EIH Limited (EIHOTEL) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. On behalf of EIH Limited and SAP Securities, it is my pleasure and privilege to welcome you to EIH Limited Q1 FY '22 Earnings Webinar. [Operator Instructions] Please note, this webinar is being recorded for compliance reasons. We have with us Mr. Vikram Oberoi, Managing Director and Chief Executive Officer; and Mr. Kallol Kundu, Chief Financial Officer. We will have the opening remarks from Mr. Oberoi, followed by the Q&A session. Thank you, and over to you, Mr. Oberoi.

Thank you very much, Naveen, and thank you to all the participants. I see the numbers going up to 59, so a warm welcome to everyone. I hope everybody is in good health. We're glad to see things get a lot better with case numbers significantly declining across the country with COVID after a very challenging second wave that touched, I think, all of us in some way or the other. With the decline in numbers, and we've seen starting actually in June and then leading on to currently to the current situation business pick up substantially and we'll share some information in the presentation that Kallol will be giving. The strongest drivers come from Oberoi Leisure Hotels, and Oberoi Leisure Hotels continue to perform well. In June, we were nearly at similar levels to what we were in 2019 before the pandemic started. And I'm sure in the months to come, many of our hotels will outperform the numbers of 2019, at least one hopes that to be the case. So Oberoi Hotels have done the best. We've shared some data on that relative to industry. Followed by Trident Leisure, as far as business goes, city hotels go, we're starting to just see some green shoots, and we also talk to our key corporate accounts. Many are thinking about going back to the office, some still haven't made a decision. But I hope over the next months, people will start returning to the office, people will start traveling again on work and we will see occupancies in our city hotels also start to pick up even beyond what they've picked up today. So that's in quick summary our comments. Thank you for this opportunity, and we look forward to presenting to you and also then answering your questions

Good afternoon, ladies and gentlemen. A warm welcome to all of you on the first quarter earnings call from EIH Limited. I trust all of you are well and keeping in good health. We have shared the presentation with the stock exchanges an hour back, but for the benefit of all of you, we are going to present it here again. And please feel free to ask us whatever questions you have after the presentation is done. Thank you so much. So we begin with an industry outlook. This report was published by HVS Anarock a couple of days back, which shows that relative to the last year, in each month, how has the industry performed. So the average daily rate has in the month of -- sorry -- in the month of March 2021 versus 2020 was down by about 22% to 24%. And that is because in March 2020 last year, the pandemic had still not peaked in. This percentage is only about 4% to 6% in April 2021. And in May 2021 versus May 2020, the ADR is down only by 2% to 4% with green shoots as Mr. Oberoi mentioned, beginning to really emerge in June 2021, where the ADR is higher by 17% to 19% vis-à-vis the last year, same month. The occupancy and the RevPAR figures are here. And just as a comparison, we've mentioned this time and time again, before that our company's philosophy is to be the best, if not necessarily the biggest. And therefore, our -- we really want to provide value to customers, and therefore, our rates are -- if you see the numbers below, they are trading higher than the industry on an average. So our RevPAR growth, as you can see, for properties in EIH Limited as well as if you take all the domestic properties that are managed by EIH Limited are in above of -- in excess of double-digit to triple-digit numbers, which is, of course, a good sign for all of us. The HVS Anarock report also highlights that domestic air traffic has increased by over 47% in June 2021 compared to May as air travel restrictions started easing across the states because of declining COVID cases. Hotel occupancy in all the major cities witnessed a month-on-month increase with the revival in leisure travel. That's our observation as well. Mumbai observed the highest occupancy in June 2021 as per the HVS Anarock report, followed by New Delhi, primarily driven by staycation and weekend businesses. Hotel stocks are seeing an upward trend due to increasing positivity towards the sector. And as per the Anarock report again, brand openings and citings by properties have increased marginally in the first half of 2021 compared to last year. Our outlook continues to remain what we've maintained throughout the year of the pandemic. Basically our mantra, to endure, to revitalize and then to ensure that we flourish when the times are better again. How do we endure? We endure through our robust balance sheet, and we are, of course, very enthused by a sharp post-COVID recovery. Just to highlight our net worth, if you see over the last 5 years, it's remained at high levels. We have a strong asset base and we continue with the strong asset base, and our debt continues to be in control, very optimally leveraged. So basically, what this has helped us is to control our finance cost. And this also helps us to maintain and obtain lowest interest rates from banks. And as we have shared in the presentation, as of 30th June, our weighted average cost of debt was 7.51%, which is a reduction by about 61 basis points in the last one year. This graph may be of interest to our investors and analysts. This basically shows how the various categories of businesses that we operate in, how they have performed. The first leg of the graph is basically the first wave, which happened last year, and it shows how the journey has panned out. So the light blue color line is the Oberoi Leisure property as you can see in the legend, which has really picked up the most. And as you can see, the recovery after the second wave is even steeper, the gradient is steeper than the recovery that happened after the first wave. Now again, I would definitely like to repeat that these are all green shoots at the moment. And obviously, we won't know how things pan out, but this is exactly how it stands. And if you really carefully note, you would see that leisure, both for Oberoi Hotels -- I mean, Oberoi branded hotels and Trident branded hotels are -- follow a same or a similar trajectory. At the same time, the metro properties are also beginning to show some green shoots, and we just hope it will get better on from here onwards. This is trajectory of the occupancy and the ARR versus we've taken 2019 as a normal year, although the last month of 2019, '20, which was March 2020 really was a washed-out month. But generally speaking, if we were to compare 2019 with what is happening now, I think occupancies, as you can see the graph, it came down after the first wave -- after the second wave kicked in. And then it has started increasing again. And really, it's difficult for us to speak on the call about July figures, but as you can see, June was also on an upward trend. The better part of our story, I think, is in the ARR, where we are almost inching in towards normalcy on an overall basis as we speak. So in June, as you can see, our ARR was 8,728 against the same month ARR in 2019 of 9,300, which is a difference of about only INR 500 to INR 600 And these trends are, in fact, better as we move along in the months.

