EIH Limited (EIHOTEL) Earnings Call Transcript & Summary

Ladies and gentlemen, Good day, and welcome to the EIH Limited Q2 FY '22 Earnings Conference Call hosted by Nirmal Bang Equities Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Amit Agarwal, Research Analyst at Nirmal Bang Equities. Thank you, and over to you, sir.

Thank you, moderator, and good afternoon, ladies and gentlemen. On behalf of Nirmal Bang Institutional Equity, we welcome you all to the Second Quarter FY '22 Results Call of EIH Limited. At the outset, we would like to extend season's greetings to all and trust everyone is keeping well and safe. The EIH management today is represented by Mr. Vikramjit Oberoi, MD and CEO; and Mr. Kallol Kundu, CFO. At this point of time, I would like to hand over the call to the management for the opening remarks, followed by a Question-and-Answer Session. Over to you, sir.

Good afternoon, ladies and gentlemen. Thank you for attending this earnings call for quarter 2 for EIH Limited. I’m Kallol Kundu. I have Mr. Vikram Oberoi with me on this call. I'll quickly take you through the presentation that was uploaded some time back in the -- on the stock exchanges and on the website. Just to give an overview of where the industry landscape stands as of now, we've seen domestic air traffic increased by about 5.4% month-on-month in September, which takes it to about 73% of the pre-pandemic level with easing of travel restrictions, especially in October, decline in COVID cases, an aggressive vaccination campaign in the country, things appear to be on its path to normalcy. The hotel industry recorded high nationwide occupancy rate, since the onset of the pandemic. Now Chandigarh, Gao, Pune observed the highest occupancy growth year-on-year. And a gradual resumption of corporate traveling is assisting in the recovery of hotel demand in places like Bengaluru and Pune. Of course, we are present in [ Bangalore ], which was previously underperforming. These are all statistics from HVS Anarock. And the increasing demand is assisting in the recovery of daily -- average daily rates in almost all markets. There are some slides and some information, which have been reported in various news articles, which have been captured in the presentation that we've uploaded. But to give a sense of the Indian hospitality industry, vis-a-vis FY '21, the ADR of the industry as a total, considering medium and the recent events as an average, was around INR 2,000 to INR 2,400 in the month of September, which represents a 20% recovery from last year. And the occupancies have increased by about 30 percentage points. And the RevPAR has effectively increased by about 164%. If you look at EIH, the recovery has been steeper both in case of hotels, which belong only to EIH Limited, which is about 200% plus, ranging from 200% to 400% vis-a-vis our performance in the last year same quarter. But also in case of -- if you take all the domestic properties into account, which includes managed hotels as well. So effectively, if you would see on the right, the last year, RevPAR index, EIH was at 1.34. And if you took all the domestic hotels, the RevPAR would have been -- index would have been 1.2, which is currently above 1.9, respectively. So that's the overall picture of the industry. Our outlook, we continue to follow our mantra of endure, revitalize and courage. We continue to have a robust balance sheet, net worth steady, strong asset base, which, of course, in the going -- in the years to come, it will probably increase. Total debt is marginally higher as compared to 31st March '21. But again, with increasing cash flow, this is set to improve. The weighted average cost of debt as on 30th September 2021 was 7.35%, which is a reduction of 10 -- of 9 basis points in the last 1 year. If you look at the slide on RevPAR recovery, and this slide is basically a recovery. It's not the actual effort, it's the recovery. So you would see that the Oberoi Leisure segment has really the blue -- the line has recovered a lot almost 200%, followed by the Trident Leisure and thereafter Trident Metro, [ Grand ] Metro and the others. So the recovery has been quite solid in the current quarter. Then covering domestic properties as a whole as compared to 2019, '20, which was a normal year pre-COVID. We are inching towards close to that, if you take all the domestic properties into account. And then as we speak in July and August and September, we range between 50% to [ 56% ] at an ARR of 8,500 roughly against an average occupancy of about 65% in a normal year versus about 9,300-odd average room rate. So we are moving in the right direction. If you look at city wise, you can see the recovery. We have seen the maximum recoveries in Himachal Pradesh and in Rajasthan, followed by Karnataka and then the other states, Uttar Pradesh, et cetera. Moving on, as you see in case of the domestic properties that we have, again, including all management contracts. The recovery versus quarter 2 in financial year '19/'20 has been the highest at Trident Leisure and Oberoi Leisure properties, so again leisure. But as we speak, city hotels are also beginning to pick up better. I think as a brand, as a company, we manage the 2 brands of Oberoi and Trident and the brand promise of being the best continues to hold for us, thankfully. As well as on revenue generating index, which is above 100%, as you can see the lines in the graph. The other icing on the cake has been F&B revenue, where it's seen a very good recovery. In fact, in quarter 2, it's almost 450% And the quarter 2 revenue in the current year is higher than last year by almost close to INR 100 crores. Oberoi Leisure, I don't want to repeat this, but it has been outperforming expectations. If you can locate the 2 dots in between which is quarter 2 of FY '22 versus quarter 2 of FY '20, you'll see it quarter 2 of FY '22 is better placed than even quarter 2 FY '20, which is a very healthy sign. Domestic properties, again, the recovery has been overall as the RevPAR recovery as we've shown here. Overall, the first half witnessed a sharper recovery in RevPAR as compared to the first year. Moving on, I think, in terms of revitalizing our safety standards continue to be premium, have been rated as Platinum by the Bureau Veritas. We've also got the Editor's Choice award as the best safety and hygiene protocols. 