Royal Orchid Hotels Limited (NSE: ROHLTD) Q1 FY23 Earnings Concall dated Aug. 05, 202
Corporate Participants:
Chander K. Baljee — Chairman & Managing Director
Prashant Mehrotra — Chief Operating Officer
Amit Jaiswal — Chief Financial Officer
Analysts:
Archit Singhal — Nearc Investments — Analyst
Yash Agarwal — JM Financial — Analyst
Darshil Jhaveri — ISS — Analyst
Rahul Bhangadia — Lucky Investment Manager — Analyst
Rishikesh Oza — RoboCapital — Analyst
Rajesh Agarwal — — Analyst
Anupama Bhootra — Arihant Capital Markets — Analyst
Presentation:
Operator
Good evening, ladies and gentlemen. I welcome you all to the Q1 FY ’23 Post Earnings Conference Call of Royal Orchid Hotels Limited. Today, from the management we have with us, Mr. Chander Baljee, Chairman and Managing Director; Mr. Amit Jaiswal, Chief Financial Officer; and Mr. Prashant Mehrotra, Chief Operating Officer.
As a disclaimer, I would like to inform all of you that this call may contain forward-looking statements, which exemplifies our judgment and further expectations concerning the developments in our business. These forward-looking statements involve risks and uncertainties that may cause actual developments and results to differ materially from our expectations. Also, this is a reminder that this call is being recorded.
I would now like to hand over the floor to Mr. Chander Baljee, Chairman and Managing Director, to give his opening remarks, post which we will open the floor for Q&A. Over to you, sir.
Chander K. Baljee — Chairman & Managing Director
Good evening and warm welcome to everyone. Thank you for joining us for the Royal Orchid Hotels Limited earning conference call for the first quarter of financial year 2022-2023. Please note that Q1 for year 2023 quarter results, press release, and investor presentation are available on the exchanges. I hope you’ve had the opportunity to browse through the highlights of the performance.
Last two years have been very tough for our industry. We have sailed through these turbulent times very successfully. The industry was coming into normalcy from November 2021 onward, when the third wave of Omicron hit us in January 2022. But we recovered from the third wave quickly and bounced back in March 2022. From April 2022 onwards, we have done robust business, which is evident from the financial results for the first quarter.
We have learned a lot during the last two years of how to be pragmatic in difficult times and how to control the cost of our operation and the benefit of our learning is visible in the present quarterly result. The company has posted robust growth because of strong business model and effective risk mitigation strategy. As our business bounces back to normalcy, we are aiming to post better margins than what our company had witnessed in the recent past. And the first quarter results have been one of the best in the last ten years.
Financial highlights of the Company for the first quarter ended 30th June 2022, on a consolidated basis, are as follows. Revenues from operations for Q1 was INR60 crores as compared to INR39.53 crores in Q1 2022, which is a growth of 53%. This is attributed to increase in ARR and occupancy, an increase and increase in F&B business. EBITDA for Q1 was INR24 crores as compared to INR14.24 crores in Q1 2022, an increase of 69%. EBITDA margins stood at 40%. PAT before exceptional item for Q1 stood at INR11.53 crores as compared to INR4.93 crores of Q1 2022, an increase of 134%.
During the quarter, we have been able to increase the average room rate from Q1 2023 stood at INR4080, as compared to INR2,769 for Q1 2022, a growth of 76%. During last year, we had opened nine hotels with 388 keys. And in the first quarter, we have opened two hotels taking our total tally to 73 hotels with 4,546 keys. We are well in line with our vision to operate 100 hotels by 2023 and I’m looking forward to opening new hotels in different cities of India.
During the quarter, we witnessed RevPAR growth led by higher ARR. We believe the industry has seen a revival and we have bounced back with better results in the current financial year. The management has set out a strategy to diversify the products, provide unique customer experience, and work towards our robust balance sheet. I would like to conclude my opening remarks by saying that we have been — we are witnessing major signs of revival for the industry as a whole, which will show up in our overall earnings quality over the next several quarters.
Thank you. And now, we can throw the floor open for questions.
Questions and Answers:
Operator
Thank you Mr. Baljee. [Operator Instructions] Somebody has unmuted, you may go ahead. Sir, you have unmuted your line, [Indecipherable] if you can announce your name. Archit Singhal, you may go ahead please.