If I could just add to what Kallol is saying, based on the calls we get at OCC, our website visits and how we're performing in terms of occupancy in ARR, we continue to be cautiously but optimistic that these lines will continue to move positively going forward?

So the ARR and occupancy trends, again, the same story, as you see, leisure is the story here. Oberoi Leisure, in fact, the Oberoi branded leisure properties have outperformed in terms of ARR versus 2019. Trident Leisure is the same. The ARR is up by about INR 1,000 more than 2019. The Oberoi Metro properties and all of the metro properties actually are slightly lower as of now. But again, the movement is in the right direction. So here you see there's a comparison with the market penetration index with the revenue generating index. EIH continues to trend higher and Oberoi Group of Hotels continues to trend higher, and that is going to be our objective to remain market leaders providing the best value and the best services to our guests, albeit at a premium. We move on to the next segment, which is basically to revitalize. And a number of steps have been taken in respect of we've used this period of the pandemic to strengthen ourselves in terms of health and safety, in terms of increasing our process efficiencies, automation, technology, rationalization of fixed costs. And a lot of effort is going in, has already gone in and it continues to go in towards environmental consciousness. So we are moving towards an extremely environmental conscious company and some of the measures that we've been able to take over the last one year has been highlighted here. To begin with, in terms of safety and hygiene, we are proud and happy to share with everybody that we've been awarded a platinum rating for all hotels by the international agency, Bureau Veritas. We've also been awarded as the safety and hygiene protocols by, and this is an Editor's Choice Award from Travel & Leisure. Would you want to add anything, Vikram?

No, no, that's fine. Maybe I'll just add one thing. The safety of our guests and our colleagues is paramount as far as our organization is concerned. And we ensured that everybody who is eligible for vaccinations were -- in fact, we completed the task before the end of June. We've set ourselves a deadline of end of June, we actually completed that prior to that. So that every single employee or whether it's employee or even third-party contract who's had an Oberoi Hotel or a Trident Hotel has been vaccinated. And we continue to monitor that so that when people are eligible for their second vaccine, that happens too. We do have some people who had COVID who haven't been vaccinated. And as soon as 3 months passes from the time of the vaccine, they will be vaccinated as well. But anybody who comes to an Oberoi or Trident Hotel, all our colleagues who report to work have been vaccinated, and in some cases, will be vaccinated as soon as they're eligible for 3 months period being that. We play a great emphasis on safety and hygiene for the safety of all our guests and all our colleagues. And we follow safety and hygiene protocols without compromise.