100% of our eligible employees have been vaccinated. In fact, 89% of our employees are already double accelerated. The rest of the 11% are not yet eligible and as soon as there are eligible, they will vaccinated too. Moving on, I think we continue with the efforts of transformation in terms of technology. The Oberoi Centre of Excellence continues to improve. And in various aspects as indicated here in procurement, financial planning and analysis, tax compliances, accounts receivable, payables and financial closing, there has been substantial improvement, including the management of treasury, which really brings -- has let us keep our interest costs, et cetera, steady. And of course, dashboarding and data analytics which has helped our management across properties and at corporate office to monitor performance. I think on an overall basis, on a consolidated basis, financial agility is the way to go, and we have been, as a company, been able to demonstrate that. So on a consolidated basis, where revenue has increased about 192%, the expenditures fell by about 39%. So -- which is healthy in our sort of estimation. For the stand-alone basis, it's even better, where the revenue has grown by 213%, expenditure has grown by 37%. And in our previous earnings calls, we had mentioned about fixed cost reduction and how much of that would be sustainable. We're happy to state that in the quarter 2, as things stand, the fixed costs have come down by effectively 17%, which we believe is going to stay the way -- at the same rate. It's not going to increase. So hopefully, we've been able to come to a trend line which is more or less steady. The next slide will show you efficiencies in expenses, total expenses is down 21%. Fixed costs have been down 16% overall, and corporate cost has come down by 28%. All of this resulted in a positive EBITDA for the company in quarter 2, albeit a small one. But I think it's a starting point. Our digitization and automation efforts continue in maintaining and creating more automation in terms of document management systems, process workflow-based processes, seamless consolidation, robotics and so on and so forth. The Oberoi Group's philosophy has been to move towards ESG initiatives in a big way. And in reducing our carbon footprint, this has really resulted in 2 plants, 2 solar plants being commissioned at Oberoi Vanyavilas and Oberoi Udaivilas, which -- and there are 2 other properties that is mentioned here, which belong to [ yet ] -- associated hotels, which is managed by the EIH Limited. So we are expecting to generate about 4.2 million units per annum, thereby reducing the carbon footprint. And as the next slide will show you that even under the current circumstances, hotel The Oberoi, New Delhi continues to maintain air quality, which is better than the standards of most facilities in the world. Moving on, there is the performance highlights. I'm sure all of you would have seen the performance results as reported and in the stock exchange or on our website. But just to give a glimpse, our total income was at INR 217 crores on a stand-alone basis as compared to INR 69 crore of last year. And we had an EBITDA of INR 3 crores, as I mentioned before. But at the PBT level, it shows as a loss of INR 33 crores with exceptional items, which we have chosen to take a conservative position and we have impaired about INR 27 crores worth of expenses of our [ one-off ] assets. Resultantly, the PAT is at minus INR 50 crores and is against minus INR 115 crores in the quarter of the previous year. On a consolidated level, the total comprehensive income is better because some of our subsidiaries and associates have performed exceedingly well. So one of our associates, which is -- sorry, subsidiaries, which is Mashobra Resort Limited has actually contributed very positively and therefore, the overall comprehensive income, the loss has come down. On flourishing, I think one of the things that would be important for us to take as it [ occurs to take ] to add wherever we think necessarily. So we're looking at a very strong brand positioning and within these very clear focus areas. To make sure that the brand is visible, more visible in the luxury segment and driving of brand preference. So all our initiatives are geared towards these in terms of digital marketing, in terms of other forms of reaching to the customer. And all of this has actually resulted in a dominance in the direct segment both with off-line and online. But what would be heartening to note that this graph that has been shared here is the blue line, which is the OTA line that has risen, there is an increase that we have seen in the trends in Oberoi Contact Center, which basically takes our off-line calls and the website, Oberoi website, which has seen a very growing trajectory, it has been on the growth trajectory. And therefore, this is of particular relevance to us. The brand website, as you can see in the next slide, has actually gone through a steep increase. And there are various promotions that are being offered here, which are -- some of which are available only to [ time of stay ] are in the prime website. The brand website also offer a best rate promise. And overall, the Oberoi company continues to dominate large corporates and medium enterprise. So one of the major initiatives that has been launched. And in the coming months, one is going to see an increased sort of footprint in this is a [ per ] subscription program, which is called the Oberoi Select. Would you like to add?