Archit Singhal — Nearc Investments — Analyst
Yeah, hi, thanks for taking my questions. So firstly, wanted to understand what is the current occupancy and pricing versus the pre-COVID levels? And do you think this current occupancy and pricing will further improve as we progress in FY 2023?
Chander K. Baljee — Chairman & Managing Director
Yeah, see there has been a phenomenal rise in the occupancy as well as the ARR. Currently, we are operating our hotels at around 78% occupancy and average increase — ARR also around from the last year same quarter if you compare, there is a robust growth of roughly around 60% — 60% to 70% growth is there in different, different hotels as far as the ARRs and occupancy is concerned. Occupancy, of course, around 80%, I think going beyond 80%, they have become a little difficult, but ARR, there is a scope for another 10%, 15% increase in the ARR, which we are very confident of having in the quarters to come.
Archit Singhal — Nearc Investments — Analyst
Understood. Thanks for this. And secondly, looking at the EBITDA margin for the standalone entity versus the subsidiaries, it looks like the subsidiaries are making a lower margin versus the standalone entity. So, what is the strategy here to improve the profitability of subsidiaries? And I mean I also saw FY 2021 Annual Report, so there were a couple of subsidiaries, which are loss making like Icon Hospitality, Ksheer Sagar, Maruti Comforts. So if you can highlight like what is the strategy to make them profitable?
Chander K. Baljee — Chairman & Managing Director
See as far as, Ksheer Sagar, that is our Jaipur Hotel and Icon, Central Bangalore, these are the two hotels which are little drag as well as subsidiaries concerned. But Maruti and Goa hotel will definitely make more profits in time to come. And Jaipur hotel is a little seasonal, it’s a seasonal hotel because the first quarter historically doesn’t do that much great performance being the summer is there in Jaipur, but in the last two quarter, it will definitely bounce back and do very well.
Archit Singhal — Nearc Investments — Analyst
So, we expect an overall improvement in margins going forward, right from 1Q levels?
Chander K. Baljee — Chairman & Managing Director
Yes.
Archit Singhal — Nearc Investments — Analyst
Okay. And last question from my side. So 1Q, we saw INR60 crore revenue. Where does the company aim to be, let’s say in three years from now in terms of any revenue ambitions you have?
Chander K. Baljee — Chairman & Managing Director
See revenue ambition, let me tell you, we are looking — we are — you know, there will be little organic growth as well as inorganic growth. And we are trying to touch — take the revenues to maybe in three year’s time to say around INR400 crores.
Archit Singhal — Nearc Investments — Analyst
So just one clarification here, so you mentioned about inorganic growth. So if you can highlight more like what you are planning here? Is it like — is it going to be an asset-light model or asset-heavy model?
Chander K. Baljee — Chairman & Managing Director
No, definitely it will be an asset-light model because by inorganic growth, I meant that — see, we are taking more and more hotels on management, where management fees straight away goes through our topline and bottom line, but simultaneously, we are also trying to sign hotels on rev share — revenue share basis also. So these are the two strategies where you know a lot of investment is not required. Rev share, there are marginal security deposit investment; management, there is no investment at all required. So that — these are the two ways, which will grow and of course, you know, getting asset right now, we are not looking at.
Archit Singhal — Nearc Investments — Analyst
Good. This helps. Thanks for answering my questions and all the best for future.
Chander K. Baljee — Chairman & Managing Director
Thank you.
Operator
Thank you, Archit. We’ll take the next question from Yash Agarwal. Yash, you may unmute and ask your question.
Yash Agarwal — JM Financial — Analyst
Yeah, good evening, sir. Congrats on a good set of numbers. I had a few questions. So large part of our hotels is managed and franchise hotels. I just wanted to understand how does the revenue and cost recognition work here? I’m little new to the company, so if you could just explain how the revenue and cost recognition works in the managed hotels for you?
Chander K. Baljee — Chairman & Managing Director
See, as far as cost is concerned, we already have fixed costs across our company, where is — the corporate expenses are almost fixed; however, say for every 10 hotels, we may add a cluster head or a VP-level person, who provides support to the newer hotel. So I think, the revenue growth will be substantially higher than the cost growth because most of the fixed costs are already there. So that is how we are going to work in future and try to limit our — we have learned a lot in COVID of controlling cost and we have already done it. And so, we are a very lean and mean kind of organization today and this is how we are going to grow in the future.