Thank you, Vikram. So this is essentially one of the legs on which our revitalizing strategy rests because we believe that as leaders in the world of hospitality, it is safety and hygiene which is of paramount importance to us, and therefore, it's important for us to consolidate at this point of time. Likewise, we've used the last one year to increase efficiencies in our processes. And I won't read out all of this, but the kind of -- you all heard about the Oberoi Center of Excellence, that was established about 1.5 years back. And it's really helped us achieve a lot of milestones in respect of procurement, where it's really helping us for standardizing our products that we purchase, price rationalization, economies of scale, consolidation, transparency technology and digitization, e-auctions, vendor portal and an optimized procurement pay cycle. Likewise, our budgetary controls have improved a lot. After we've implemented the centralized systems operating from the Center of Excellence we actually today have a cockpit view of the entire company up to the last level of detail sitting in corporate offices or anywhere from -- for that pattern. And that really helps us to maintain a lot of sanity check on what is happening around. Tax compliances have improved a lot, and I'm happy to share with everybody that 13 of our units, which has been managed by the Oberoi Center of Excellence, have received a certification of appreciation from the Ministry of Finance for prompt filing of returns and payment of GST during the financial year March 31, 2021. Likewise, there's been a lot of improvement in accounts receivables, which is really, if you look at our balance sheet numbers, you'll see accounts receivables have improved a lot. Accounts payables at the same time has also improved in terms of our timely payments to our vendors, ensuring transparency through using of vendor portals. Our financial closing, you would have observed has taken lesser time. This time we closed the accounts 3 weeks ahead of what we normally did in previous years. And that's all been possible because of the automation that has been done and the processes that have been really tied up all towards one common objective. I won't really belabor on this point on other processes, and it's all available on the screen, plus on the presentation that has been provided to the stock exchange. So in case of any questions, any specific questions on any of these initiatives, we are happy to really elaborate on. And maybe in times to come, in the quarters to come, we will see more of this quantifying into positive results in terms of efficiencies and cost rationalization. And as and when we are able to quantify them, we will definitely come out and share with you these numbers as well. The financial agility is demonstrated by a way of a much more stricter payroll where we've been able to rationalize human capital in terms of a 24% reduction. And this reduction is mostly driven by, again, as I said, process efficiencies in terms of multiskilling. And that has helped us ensure that wherever there's a vacancy or where people have resigned, we've not had to fill up those vacancies, and we've been able to manage with our current workforce. Likewise, this is visible almost in all the areas, and this cockpit view that I spoke about that really helps us in maintaining a very tight control over our operations. I think the benefits that I talked about really comes from people, guests and company. From people by rotation of job profile, progression to senior positions within the company or outside and increased employee satisfaction. From guests by way of exceptional guest service encouraged by a culture of multifunctionality in terms of company people efficiencies, talent development with new knowledge and skills. In terms of automation, there's a great deal of work that has gone in again. We work on a totally automated document management system or digital. So we, practically, we are paperless whether in the front of the house or in the heart of the homes. All our processes are workflow based. So therefore, generally, any approvals, et cetera, is all on devices, whether it's mobile devices or on our iPads or laptops. There's a process of seamless consolidation, which again helps us in proper and timely closure of accounts. Robotics is an area where we have invested and we continue to invest where repetitive tasks which are done by software technology saves valuable human capital time and thereby reduces chance of errors and frauds. Our banking is today 100% online. There's not a single check that is issued on paper. And there's a lot of information integration amongst all our software, and I'm sure people who are aware of the leading software that has been used in the hospitality industry, the opera micros, SAP, sales force, et cetera, these are all integrated, and that is really a benefit for all of us. Talking of environment, this is another area which is of great passion for our company. We are happy to announce that 4 of our hotels, which are managed by us, out of which 2 are owned by EIH, we have now installed solar plans, and a couple of pictures are provided here. So this capacity is -- it gives us a combined capacity of roughly 3 megawatt, and we are expecting to generate about 4.2 million units per annum, which reduces the carbon footprint by about 30% to 40% in these hotels. The annual estimated cost reduction -- there will be an annual estimated cost reduction of about 86% cumulatively taken. And again, I'm happy to share with everybody our focus towards renewable energy has ensured that many of our units today, hotels and units, at least 10 of them have been listed out here which are on renewable energy. So the Oberoi and Trident Gurgaon are on 