No. Go ahead.

So here, basically, this allows our customers to benefit by buying a package or buying a set of the room nights for an extended period of time at very attractive rates, and this hopefully is one of the major pillars that is going to be in the coming future. Customer loyalty and brand alliances continue to strengthen. The Oberoi One enrollment trend has been on an upward trajectory again. We have increased the number of alliance partnerships with various luxury brands, and that is also yielding a lot. Finally, I think one of the most interesting initiatives that the Oberoi Group has ventured into. In fact, it went -- it opened on the seventh of October, which is the next quarter, but because the cost was incurred and it was already in place, therefore, we are covering it in this presentation itself. So this is our first outlet, particularly a cap rate at the Geo World Drive at [ Bandhavgarh ] called Cou Cou, which essentially is -- looks forward to building affinity with the millennials and the next generation but also for every year. So this really targets a segment of customers that one would assume is something that a company would like to venture in going forward, which includes next-gen luxury, premium millennials, luxury loyalists, the modern executives and so on and so forth. So what exactly is Cou Cou? It's a modern French-style patisserie to satiate your craving for everyday indulgences. And it's very different from what is normally in the market. Some of the slides will give a glimpse of what kind of food is available and what kind of experience is available. And the launch -- the day of the launch we had, it was very successful, and we look forward to seeing how this segment turns out. Finally, the corporate structure and the number of keys remain unchanged as of now. And that's all from my side. If there's any -- of course, there will be questions, and we will be happy to take on any questions. Mr. Oberoi, if you want to say 2 lines and maybe -- otherwise, we can go ahead with questions and answers.

No, I'm fine. Thanks, Kallol.

Thank you so much. Over to you, Amit.

[Operator Instructions] The first question is from the line of Amit Agarwal, an individual investor.

My first question is regarding the Bandhavgarh property that is coming up. How much sales do you think it will add when it becomes operational for the full year? And what is the status of the project? When you get -- supposed to be launched? Hello?

Members of the management, we can't hear you. Participants, please stay connected. We seem to have lost the line for the management. Please stay connected while I reconnect the line for the management. [Operator Instructions] Over to you, sir.

Shall I ask my question again? Hello?

Yes, Please go ahead.

My question is regarding the Bandhavgarh property that is coming up. When it's supposed to be launched? And what is operation, how much additional will do to our top line for the full year?

So may I know who to speak?

This is Amit Agarwal.

Amit, that's going to open next summer. That's a managed hotel. It's actually quite a small [ 17 tenths ] resort. And there will be management fees payable from that. But I can't imagine, just given the size of the hotel, that the rates will be very high and hopefully, occupancies will be strong, just given the small room count, like management fees won't make any substantial difference to EIH in the scheme of things, in the overall scheme of things.

So there's no property that is coming up in the next 2, 3 years, which would add -- to add turnover because rate increases can go -- increase the top line to a certain extent, not beyond that. You need some more room additions year-on-year, which is -- I don't think we are happening -- it's happening in the next 2, 3 years. Am I right?

We are looking at monthly contracts. If are you asking 2, 3 years? Yes, you're right. There will be no substantial change. But one of the focuses is to grow the -- grow top line and flow-through to profitability through management contracts, and we will be working actively on that. We also, of course, as you know, have a development which is going to start very shortly on Hebbal Lake in Bangalore. That's about 1 million square feet. It will be commercial and a luxury hotel, an Oberoi Hotel. And also we have a very nice site in Goa, which is a 55-acre site where we'll also be developing an Oberoi Hotel.

What is the time lag we're expecting for the Goa property?

So I would say -- I hope it's within the next 4 to 5 years. Our planning is already underway.