Yash Agarwal — JM Financial — Analyst
Sir, actually my — yeah, thank you for the answer, sir. My question was more that — suppose if have five managed hotels, so all of those revenues and costs are accounted for in our profit loss statement, or do we only account for some bit of sort of commission income; how does the recognition work for us?
Chander K. Baljee — Chairman & Managing Director
We account only for our fee, which will come to us. We charge a fee to the company, which is really around an aggregate of about 6% of turnover. That’s a fee we charge them, so that will come to our listing. Costs and other things, revenue will all be on the owner’s account, it doesn’t reflect in our balance sheet.
Yash Agarwal — JM Financial — Analyst
Sure. And sir, is there any initial — suppose whenever we sign up a managed hotel, is there any renovation expense or something that we have to do or it’s all on the owner’s —
Chander K. Baljee — Chairman & Managing Director
All on the owners. In managed properties, all expenses are on the owners.
Yash Agarwal — JM Financial — Analyst
So incrementally the hotels that we are adding, I think 12 to 13 hotels that you mentioned in the presentation, are they mostly on the managed basis or they are on this —
Chander K. Baljee — Chairman & Managing Director
Yeah. They’re mostly on managed basis. They’ll be going forward maybe about 10% of the hotel will be on revenue share, where the costs and the revenue will come on to our books.
Yash Agarwal — JM Financial — Analyst
So out of the INR60 crores, could you outline how much of the revenues are from the managed hotels?
Amit Jaiswal — Chief Financial Officer
See from them managed hotels roughly, as far as revenue is concerned, they contribute to roughly 20% of the revenues.
Yash Agarwal — JM Financial — Analyst
So about INR12 crores to INR15 crores or INR10 crores to INR15 crores, that’s the right assessment?
Chander K. Baljee — Chairman & Managing Director
Yes.
Yash Agarwal — JM Financial — Analyst
And the margins on this will be extremely high, right, because this is completely flowing into EBITDA for us?
Chander K. Baljee — Chairman & Managing Director
No, margins are quite high, as far as the fees are concerned. But we have a certain fixed cost of managing these managed hotels. There are basic cost of sales offices and blabla things. So but — yes, of course, the margins are high and as we add more and more hotels, the margins will further grow.
Yash Agarwal — JM Financial — Analyst
Okay. Sir, on the question of — the previous participant question of the occupancy and ARR, so has that improved further from the first quarter or is there some bit of cool down in terms of seasonality? And how do you expect this [Speech Overlap]
Amit Jaiswal — Chief Financial Officer
We have maintained a run rate of occupancy in the current quarter also and there is marginal growth in the ARR also.
Yash Agarwal — JM Financial — Analyst
Got it. Sir, one final question from my side. What is the net debt of the company, gross and net debt?
Amit Jaiswal — Chief Financial Officer
The net debt on a consolidated basis is around INR88 crores.
Yash Agarwal — JM Financial — Analyst
INR88 crores. Okay, sir. And, sir, suppose if you want to meet on a separate basis on a one-on-one basis, how can we do that, because [Speech Overlap]
Amit Jaiswal — Chief Financial Officer
You can get in touch with Mr. Vinay Pandit who is there on the line. He will take it forward.
Yash Agarwal — JM Financial — Analyst
Okay, thank you.
Operator
Thanks, Yash. We will take the next question from Darshil Jhaveri. Darshil, you may unmute and ask.
Darshil Jhaveri — ISS — Analyst
Hello, sir. Am I audible?
Chander K. Baljee — Chairman & Managing Director
Yes.
Darshil Jhaveri — ISS — Analyst
Yeah, sir. Congratulations on a brilliant set of numbers, sir. Sir, I just wanted to ask because you’re — I think Q3 and Q4 might be even better numbers, so could you give any guidance in terms of what revenue do we expect by FY 2023 end? As you have already said margins will improve, could you just give some [Speech Overlap]?
Amit Jaiswal — Chief Financial Officer
Revenue, we should be able to touch around INR280 crores for the current financial year,
Chander K. Baljee — Chairman & Managing Director
Maybe a little better.
Amit Jaiswal — Chief Financial Officer
Maybe a little better also.
Chander K. Baljee — Chairman & Managing Director
Normally, the first two quarters will give about 40% of the revenue and the second two quarters give about 60%. It may vary a little up and down. But keeping –we extrapolate what we have already seen the INR60 crores and [Indecipherable] that is INR40 crores. But we do expect INR280 crores to — more than INR280 crores, but some — [Indecipherable] also likely come into the pipeline, so our target is to cross INR300 crores.