100% solar energy. The Oberoi Vanyavilas is the is location where these pictures have been provided for, where we have solar plants catering to about 40% of our total energy requirements. The Oberoi Udaivilas, Trident Agra, Trident Udaipur, all of this has got solar plants installed on premise. At the Oberoi Bangalore, Trident Bandra Kurla -- at the Oberoi Bangalore, Trident Chennai and Oasis Chennai, our power is basically wind power. And at Trident Bandra Kurla, 50% of our power is from wind power. We continue with this mission. And as we move forward in the years to come, the objective and the endeavor to really reduce our carbon footprint and make our business more responsible as and when we go ahead. As part of our initiatives, this is another memorandum of understanding that we have signed with the government PSU Energy Efficiency Services Limited. This is one of its kind in this industry. This is the first one that has been signed which is going to help us implement a lot of energy saving measures at very reasonable costs given the muscle of the company, EESL, in negotiating the best prices from original equipment manufacturers. So not only is it going to help us conserve energy, but it is also going to reduce cost for us. The third dimension of environment is air, and as you can see, this is a screen shot from the Oberoi New Delhi taken on 30th of July, which is today where the hotel air quality in terms of PM2.5 is at point -- is at 4 compared to 20 in London and 106 in New York. So this is something that really speaks volumes about the clean air that we really are striving to achieve across our hotels. In terms of water hygiene, we have installed environment-friendly disinfection systems. All hotels have a centralized ultraviolet water disinfection system. These microprocessor-based systems are operational around the clock to ensure water hygiene and the UV systems are environment-friendly as they have offset our consumption and dependence on oxidizing disinfection chemicals like chlorine. We have our efforts going in towards wastewater management as well. All hotels have sewage and wastewater treatment plants that enables us to treat used water to high-grade recyclable quality treated water and which is used for irrigation of our lawns, of our gardens, air conditioning, cooling towers and flushing systems. The recycling of used water not only reduces our usage of freshwater, but also helps in conserving groundwater resources and municipal water resources where we use. So we believe that all of these measures, and this is the last one, heat pumps, which replaces fossil fuel-based water heating boilers, which we are installing at our several hotels, all of these measures are basically to ensure that we use this period of the pandemic to really work on these measures and make sure that we flourish as we go ahead. And like Mr. Vikram Oberoi mentioned, our focus is on vaccination of our employees. So we believe that when the COVID really -- the pandemic comes to an end and normal times return again, we will be in a position to flourish with our leadership in domestic leisure, food and beverage, our alliances and guest recognition. I won't dwell much on this slide because this is a repetition essentially of what I said earlier where our Oberoi Leisure properties continue to feature on the right most quadrant in terms of performance. There are some figures here, which again shows that the recovery of RevPAR in the current year as compared to last year has been good, and they continue to be good. What we actually see in the year 2021 is a sharper recovery. But again, we'll have to wait and watch as to how things pan out in the months to come, especially with the talk of the third wave. So I leave it to you all to really go through the presentation. And in case of any questions, we'll be happy to answer. Food and Beverage revenue has also gained traction. We are -- actually our focus on Food and Beverage revenue continues. As you would have noted that we've opened 2 restaurants which are doing very well in Bangalore and a bar in Bombay sometime back, which is again, a state-of-the-art bar. And therefore, our focus on Food and Beverage continues. We mentioned about the O&MO Alliance, the alliance with Mandarin Oriental. Essentially, this will really come into play when international travel starts where guests who are loyal to both the groups will have access to hotels of each other when really traveling starts off. Efforts are on for enhancing brand awareness. Finally, coming to the financial results of the first quarter. The revenue from operations has increased versus first quarter of last year from INR 28 crores to INR 79 crores, and the total revenue up from INR 38 crores to INR 90 crore. Total expenditures increased by 15% from INR 153 crore to INR 176 crore. Our fixed expenses, and I'm sure this question is there in any of your minds because we keep getting this question from investors, so I'll probably try and preempt the answer. Our decrease in fixed cost is about 25% odd. And out of which we believe at least 15% of the cost is sustainable in nature and in the future will not come back again. We, of course, ended the first quarter with a PAT loss of INR 93 crores versus INR 118 crores. But we definitely look forward to more optimistic times in the next couple of quarters. This is the consolidated results, and these are available in the newspaper as well today. The business footprint for those who are joining us for the first time, just to show the architecture of how the company operates with its subsidiaries and with its associates and our presence in India and abroad. Thank you so much. I will stop here and we look forward to whatever questions you would have, and we are happy to address that.