And that will be owned by the company, right?

Yes.

But does management contracts add sufficiently to the bottom line, top line? Or it's just a INR 5 crore to INR 6 crore per annum to the profit line?

Management contracts have the potential to add significantly to bottom line. And there's some other things that we're looking at. We've -- Kallol talked about Cou Cou, our endeavor will be to scale Cou Cou. And also, we're looking at some other opportunities which are still -- I can't discuss them now. But we are looking at even shorter term initiatives that will drive top line and bottom line performance.

But if I'm not wrong Cou Cou is a cafe, right? And is there any hotel chain doing the same thing. That's what I got, that Cou Cou is a cafe. And how many joints are going to open something like this?

I'm sorry, could you just repeat that? I couldn't understand what you meant.

Whatever I got it from your presentation was that Cou Cou is cafe, right?

That's correct. That's correct.

And how many cafes are you going to open in a year? Is there any prediction or is there any ambition you're achieving? And is there any other hotel chain around the world is doing a similar thing, opening cafes around the world?

So let me answer the first question first, is how many -- what is the plan for growth. And we identified locations where we feel there's potential for Cou Cou. That exercise has been done. What we would like to do is just wait and see how it performs, learn from that before expanding. And it would be premature for me to give you a number because this isn't available in the public domain. But the answer -- to answer your question, we would like to scale this, and we'd like to do it well. Just to give you a perspective, cafes, whether -- I mean I just Googled Starbucks, for example. Starbucks, I think last I looked was in 170 locations across the country. So there is an opportunity. And we won't be a Starbucks, let me also clarify that. But there is potential to scale Cou Cou.

No, but they are a high-end cafe also, I suppose, right? And will they be owned by -- all the joints will be owned by the company? Or it will be a franchise model?

At the moment, they will be owned by the company, who's to say whether we look at a franchise model in the future or not. But we -- certainly, to begin with, they will be owned and operated by us.

Any number you're targeting for next 2 years, like 10, 15 or 5 or 6?

Let me not -- I don't want to comment on that. But again, I think I've given you a clue in my answer to Starbucks, which is in 170 locations.

Is it thing around the world, like Hyatt Regency or other order joints like -- given many of the Marriott or something like this?

I can't comment on others. So it's best that I -- it would be wrong for me to comment on what others are doing.

Okay. And my next question is regarding property [ Oberoi ] in Egypt. So is it a company owned? Is it associated? Or is it just a management contract?

It's a management contract, and we have 14% equity in it.

14, 1-4, am I right, 14?

Yes. a small equity participation.

Which of the company is having this 14% equity in the company?

No. See, we are only a minority shareholder there. So therefore, it's really -- if you're looking at it from a consolidation perspective, that's not really -- it's basically the management fee. The reason of our presence is there is -- presence is because the contract mandated a small equity ownership by the company, which was managing the hotel.

But I just ask you which company? Is the parent company or is one of the foreign companies that is having the 14% equity over there?

No, no, the -- sorry, it is actually a little bit less than that. It's not 14%. But -- yes, it's less that, it's about 10%. But that's owned by EIH International, which is a 100% subsidiary of EIH Limited.

And my last point is regarding the technology that is being used at the website of Oberoi One. I think it's pretty cumbersome compared to getting a booking done at booking.com or some other travel sites. It needs to -- you need to call the reservation people twice and try to get a booking done for Oberoi One. It's simpler to get the book done at an Internet travel site. That's my observation. And all the big hotel chains are having a mobile app. We are not thinking of something to -- along similar lines?

So I'll answer the question on the mobile app first. The -- if you have a large number of hotels -- so let me give you an example, 4 Seasons, Mandarin, Peninsula, et cetera, they are luxury hotel players, but they don't have the scale of, let's say, a Marriott, right? Marriott is present in thousands of locations, the largest luxury operator at just over 100 hotels. And at least our research and the research, what we understand of others in this segment is, that unless an app takes real estate on your phone and unless I'm using the app regularly, right? I will not use the app. I need to be using it regularly for it to stay on my mobile phone. Now having said that, what we're looking at is something which is slightly different, which is rather than a mobile app, it's an app or it's -- you can use your mobile phone to activate whether it's your lights, whether it's the television or all other uses in the room. And on the back of that, it will also have the ability to work on a reservation. But that's -- our endeavor is to do this. It's not underway yet.

But getting booking them through the website. I think it's much cumbersome. I think that the technology is not right up to the mark. Like for Oberoi standards, it needs to save a lot of work to be done over there. That's my observation.