Darshil Jhaveri — ISS — Analyst
Yeah. So that’s amazing, sir. And the margins will keep on increasing because we had —
Chander K. Baljee — Chairman & Managing Director
Yes.
Darshil Jhaveri — ISS — Analyst
Sir, would it be fair to assume we will do more than 40%, 45% margin?
Amit Jaiswal — Chief Financial Officer
Not 45% is not possible in our industry. [Speech Overlap] but yeah, but it will be around 40% definitely, EBITDA.
Darshil Jhaveri — ISS — Analyst
Yeah, sir, EBITDA. And sir, just one last question, any risks that we see that might — we might just face or or some problems that we might face except the pandemic because the slowdown, recession, do we have any fears or anything?
Prashant Mehrotra — Chief Operating Officer
Not really. See, we can’t predict into the future, like pandemic was not predicted. I don’t [Indecipherable] any other major risk in our business.
Darshil Jhaveri — ISS — Analyst
Okay. Thank you so much, sir. And all the best for future numbers. Thank you so much for your answers.
Operator
Thanks, Darshil. We’ll take the next question from the line of Rahul. Rahul, you can unmute and ask your question.
Rahul Bhangadia — Lucky Investment Manager — Analyst
Before taking my question, sir, and first of all congratulations on a great set of numbers. Sir, you’ve always given a broad outline of trying to reach 100 hotel properties. Given your already existing ones and the pipeline that you have shared in the presentation, you will already be touching about 90. So, 100 is literally not far away. So what is the next phase that you’re looking at beyond 100?
Chander K. Baljee — Chairman & Managing Director
Yeah, actually, particularly management contract space, the growth is exponential. So if this year, I would say, the next one year, we are able to reach a 100 and definitely you can easily add about 30 to 40 properties in another year or so. I think that should be the — it is the target and only hope, because sometimes, in opening hotels, the circumstance is beyond our control, because the owner is controlling and driving the project. They have some fund constraints or he may have some organization constraints, which is why he is not able to deliver or so. But then, we do provide support to him and guidance on how to execute the project. Certain people will take the guidance, certain don’t.
Rahul Bhangadia — Lucky Investment Manager — Analyst
Okay. Sir, secondly, given the uptick in the industry and the profitability that we have reported, and the continued profitability, we should expect by the year end pretty much being close to a net debt free kind of situation? Or what do we plan to do with all the cash flows that we going to generate?
Chander K. Baljee — Chairman & Managing Director
You see with what — like Amit had also mentioned, that we are getting into some revenue share deals also. We’re actively looking at revenue share deal where there will be some working capital requirement, that means we will be requiring money to pay the deposit, we will require money to start up the hotel, some operating supplies we’re to give. So, I think, with the combination of both, we will reduce our debt to some extent. and the balance money we will deploy for getting more revenue-share hotels.
Rahul Bhangadia — Lucky Investment Manager — Analyst
Okay. Sir, just third update, is there any further asset or something that you can monetize? Last we heard you had something in Africa as well. Anything that you can kind of monetize that is left to be monetized on the books?
Chander K. Baljee — Chairman & Managing Director
See, Africa debt has been in the market. The market there was quite depressed, but now, I’m told that the market has picked up because there has been a change of government and change of heart that will be inviting investors. So, I’m told that the area is developing. At the moment, the area develops, then obviously, then we will get buyers and I am planning to visit Africa this month so that to plan meet some prospective investors and all that. But at the moment, since there is no distress in the company, so we don’t want to be in tiering hurry and waited patiently for so many years. We will go there and we’ll try to explore and try to monetize that asset within this financial year.
Rahul Bhangadia — Lucky Investment Manager — Analyst
Lastly, I didn’t have a question, it’s a suggestion. In the presentation, sir, in quite a few of the slides, it’s basically a comparison between Q1 FY 2022 and Q1 FY 2021. There is a slide — I’m assuming it’s a comparison 2023 and 2022, but lot of places just mentioned 2021 and 2022, it’s a little confusing if that could be corrected. Thank you.
Chander K. Baljee — Chairman & Managing Director
All right.
Operator
Thanks, Rahul. We will take the next question from Rishikesh.
Rishikesh Oza — RoboCapital — Analyst
Hi, sir, good evening. Sir, my first question is, I need a clarification on the EBITDA margins that you set for FY 2023. Sir, did you say like 40% for whole year FY 2023?