We now open the floor for Q&A session. [Operator Instructions].

Sorry, Naveen, if I may ask you, you probably want me to transfer the host?

Yes, please. Yes, so I can just moderate the Q&A.

Tell me the option, please?

Yes. [Operator Instructions]. Okay, the first question is from the line of Sanjeev Pandiya of Old Bridge Capital.

Can I be heard?

Yes, yes.

Sir, I noticed that your room rents are rising faster than your occupancy. So would it be fair to say that at this stage, you are trying to hold the price line and expecting an uptick in occupancy despite the fact that -- so it's not really a commodity price. It's really that you're betting on some of -- a surge in consumption, and therefore, the price line is being held? This is not the natural ARR that one would expect.

Sanjeev, thank you for your question. Actually, we really look at balancing room occupancy with average room rates as well. So we look at both occupancy and room rates. And I can't talk about how we're doing this month. But all I can say is that our strategy to maximize room revenue -- RevPAR is showing results and will continue to show results

The next question is from Priyanka Khandelwal from IPru AMC.

Am I audible?

Yes.

Okay. Sir, can you help me understand or provide any parallels from the recovery in global business travel? And given your conversations with corporates in India, are there any parallels that you can show or the recovery in upper upscale and luxury business travel over the next 2 years or so?

Priyanka, thank you for your question. If I understood your question, your question is based on what's happening elsewhere in the world where vaccinations have progressed better than what's been done in India, what is the trend of both corporate and leisure travel returning. I know, for example, in the U.K. and the U.S., where vaccination rates are high that leisure, of course, bounced back quicker. But I also understand that business travel is returning. And many companies have now directed employees to return to offices which you would have read about because what we can achieve by working face-to-face in terms of culture building, values, et cetera, can't be done online. So we're optimistic with vaccines rates going up. And keeping in mind that many of our guests are amongst the first to be vaccinated, whether they're corporate or leisure travelers in large cities where most of our travel comes from, I think our bounce back will be quicker than perhaps the rest of the country because of high vaccination rates amongst our guests. And of course, I need to add that our colleagues have all been vaccinated

Understood. And my second question was, where is the company employee room ratio now? And how much do you think is the sustainable level? And also, if you could highlight what is the global standard of employee to room ratio for luxury hotel? And do you target to achieve that in the quarter?

Thank you. So Priyanka, we've reduced manning by just under 2,000 people. That's about a 30-odd percent reduction. Not all of this will be permanent in nature. Some of it will come back as business levels pick up. As far as benchmarking with others, I'm not aware of this data being published. So I don't want to hazard a guess unless it is authenticated data on where others lie. What I can say to you is that we continue to focus on multi-skilling. We continue to deploy technology. We continue to run -- endeavor to run our hotels as efficiently as possible. And this is a target that keeps moving. So we will endeavor to continue doing that, both during the pandemic and after the pandemic.

But is that a number that you can quantify?

Yes, we can. I don't have the number with me, but Kallol may have the number of people today. A number of people today -- no, number of people are I think it's about 4,000-odd people. Priyanka, I'll come back. Let me just have a look. I should have that number. Just one...

Sir, no worries. I can take that offline. Not a problem.

Just one second, I'll be able to probably give it to you right now. Actually, I'll let Kallol look it up and we'll give that to you.

Yes, it will be about 4,500 like...

And it was 2,000 -- slightly less than 2,000 prior to the pandemic. So it was -- if it's 4,000 -- I think it's about 4,500 now. It was 6,500 prior to that or 6,400 prior to the pandemic.

Okay, that's very clear. And the last question I had was on your loan rate. So say if international travel recovery, I mean, inbound travel does take a certain amount of time to recover, like say, 1 or 2 years. Is there a quantifiable impact on your ARR because of that? Particularly for the Palace Hotel?

Well, again, what we've seen is that our hotels, and that was reflected in the figures that Kallol shared for our leisure hotels, Oberoi in particular, we are already running higher rates than the rates in 2019. So our belief is that guests in India have the propensity to pay those rates and that's clearly demonstrated by both the average room rates and the occupancies at Oberoi Leisure Hotels. And this trend is only stronger in the month of July.

The next question is from Amit Agarwal.

This is Amit Agarwal from [indiscernible] Securities. My question primarily relates to your topline of [indiscernible] about INR 96 crores. Earlier given a breakup of the rental revenues to the F&B revenue, if you can help me with the breakup in this particular quarter and has a decline on a quarter-on-quarter quarter basis being driven primarily with the all-in F&B revenue? That is first question. Second question, following up with the -- over previous question -- the previous question asked, as I understand today, the growth is coming, if I may put it this way, from revenge tourism because people are probably tired of sitting at their home. MSME is not working right now. Your corporate is probably just thinking about it. International travel is not happening. So if there's a third wave or something, is it sustainable? Just on this particular thing. I know it's -- I'm stressing a point, but just your views on that please?

So I will let Kallol give you the figures on rooms versus Food and Beverage, but there has been a larger contribution to Food and Beverage than rooms in -- than it was previously compared to the previous quarter of -- or even 2019. So that SKU has taken place. And Kallol, do you have the exact...

In 2019, it was -- the ratio was roughly about 60:40, which was about 50:50 in the last year. And now we're returning, it seems that the trend is returning back to similar levels like 2019. But we'll have to wait and see as occupancy gains more traction, probably a clearer picture will emerge.

What I was trying to figure out is what is the reason for a drop on a quarter-on-quarter basis for topline? So that was -- is it the F&B fall or is the room rental fall?