No. And I think -- I thank you for your feedback, and we'll certainly look at that. Now I just had a clarification. You talked about Oberoi One, are you referring to -- because I've made a reservation on our website. And if you go to the Oberoi.com website, you make a reservation, it is very, very...

Yes, I'm talking about that particular website only because to get the -- I'm Oberoi member also. To get my certificates issued over there and to get them adjusted to my -- such a stay, it is cumbersome. We needed to call for 3, 4x to get it done. It shouldn't be there.

We will -- and I thank you for your feedback. We look at that immediately. Thank you.

Yes, because for Oberoi standard, we expect something more smoother and much faster.

I think your feedback is very balanced. Absolutely, you're right, and 100% we will look at it.

[Operator Instructions] The next question is from the line of Sumant Kumar from Motilal Oswal.

So my question is, can you talk about the -- how things are panning out in the month of November and in advanced bookings for the -- all the key locations like Mumbai and Delhi?

So as I mentioned in my presentation that the trend continues to grow. And as we see the recovery after the second wave is much faster than the recovery after the first wave. So as things stand, things are looking much better [indiscernible]

And Sumant, if you take -- I'll talk about EIH. EIH is largely in gateway or in metropolitan cities like Delhi, Bangalore, et cetera, Calcutta. And these are the hotels that we own. EIH is associated has -- is more focused towards measure locations, whether that's with Oberoi or Trident. And the Oberoi Hotels, Leisure hotels that EIH owns and operates are 2, that is Udaivilas and Vanyavilas, which represents, I think, about 5% of room inventory of EIH owned and operated hotels. What we continue to find is very, very, very strong performance in leisure. And absolutely no resistance to rate. So the perception or the misperception was that the domestic traveler is more rate resistant, whether they're traveling on business or leisure. Certainly, what I can tell you is as far as measure goes for the right product, the right service, the Indian luxury traveler is willing to pay a high rate, and we're enjoying record occupancies at both Udaivilas and at Vanyavilas. And of course -- yes, in fact, all leisure, but I was talking about the EIH-owned hotels. Also managed hotels, which are -- which have a measured focus, occupancies are strong, other than the Oberoi [indiscernible] where occupancy demand is strong. But in all other locations, occupancies are strong and rates are good. And that includes hotels like hotels like Sukhvilas, et cetera, Vanyavilas and Udaivilas. Corporate business, we do see a positive trend in our city hotels occupancies are starting to go up and so are average room rates. But the recovery in the corporate segment is considerably slower than it has been in the leisure segment. So that would be broadly how I would define it. And EIH, of course, our larger hotels are all in key cities like Delhi, Bombay, et cetera, Bangalore, Calcutta, et cetera.

Okay. So overall, can you talk about the staff-to-room ratio talking about your peer, they have reduced significantly, say, 30% to 25%, roughly, the pandemic level. So can you talk about the metrics for EIH?

I don't have those -- the numbers with me, so I don't want to misquote a number. But you'll see that pre and post-pandemic, Kallol presented that slide in the presentation that's been uploaded. And we have worked significantly on relooking at how we work and numbers have come down. Some of that, as business picks up, will increase. But I think Kallol's slide also covers what we expect to be long-term sustainable reductions. So -- If I just -- I can give you some numbers, if you like. But the base that we anticipate approximately a 17% reduction, permanent reduction in payroll to pre-pandemic levels. So I'm just giving you Q2 figures. So Q2 for the financial year '19, '20 versus current, which translates to approximately INR 80 crore. Some of this will come back but the vast majority of it [ I hope ] won't.

So talking about the recovery and that we have seen in Q2, the Q3 and Q4, what percentage of business we are expected to recover the pre-pandemic in the Q3 and Q4?

Your guess is as good as mine. I don't think recovery will be a 100% even in Q4 is my feeling. And the other thing, Sumant, is -- I mean, you travel on business. I think one of the things that I -- and Kallol can go through some of the figures, but -- what -- I mean, increasingly, we are -- what we believe is that corporate business, there will be a reset of corporate business. And corporate business will be defined by a new normal, which will be less than what it was pre-COVID. And I think people are -- people are working differently. People are working online, not everybody is traveling for meetings like we used to do. So I think there will be a reduction in corporate travel and a new normal. What that percentage is -- I mean, we have some internal estimates of that. But I mean, your assessment of that will be as good as mine.

The next question is from the line of Himanshu [ Upadhyay ] from [ Oak Tree ] Capital.