Amit Jaiswal — Chief Financial Officer
Yes.
Rishikesh Oza — RoboCapital — Analyst
Okay. And that is on stand-alone or consol basis?
Amit Jaiswal — Chief Financial Officer
Consol basis.
Rishikesh Oza — RoboCapital — Analyst
Okay, great. Sir, my second question is how much cash and investments do we have?
Amit Jaiswal — Chief Financial Officer
See, we have, if you really look at our balance sheet — even 31st March balance sheet, if you see, roughly around INR30 crore cash we have.
Rishikesh Oza — RoboCapital — Analyst
Right. And also you have some INR25 crores investments, right?
Amit Jaiswal — Chief Financial Officer
Yes.
Rishikesh Oza — RoboCapital — Analyst
Okay. So that — what is the plan with that cash and investments, what exactly are we going to do?
Amit Jaiswal — Chief Financial Officer
See, As Mr. Baljee rightly said, see, there are two ways of handling the cash. One, we use the cash for the growth of the company. Or second, you retire your liabilities, right? So we will try to balance it out. Because now is the opportunity to grow the company. We have to keep it in mind next five or ten years of performance what we are going to do that we need to decide now. So that is why we will use it very judiciously the cash that we are having as well as the income which is going to come during the year so that we can plan the company’s performance for next five or ten years.
Rishikesh Oza — RoboCapital — Analyst
Okay. So your gross debt if I see it’s around INR150 crores.
Amit Jaiswal — Chief Financial Officer
No, debt is not INR150 crores. Debt is only INR86 crores something. INR87 crores, yeah.
Rishikesh Oza — RoboCapital — Analyst
Okay. So, are we looking to be debt free in near term?
Amit Jaiswal — Chief Financial Officer
See the debt has been distributed into three entities. The one is a stand-alone, which is around 40 and then one subsidiary of 20 and then another subsidiary where we have around 30. So that is how it has been distributed. So subsidiaries where we have partners, I don’t think so much can be done. But stand-alone, yes, we are looking, if not full, at least part of it we may retire. It depends on the opportunities what we get. Now, there is lot of opportunities in the market to sign some revenue share as Mr. Baljee has said earlier. So that will pave the path for the company’s growth in times to come. And believe me that debt is at a very low cost, we had — it is at a very, very low cost of around 8% and odd, so that is not hitting us so bad.
Rishikesh Oza — RoboCapital — Analyst
Okay, great, sir. Thank you very much.
Operator
Thanks, Rishikesh. We’ll take the next question from the line of Rajesh Agarwal. Rajesh?
Rajesh Agarwal — — Analyst
Yeah. Congratulations for good set of numbers. See my small question is, what has led to increase in employees’ benefit expenses? 20%, it has gone up quarter-over-quarter.
Chander K. Baljee — Chairman & Managing Director
See when as the business goes up, you have to see, we were working on a very, very low staff because of the COVID situation. There was a salary cut also for some of the employees. All salaries have been restored and more people — naturally if the business goes up, you need more people, so more people have been employed. So with the result, that salary will — has gone up, and of course, will go up in future also. But we are watchful of the situation that it should not go up to those numbers, which are pre-COVID levels. We’re trying to keep that under control.
Operator
Rajesh?
Rajesh Agarwal — — Analyst
Yeah, because you know, quarter-over-quarter, 20% increase, unless salaries have been revised, or more people have been inducted, and normally other companies, we have been finding that the salary — employee benefiting structure has remained the same quarter-over-quarter.
Chander K. Baljee — Chairman & Managing Director
No, Mr. Agarwal, please understand. Our industry is very employee intensive industry. So if you see in the last quarter, January was literally third wave was there. And we managed to close the quarter with as the least employee, but with — from April onwards, most of our hotels are doing 80% occupancy and lot of F&B business. So we had to increase the number of employees. That is why you are seeing the jump in the numbers. But this jump now will not go every quarter. It was one shift from one year to another year, so this cost is not going to go up in every quarter, it was a one-time exercise when we move — we were doing 50%, 60% occupancy, all of a sudden it has gone to 80% so we had to increase the number of soldiers on the floor.
Rajesh Agarwal — — Analyst
Understood. Very well, very well. Because the induction is there more, so hence this cost increase. Sir, could you throw some light on our Goa hotel now — how that performed on 100% basis top-line and bottom-line?