Sorry, Amit, just to verify, there isn't a drop in revenue in the topline.

Quarter-on-quarter, quarter-on-quarter. Last quarter, it was INR 216 crores. This quarter, it's INR 96 crores. I'm looking at it on a quarter-on-quarter basis.

Certainly, Amit. And Amit, I'm happy to answer that question, or Kallol and I can both give you, answers will be the same. We had the second wave. I think it started on 18th of April or when lockdown started to happen state-wise. And in April, therefore, the latter part of April, occupancy levels were low. Even Food and Beverage was low. We didn't have that in Q4 of last year. And then if I look at May, May was regrettably a total washout with occupancies plummeting with the number of COVID cases going up. And we saw things the economy start to relax or restriction start to ease in June. And we've seen, therefore, business pick up. So if I were to just say what the biggest difference is, it was that we had a second wave in Q1 in the months that I've explained, and that didn't exist in Q4 of last financial year. So that would be that. Your second question was on the third wave and also on MSMEs. Actually, we're starting to see some green shoots on MSMEs, and we're going to launch some initiatives, particularly for MSMEs. So that's one. If there's a third wave and it's a serious third wave, which I don't think will happen, at least my assessment is, and I hope I'm right because of vaccinations going up, we may see the number of COVID cases increasing, but what we will see, based on what we're seeing in other parts of the world, hospitalizations being low and fatalities being low, which is the most important part. If a third wave weren't to happen, then we will see business bounce back, God forbid if a third wave happens, whether it's business or leisure, travel will significantly decline.

Sure. If I may just squeeze in one last question. What's -- in the next coming year and probably for next 1 or 2 years, what will be your CapEx and any new hotels which you are looking to open in the next, let's say, 2 years, I don't want to restrict it to one year only?

Amit, we are still completely not come out of the pandemic. As you know, our CapEx plans we've said in the past that we -- our CapEx plans are all there, albeit they are staggered. It depends on how things pan out going forward. So really speaking, I think it will be too early to talk about CapEx figures going forward. Maybe in the next couple of quarters, things will become clearer. Projects, our 3 projects, in fact, our Executive Chairman today in the AGM did speak about the 3 projects which are on and which he expects by FY '25, we will have all these 3 projects in operation, which is Rajgir, the project in Bangalore and the project in Goa on our own.

We have the next question from [Venkat Samla.]

Just wanted to understand, last time -- or for the last 2 quarters actually, you mentioned that you're thinking of coming up with some new revenue initiatives which could also include some of the segments or subsegments that you may not really have a presence in at this point in time. Just wanted to understand what has been the progress on that front? And how soon can we hear [Technical Difficulty]?

So one of the things that we've already done and that information is available on our websites, both at Oberoi and trident.com is the experiences and packages that we've launched. We're also looking at other initiatives to drive revenue, and I would be -- it would be premature for me to mention those on this call. I hope you understand. But things that have been launched are all available on our website.

So Venkat, just to add to what Mr. Vikram Oberoi said. In the last 2 quarters, of course, the second wave came in between that. So maybe it is not -- the plants have got a little stretched, so please wait for the next few quarters, and you'll hear the announcements whenever they happen.

Sure. Sir, I mean, I'm just trying to understand. I mean what will be the latest that we can hear on [Technical Difficulty] I mean, given the broader caveat that no third wave will happen.

I couldn't hear the question, I'm afraid.

Your line broke. So we couldn't hear the question, I'm sorry.

Hello, am I audible. Yes [Technical Difficulty]

Venkat, there is some connectivity issue. Your voice is breaking. Your question is not audible. The next question is from the line of -- from Sumant Kumar.

Sumant here from Motilal Oswal. So my question is, can you talk about the recovery in the business in the month of July? And how is the business -- in the key cities I'm talking about, not leisure business?

I'm going to let Kallol answer this question. I'm a bit concerned on what I can and cannot say. So Kallol will be a better judge of what can and cannot be said. Obviously, we'd like to share as much information with you as possible, but we need to be mindful of disclosures. So Kallol, go ahead.

Thank you, Vikram. So yes, Sumant, you are well aware of the disclosure requirements, et cetera. July is the first month of the second quarter. So we'll not get there. But to answer to give a sense of the trends, yes, trends are healthy. They continue in the same direction in which you saw the graphs that we showed earlier from June onwards. In fact, some of the cities, the gradients have been steeper. And as I shared, the analogue details also, which really says that there is some good traction picking up in the cities of Delhi and Bombay. So we have a similar view. And July also is the same. And we would add to that. In addition to that, the leisure locations are really, really picking up well as we go forward.