Sir, my question was in some of the leisure properties where we are seeing the ARRs are above FY '20 also. What is the scope to improve the occupancy [ okay ], especially on the Oberoi Leisure? Is there any opportunity to further improve the occupancy or how you are looking at that? And do you think it still scope to improve ARR is there or just your assessment?

So what we find is traditionally in winter months, certainly, and I'll again talk about the 2 EIH owned and operated hotels, which is already Udaivilas and Vanyavilas. Our business on books, even for the winter months is very strong. So is the rate and these are at levels that are higher than what we did in Q2. So Q2, if you see, we did an average run rate for about [ 13,000 ] at Udaivilas and [ 28,000 ] at Vanyavilas and there is a considerable upside in both these as we go through the rest of the financial year, both in terms of rate and in terms of occupancy.

And this is on Slide 14, where we have given ARR and occupancy trends, domestic properties. This ARR is Q2 FY '22, Q2 FY '21 and Q2 FY '20 or is it Q1?

You could just read out the heading, it is city wise revenue recovery? Domestic properties, is that the slide you're referring to?

No, next to it. The slide next to it where ARRs are given.

Okay, I see. Yes, did I answer your question?

No. My question is, is there some error in renting rates because ARR says Q1 FY '22, Q1 FY '21 and Q1 FY '20?

Yes.

It is Q1 or Q2 means -- because...

It should be Q2. Our fault. You're absolutely right. It should be Q2.

Okay. Okay. And one more thing. In the city wise revenue, we have seen pretty strong traction in Karnataka, which is basically Bangalore market. But Delhi and Maharashtra are still much lagging behind in our expectation, whereas Bangalore would be later market to join the race. What is happening in that market? Or are we doing something which is helping to improve the occupancy in that market, especially in Karnataka?

Very, very good question. Actually, the biggest impact on it, it's driven by the size of hotel. So the overall Bangalore is a relatively smaller hotel with 160 keys. And obviously, as corporate travel recovers and we regained the numbers, it's much easier to fill a smaller hotel than it is to fill a larger hotel. So it's as simple as that. Our other locations, hotels are -- have a significantly higher room inventory.

And one last question. Generally, marriages is a big proportion for some of the hotels, okay? And what we read in newspapers next 3, 4 months, dates are choker blocked at the hotels. So what is the situation at your end? And anything you can relate?

I think we're also benefiting from marriages and particularly hotels like Udaivilas, but even in our city hotels. Marriage demand is strong and the propensity to pay is high.

Okay. And lastly, this Orissa, Tamil Nadu, Kerala, in the last bucket, okay, what we have shown in this slide, is at 54% of the revenue recovery rate, okay? What would be your thoughts on these markets? Will it take further time period? Or it is because of Kerala COVID second wave or whatever we see?

Kerala is certainly contributing to that. Actually, [ recently ], we're seeing good demand. So -- but I think what's dropping the figures is because it's all combined.

The next question is from the line of Nihal Jham from Edelweiss.

Sir, one question from my side. You mentioned about the business on books. Specifically, what I was just trying to understand is that for the leisure properties, is the current business on books, at least for the period, say, post January, similar to what it used to be pre-COVID? Or that is still something that, as of now, is slightly lagging?

I don't have the figures on me, but I would imagine it's better, but I need to look at the numbers before, but my -- if my recollection serves me correctly, it's actually better.

Sir. And that, if I had to just bifurcate it, is it -- apologies if -- and I can check later also. Is it mainly that the room nights are or the occupancy is better off? Or is it the rates that we have seen even in off season, that kind of improved trends continuing into the key peak season from, say, January to March also?

In leisure, our forecasts indicate that we will do better, both in terms of occupancy and ARR.

Sure. This is helpful, sir. And that was it from [indiscernible]

And may I just give 1 clarification. I'm referring to the [ cumulative ] EIH-owned hotels, which are Vanyavilas and Udaivilas. And I mentioned Amarvilas, actually is extremely reliant on foreign occupancy or historically has been. And we've done various promotions for Amarvilas to try and attract a larger domestic audience. But weddings has been an important segment, but we don't -- aren't able to run the same occupancy and ARR at Amarvilas in Agra as we are in other locations. So Udaivilas, Vanyavilas, [ Maharashtra ] is extremely strong. Rajvilas are somewhere in between. And Amarvilas, unfortunately is -- occupancies are lagging although with winter buyouts for weddings, occupancies will be are and will be stronger but not -- certainly not to the level of Udaivilas and Vanyavilas.

I just had a question.