Amit Jaiswal — Chief Financial Officer
See the Goa — I will just let you know, the Goa hotel has performed very well in the first quarter, okay. And it continues to perform very well. That was the reason why we had taken the 100% stake of the Goa hotel. In the first quarter, they have done 89% occupancy, and they have shown a phenomenal growth in the ARRs also.
Rajesh Agarwal — — Analyst
Mr. Amit, one question, which is a little distinct. What is our total contribution coming from our Bangalore center? We have around — Bangalore, what is the revenue share after total revenue. We have eight properties there, four are owned, leased, and subsidiaries, so what contribution it gives [Indecipherable] INR60 crores?
Amit Jaiswal — Chief Financial Officer
To INR60 crores, no?
Rajesh Agarwal — — Analyst
Yeah.
Amit Jaiswal — Chief Financial Officer
I will just tell you. Okay, I’ll just get back to you.
Rajesh Agarwal — — Analyst
Yeah. Please no problem. Thank you. Thanks a lot. Again, congratulations.
Chander K. Baljee — Chairman & Managing Director
Thank you.
Operator
Thank you, Rajesh. [Operator Instructions] So one question from my side if you permit.
Chander K. Baljee — Chairman & Managing Director
Yeah.
Operator
Could you give investors some light on this plan to add 17 hotels and 1000 keys by 2023? And by what route — management operator route or own properties, how would this be?
Chander K. Baljee — Chairman & Managing Director
These are mostly managed properties. There will be one or two out of 17, which are revenue shares. And most likely, this financial year, they should begin. But out of that, may be one or property — one or two properties may not come up in case there is an inordinate delay in competition of the project. But then to compensate for that, we have — our development team is aggressively working on adding more property. So, there may be some properties which are already ready to operate properties till coming through the system. So, I think we are aggressively working towards a target of 100 hotels. But I just hope that we will be able to achieve it. Our development team, our operation teams are all getting geared up for that.
Operator
And this is your target for end of FY 2024 right?
Chander K. Baljee — Chairman & Managing Director
No, one year from now.
Operator
Okay.
Amit Jaiswal — Chief Financial Officer
44% of the revenue comes from the Bangalore market.
Rajesh Agarwal — — Analyst
How much?
Amit Jaiswal — Chief Financial Officer
44%?
Rajesh Agarwal — — Analyst
44%. Thank you.
Operator
We take the next question from Anupama. Anupama you may unmute and ask.
Anupama Bhootra — Arihant Capital Markets — Analyst
Yeah. Congratulations for the great numbers. I just wanted to understand if you can give us a breakup of managed and owned hotel contribution — revenue contribution? Managed you have given us.
Amit Jaiswal — Chief Financial Officer
[Speech Overlap] Around 19% of the revenue comes from the managed hotel.
Anupama Bhootra — Arihant Capital Markets — Analyst
And the owned ones?
Amit Jaiswal — Chief Financial Officer
Balance is owned ones around 81%.
Anupama Bhootra — Arihant Capital Markets — Analyst
Okay. [Indecipherable]Thank you so much.
Operator
Can you also throw some light on the travel trends that you’re seeing since we have multiple properties across regions?
Chander K. Baljee — Chairman & Managing Director
I request Mr. Mehrotra to take.
Prashant Mehrotra — Chief Operating Officer
Hi, everyone. So right now in terms of travel trends, we see a very, very robust strength coming out where the corporate demand has also picked up as well as the leisure demand continues to grow. In the last quarter, we also saw a lot of weddings segment — lot of weddings happening at the hotels, which we foresee in the future.
To the question, if we look at the demography, I think 94% to 95% of our customers are domestic Indian customers who have been staying with us. So, it’s largely a domestic consumption story is what we are witnessing as a pattern. And going forward, we see this pattern continuing. And as international guests start coming into India, we feel very, very robust travel environment unfolding. Also, the Government of India planning many new airports with the new highways getting connected, it’s going to be very, very successful story as we see forward.
Chander K. Baljee — Chairman & Managing Director
Yeah, I see a large amount of business coming in the long weekend. India celebrates so many festivals and so if there is a — say at, there is a festival, and it’s Saturday, Sunday holiday, people will take Monday as one casual leave and have a four-day weekend. So that has seen a growth tremendously because it’s easy to book. On the portals you can just sit down, in two minutes you can get a confirmation, the rates pretty much competitive and flights are easily available. So I think that has been a huge growth in the last year or so, the long weekend business. People had started taking long annual holidays taking three or four shorter holidays and that has definitely benefited us.