Talking about overall hotel industry has a higher fixed cost in the pandemic, say, 65% fixed cost and 35% valuable cost. So what's your view where post-pandemic, where the -- how is the mix going to be post-pandemic?

Sumant, if you recall, I already preempted that question, to say that we expect a 15% reduction in fixed costs, which is sustainable. And obviously, there are some savings in the variable cost as well in terms of better negotiations, et cetera, because of processes and those have got nothing to do with the pandemic per se, but in any case, we were looking at process efficiencies. So I'm sure you can derive from that the percentages between fixed and variable costs as we go forward.

Anyway please update us on air catering business?

Sure. So air catering business, we've actually got quite a few airlines domestically. And I suppose you're referring to the Indian Air Catering business, right? You're not talking of Mauritius?

Correct.

So the Indian Air Catering business, of course, with flights not operating, I mean, international flights not operating and operating only on bubble routes, that's really not going good so far except that in the months of May -- April and May, there was -- and you would have seen in the media that there was a lot of student visas, et cetera, that were granted. So some business traction we saw there. But at the moment, as we speak, it's mostly domestic, and we do have some increased business from some of the domestic players.

So any sense on how things are panning out, how the performance, the main number?

Kallol, anything on numbers that we can share?

Sumant, I mean, as you're aware these are only trends that we can discuss. And only the first quarter has gone by, we have 3 quarters to come. And hopefully, if things go the way they are, then obviously, we are cautiously optimistic.

May I just add a couple of things, Sumant. Sumant, first of all, we know that domestic travel has started to bounce back, and that was also in the HVS report, barring a third way we expect that trend to continue. I think it's going to take some time before international travel really comes back, maybe whether it will be in the last fourth quarter of this financial year is your guess is good as mine. But we are trying to secure revenue with the airlines that are operating today, and we'll continue to do that. So I don't know if that helps answer your question. Thanks so much, Sumant. Nice to speak to you again.

We have Venkat back online. Venkat, would you like to go ahead with your question? We have a question from Sunil Jain, please go ahead.

It was a very informative session. Maybe just -- maybe a repeat question, but I think I have not got the answer See, we are seeing that this is a revenge spending that is happening on the leisure segment. And on the business segment, I do not see at least 80%, 90% of the corporates are still having the hostility measures in terms of travel. So how are we going to see or how do you foresee the revenues coming up, this is some total of business travel as well as leisure travel or the corporate level as well as the leisure level because this is a blip what I can see in terms of revenge spending? What after 2 months?

Sunil, may I ask you a question? What is -- what data do you have to indicate that this is data that assists to indicate that this is revenge tourism or a large part of it is revenge tourism? Is there any data that you've read that substantiates that?

Not data exactly. But actually, I see the spike that has come in the last 2 months, that was never there in the last previous 3 years in these particular months. So that corroborates that this is something that people want to go out.

And that maybe I can explain, Sunil. I think the biggest difference that has caused that spike is not revenge tourism. In my view, it is because our Indian guests who were traveling overseas, we have something like 25 million Indians or 25 trips that Indians make overseas is not happening. Even if you compare that with our foreign tourist arrivals, it's small. And because people can't travel overseas, they're traveling in India. Now with the Delta variant, we're not sure there was some data that was published yesterday on infection rates, et cetera, across the world. I think it may be some time, and again, your guess is as good as mine, when international travel from India at least will resume. So barring that happening, I think there will continue to be strong demand. And in fact, I would say, with the winter months approach, that demand will become even stronger.

Thank you, Sunil. We have a question from Vikas Ahuja.

So I have couple of questions. Number one, can we talk about our expansion strategy, maybe not in 1 or 2 years, maybe in medium term, how much we are planning to add, maybe not build, but on management contracts because clearly, if you look at our peers, they have been very aggressive in adding rooms and think that COVID has kind of given them an opportunity to add on market share? So if you can comment on this first.

Sure. And I'll ask for help from Kallol in answering this, but I can certainly start. I think, one of the things that Kallol mentioned in his presentation that -- for us, it's very important to be the best and to run the best hotels, have the highest levels of guest satisfaction, et cetera. So our focus will continue to be in that premium segment of travelers who stay at Oberoi Hotels and also Trident Hotels. We absolutely are committed to growing. In fact, I'll just talk a little about the projects that my Executive Chairman mentioned in his Chairman's speech today at the AGM. We're developing an 8-acre site on Hebbal Lake in Bangalore. That's 1 million square feet, and that includes both commercial and the luxury hotel. So that's a large project that we will be undertaking. We have a fantastic site in Goa. It's a 55-acre site, and we'll be developing an Oberoi Luxury Resort on that site. And the third one, which is the most beautiful Palace in Rajgir, very close to Khajuraho. Khajuraho is an important tourist destination, and we're developing a hotel there as well. In addition to that, we will, with the right partners in the right location and for the right hotel, look at management contracts. In fact, we opened another hotel, a small luxury resort in Madhya Pradesh, it's in the Kanha reserve. It will open next year - sorry, in Bandhavgarh, it will open next year. So -- and that is purely a management contract. And internationally, we have a number of hotels that are under development, for example, Doha, which is currently being constructed which is also a management contract.