I think 1 of the points is that since you're looking at business on books and that, too, for January, which is about 3 months away. I think what is important is that your businesses books been mainly reflected case of weddings and those kind of social functions. But in case of the other businesses, other leisure businesses, actually the wedding bookings vendors come down significantly. So therefore, I think to look at business on books, 3 months, 4 months, 5 months away, may not be fully accurate in today's world. I don't know if Vikram agrees with that point of view.

And for -- I would say it's somewhere in between, Kallol, because Vanyavilas, which has a small room inventory, we find business on books quite strong even there because people know that if you want to get a reservation, you need to book in advance. So the lead times are slightly longer. It does vary from location to location. Rajvilas, you're right. Amarvilas, yes absolutely right.

That's helpful. I just had a question which came up that you mentioned about foreign guests. Ideally, I think for EIH, the proportion of foreign guests was around 70% pre-COVID. Is that a right assessment? And currently, what it will be?

Yes, I would say it was about 60%, not 70%, but 60%, 70%, you're right. But 60% is probably closer to what it was.

The next question is from the line of [ Rajiv Pardi ] from DAM Capital.

Sir, I would like to have an update on the flight catering business. What is the status now? What is the capital employed in this business as of today? And what are we doing in terms of ramping up?

Yes, it's about INR 357 crore, which is the net block. It's in -- I'm not sure if that answers your question. I believe you're referring to the India operations?

Yes.

Yes. So that is what it is. And as things stand, things are improving, as we speak. But obviously, with foreign travel still not fully open, meaning it's still on those same bubble flights. I think we'll have to wait and see what happens there. But losses, of course, has reduced compared to previous year. And with the domestic travel picking up, I think 2 things which where we have seen some traction is our share of the domestic business has actually yielded some profitable revenues as well as the Oberoi Airport Services, the lounges that we have in airports.

Do we have any indicated number for Q2, I mean, in terms of improvement?

Well, we did -- yes, I can give you indicative numbers. We just -- so against an EBITDA loss in -- of course, we've done an EBITDA loss in this quarter as well. But this is roughly about 30% to 35% lower than what we did last year.

Sure. Sure. And sir, going back to your citywide revenue recovery slide, there, Rajasthan and Himachal Pradesh, where you're doing 141% and 234% in terms of revenue. Now there how much is due to rates alone, the swing in revenue?

So Rajasthan, again, it's both rates and occupancies, but this is -- I mean, Rajasthan has Udaivilas and Vanyavilas. So it's both rates as well as occupancies. In case of Himachal also, it is again both rates and occupancy. So really speaking, in both these locations, it is both, but I would say a higher ARR. The ARR is actually much, much higher than the growth in occupancy.

Historically, in these markets, the rates have risen at a very standard rate year-on-year basis because you kind of -- I mean in leisure destinations and such destinations, you've kind of maintained rates and you want to have -- don't have -- don't want to have large swings in the rate, right? And if you're charging -- I mean, if you increase the rates substantially now, in the later season when it goes down, is this divergent from your old practice? I mean that old strategy of keeping the rate that are always upward sloping curves?

So [ Rajiv ], the first thing is that when demand is there and people are willing to pay the rates then there's, I think -- I mean, a situation that really panned out in quarter 2 is in much cases, even rooms were not available at whatever rate. So as long as the buoyancy is there, I think there's no question on what you need to do with your rates. And therefore -- and you're quite right with your numbers. For example, if I were to look at -- like Mr. Vikramjit Oberoi mentioned a while back, our rates at Vanyavilas and Udaivilas have grown by at least 60% or thereof. So really speaking, I think the strategy depends on what the demand supply situation is going to be. And I'm sure, Mr. Vikramjit Oberoi may want to add to that.

Yes. Sir, lastly on Marrakech, because it was operational for the entire quarter. Can you give an indicated number for what happened there? And what was the ARR you were able to come on for the quarter?

So ARR is very, very good. But I'll just take 1 step back about Morocco. Morocco or Marrakech in particular, in winter, get a lot of business from Europe, whether that's the U.K. or all European countries. But the U.K. is a very strong market, and Germany also is a strong market as others. For us is for all Oberoi hotels across location tends to be very strong and the U.S. as well. Now what's happened with Morocco is that when the COVID numbers started to go up in Germany and in the U.K., they closed travel from those markets. So we had reservations in at the Oberoi Marrakech in both the U.K. and Germany, which all canceled. In terms of our occupancies, what are they Kallol? They're doing about 12% with an average run rate of about [ INR 470 ] approximately.