Operator
Okay. Sir, as of Q1, your average occupancies is at around 68%, 78% depending on managed properties and average room rates have hovered around INR5,000 for owned and leased properties, and around INR3700 for managed properties.
Chander K. Baljee — Chairman & Managing Director
Right.
Operator
Do you see this trend for this year and next year as new properties as well coming in?
Chander K. Baljee — Chairman & Managing Director
It is pretty much a similar trend because see in managed properties you will that find some of the properties — and the owned like five-star properties, many of these hotels are not 5-star. So I think — and also when a management comes up, it takes some time for it to stabilize. So, there will be at any particular moment of time, there will be about 10% property which are not yet stabilized and their ARR are low. But eventually, this segment will grow quite exponentially as compared to the other segments. So I think whatever you are saying in terms of turnover, that will grow probably much faster than the owned properties because we are not adding any owned properties, we are adding only the managed properties.
Operator
Okay. We’ll take a follow-up question from Rahul. Rahul, you can unmute.
Rahul Bhangadia — Lucky Investment Manager — Analyst
Thank you, sir. You’ve already mentioned that because of the pandemic last two years, probably the number of offers that you would have got to sign up for the, let’s say, a managed contract or whatever [Indecipherable]. What is the situation for, let’s say, if somebody wants to put up a new project, it is now getting incrementally more difficult than it was pre-COVID, what’s the situation there? Are banks ready to fund? What’s the [Technical Issues]
Chander K. Baljee — Chairman & Managing Director
I think there is no difficulty. It’s just that managed space also is having competition. There are a lot of people who are starting management companies, lot of them, we are exiting management companies because management companies books on a very wafer-thin margins. The strength that we have is that we have our own properties, which even if the managed properties did not perform well, our company has the wherewithal to stand to afford overheads required for the management companies. So we are pretty well placed that way.
Rahul Bhangadia — Lucky Investment Manager — Analyst
And, let me rephrase the first question. If today hypothetically you wanted to kind of start up a new project, a 4-star or 5-star hotel, what are the kind of timelines we are looking at?
Chander K. Baljee — Chairman & Managing Director
A greenfield project will take three years minimum to set up. And because the standards have not improved in that country, it takes maybe three to four years to put up, and depending on which city you are in and how proactive your government sanctions are. So that is why we have refrained from taking up any greenfield projects, because of long, long process and then you have to have the bank loans, you have to have working capital requirement, you have project cost, so we are staying away from that at present.
Rahul Bhangadia — Lucky Investment Manager — Analyst
And are you seeing others being active in that segment bringing greenfield expansion?
Chander K. Baljee — Chairman & Managing Director
Well, everybody you see, whatever you see the new trend, everybody will follow that. Hotels can be established, hotel companies are also getting into management contracts and all that. There will be definitely more competition, but then, there is no fun without competition. We are there to take it on.
Rahul Bhangadia — Lucky Investment Manager — Analyst
Sure, sir. Thank you. Thank you, so much.
Operator
Thank you, Rahul. Anybody else wishes to ask a question?
Since there are no further questions, would you like to give some closing comments before we end the call?
Chander K. Baljee — Chairman & Managing Director
Yeah. I see. As I think most questions have been answered, I will say that in this, we have survived, and a lot of management companies have actually closed shop because we ran most of the hotels. And I would say the credit goes to all my team, I like to thank them for their support because, without their sacrifices of doing double the work and half the salary, they all stood by us. And that’s why this company has become much stronger than it was and our pipeline is growing pretty fast and also our image in the market has improved a lot. We are very well-known brand today. At one-time, we used struggled to contact people and to talk to. Now, a lot of people contact us and at least consider us for the management contracts. So, I think going forward, to my mind, I’m very optimistic of the future. And we look forward to meeting all of your expectations this year and the coming at least two years. I can’t give you a prediction for five years. But at least, I’m looking at a very, very robust next three years. Thank you very much.
Operator
Thank you so much, sir. On behalf of Kaptify, I thank all participants for joining us on this call. And I would like to thank the management for giving us their valuable time. Thank you so much.
Chander K. Baljee — Chairman & Managing Director
Thank you.
Amit Jaiswal — Chief Financial Officer
Thank you, everybody.
Prashant Mehrotra — Chief Operating Officer
Thank you.