Sure, and just one clarification, when any management contracts come in the market, do we mostly participate in all of them in which maybe Indian hotels and others are participating? And secondly, my other question is also once more people are vaccinated and I assume maybe in 9 months or so, hopefully I think the demand is going to be one of the best and we will see one of the best data for maybe hotels in maybe a decade? Clearly, U.S. is entering into one of the best times, actually entering more of a Goldilocks era. And now many foreigners are talking about Europe following in 6 months and Asia following in 9 to 12 months. So maybe when we talk about FY '22, '23, '24, the demand is going to be very, very strong. And how we are planning to capitalize, especially if we have come up with any kind of a digital strategy where in terms of making it more around digital and less human factors, I think if you can just answer that?

Sure. So in terms of the future being better than we've seen before, I hope that's the case. And I agree judging by what seems to be happening in places where vaccination rates are high, I think we have good reason to be cautiously optimistic. So you may well be right and for our industry's sake, I absolutely wish and pray you're right. We share your view on that. As far as our hotels are concerned, we cater to the luxury segment to guests who are willing to pay a higher rate for quality, and that's clearly been demonstrated both in the past and present given the rate premiums we -- and the RevPAR premiums we command over our competitors. We will continue to focus on that. And I just want to say one other thing, with the pandemic people want to be sure, people will pay a premium to be certain that the hotel or the company they're selecting has the highest standards of safety and COVID protocols. And I think with that in place, we're in a good position. Our guests really appreciate everything we're doing as far as COVID is concerned. We get great guest feedback. And as travel continues even when international travel returns, guests would be willing to pay a premium for staying in hotels for that very reason. And I think that puts Oberoi and Trident Hotels in a very good place, not only today, but also in the future.

That's very helpful. Just one last question. In terms of our corporate booking, is it possible to get maybe some kind of cost that how much of it comes from maybe technology or consulting side because clearly, their growth has picked up massively and the hiring has been very, very strong. So if we have that data?

We absolutely have that data. I just don't have that data on me, but we absolutely have that data. And I'd like to also say some things that we've been doing right from the beginning of the pandemic. Obviously, all of us want to be able to predict what's going to happen in the future. And one way -- so we've been talking to our corporate clients formally through a questionnaire, and we asked them questions on their travel patterns, on business, and we break that down by the size of the company, whether it's a multinational or not and also the business that they're in. And we've been doing this periodically. So the insight that we get, I hope, will be able to not only see what -- how they've responded to in the past, but what their responses could be in the future and how that will help us drive business to our hotels.

I think we can take the liberty of squeezing and just a couple of more questions before we wind up. I see a few hands up who have already had an opportunity. Venkat, would you like to go ahead now? Okay. I guess he's still facing some problem. Sanjeev Pandiya, do you have another question?

No, no. I'm done.

Okay. And Sumant Kumar, the last one, any question from your end?

No.

Okay. So since there are no more questions, I would now like to hand over the conference to Mr. Oberoi for his closing remarks. Over to you, sir.

Would you just give me one moment?

Sure.

No, I just want to thank everybody for joining on, on the call. I saw we peaked at over 90 participants. So thank you. Thank you for your support. Thank you for believing in our company and in the service we provide to our guests. And we look forward to business conditions improving in the next quarters and in the next few years. That's a little so pointed out. Thank you very much. Naveen, my sincere thanks to you as well for your help with this and for organizing this. On behalf of Mr. Oberoi, who is sitting with us in the office, our Executive Chairman; and of course, Kallol and myself.

Thank you, Mr. Oberoi.

Naveen, thank you so much. Rajeev and Mr. [indiscernible], and everybody else on the call. It's always great to interact with all of you, and look forward to interacting with all of you again in the next quarter. Thank you so much.

On behalf of SKP Securities, I'd like to thank Mr. Oberoi and Mr. Kundu for their time. We look forward to hosting you again. Thank you, ladies and gentlemen.

Thank you.

Thank you so much. Bye-bye.