, especially as we see all the growth in all these properties. So can you just elaborate on that? What are some of the steps that you’re taking to kind of offset some of these increases and HR needs?
Puneet Chhatwal
I think that’s a very good question. We have spent a significant amount of money in upskilling our people at all levels, especially at very senior-level we have enabled people to get European international experience, education, degrees and also at all levels, whether it’s apprenticeship level, management trainees level, that’s one part of it. The second is as our commitment on Pathiya, which we launched three years ago, we committed to skill 100,000 people by 2030. And I mentioned that we are already crossed to 31,000 that we have already skilled, opening 52 skilling centers, including in places like, where we are opening and a ginger in the next few months. So yes, there is indeed some kind of shortage or crunch because the demand came back very strong.
And lot of people left the sector because of fear was inculcated that if you work-in a hotel or you’re exposed to people, you get COVID. So some people permanently left the sector or others unlike our group, who just got rid of the employees because there was no business. So when demand comes back, then they try to take employees from each other. So I think we have not done any of that. And what is paying-off well for us, especially on our attrition rates is the way we looked after our people, especially during COVID and them and their families is — obviously people have always been loyal to the brand and to the group, but now they are even more loyal and to especially our brand in the way we take care of our people.
Sameet Sinha
Got it. Thank you very much.
Puneet Chhatwal
Thank you. I think, thank you.
Operator
Yes, sir.
Puneet Chhatwal
Sorry, go-ahead. I think we can maybe take maximum one more question and then.
Operator
We’ll take one last question from the line of Prashant Biyani from Elara Securities. Please go-ahead.
Prashant Biyani
Yeah. Thank you for the opportunity. Sir, we have been — last year we have been running at around 78% to 80% occupancy between Q2 and Q4. So is it that despite demand being there, technically we may not be able to increase occupancy beyond that point because of the weekday, weekend dynamics.
Puneet Chhatwal
Yes, Prashant, you’ve already answered the question yourself. It’s a — if you — if you’re running at around 70, 80 means most of the time you are sold-out. There will always be some shoulder period, you know some religious things like you have this and you know sometimes it’s the, sometimes it’s Diwali, you know many, many days where it’s not hotels where you are in, you are actually with the families or at-home. So with those kind of occupancies, you can only yield better on rates.
Prashant Biyani
Right. And so it will give you pricing power to choose more profitable customers.
Puneet Chhatwal
This is — I heard this for the first time that we can choose more profitable customers. I mean, customers, customer Atiti, they will go, guest is God, not a profitable or non-profitable. So I’m sorry, I could not stop myself, but what it does is definitely it gives you a pricing power at a high occupancy level and that is what the sector has witnessed in the last few years.
Prashant Biyani
Sure. Thank you.
Operator
Thank you. Ladies and gentlemen, yes.
Puneet Chhatwal
Sure. Sorry, go-ahead. Good.
Operator
I now hand the conference over to Mr Puneet for closing comments.
Puneet Chhatwal
Thank you everyone for joining this call and thank you for all your questions. We look-forward to interacting with you in this quarter and at the end-of-quarter two, and thank you for all your support. Have a wonderful evening and see you soon.
Ankur Dalwani
Thank you.
Operator
Thank you. On behalf of the Indian Hotels Company Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.