Sure. And if I can squeeze one. On the Indonesia bit, which is still, I think, has not opened. What is the capital employed there in terms of assets? Because this has been under stress for some years now, barring COVID as well.

Yes. It's about...

It won't be significant.

It's about [ INR 4 ] million, if I'm not wrong, roughly. Approximately.

The next question is from the line of Amit Agarwal from Nirmal Bang Equities.

My first question, is it possible to get a split of the top line in terms of room rental, F&B and others? And secondly, continuing on F&B, compared to, let's say, what was the second quarter, how do you find the F&B as we speak today? Has it come back to pre-pandemic levels or still some place to go?

It's still not -- it's actually recovered to a large extent, but it's still not recovered to pre-COVID levels. It's marginally below. It is -- so food and beverages, just under [ 90% ] is the recovery.

And what is the split of room rental to F&B in the second quarter [indiscernible] ?

That's changed. It's now -- rooms is 47% and food and beverage is 45%. And if I take -- financial year '20 Q2, food and beverage was 36% and rooms was 53%.

Right. So F&B -- so you would expect F&B to help out as we move ahead because I think Maharashtra has also opened up in terms of timing also. So probably that should help in coming back to the pre-pandemic levels within the third quarter. Do you think so?

What I can say is the historic -- or if we look at the Q2, recovery in food and beverage has been stronger than rooms. And if that trend continues, what you're saying is absolutely correct.

Sure. And the second question pertains to -- you've got another vertical going in terms of Cou Cou. Any other verticals being planned apart from the traditional hotel verticals of F&B rooms? Do you have anything in the plan?

We are looking at other things as well, but I unfortunately can't comment on them at this point. And the only -- and one of the things that I may want to just add to that is Oberoi Select. Now that's not to -- Oberoi Select is it just looks at a slightly different approach to selling rooms. So that wasn't what your question was, but I still would like to highlight Oberoi Select. But to say, are we looking at new sources of business and revenue and new models, we are. But I unfortunately cannot comment on that. It's too premature for me to comment on that.

So Amit, just to add to what Mr. Vikramjit Oberoi said, I think in our previous earnings calls, we had mentioned about a few new initiatives that we're taking. One of them is operational, Cou Cou and the others are to follow in subsequent quarters. So you would like to watch out for that space.

And my last question pertains to - you've already talked to I know about the corporate coming back. So what percentage would it be about 10%, 20%? Or is there just about [ green chew ]. And secondly, any movement in the [ March ] term?

Sorry, I didn't hear the question.

Can you just repeat, Amit?

My question pertains to the fact that corporate and [ March ] were the missing ingredient in terms of the room rentals. So in terms of corporate, can you say that there is a decent percentage -- and when I say decent, I am saying 20% of total room rentals? Or are there still north of that? Just about [ taking ] off? And secondly, on the [ March ] that is making the incentive to catch up, has the [ March ] started? Or they have -- you haven't seen any start on that?

We've seen [ March ] start. It's probably not the large [ March ] that you traditionally had. But I'll just again give you an indication, September, October, and these may be indicative of what will come in the future. [ March ] has recovered -- it's now about 30% down on what it was previously. So pre-COVID verses now for the months of September and October. So the recovery actually has not been bad, it's 72%. And to answer your question on corporate. Corporate is roughly just under 40% down compared to pre-pandemic for September and October. But what I'd like to highlight actually is the direct segment. And this is -- actually, let me -- yes, so I'll break that down into our website. And our website is up just under 20%. OTAs are marginally up and calls to our contact center are up by 70%. So it's really -- and our website, OTAs and OCC reclassified as direct, it's customer coming to the hotel booking through various channels, and that's over more up substantially.

So again, to add what Mr. Vikramjit Oberoi is saying, Amit, that since the direct has gone up, this is -- one is due to the initiatives that has been taken, and we are aware of what initiatives are leading to what growth. But some amount of this could also be a spillover from the corporates who may choose to book especially the SME segment. SME segment, which may choose to book through direct websites, which may not have a contracted rate with us. So it's quite possible that there is some fungibility out there.

Sure. One last question, if I may squeeze in. Have you started entry into talks with the corporates for rate negotiation? Or is it too early for that?

We are talking to corporates. Absolutely.

[Operator Instructions] As there are no further questions, I'd like to hand the conference back to Mr. Amit Agarwal for closing comments.

I would like -- at this stage, I would like to thank everybody for having joined the call and especially to the management for answering the call, the questions and Q&A. Thank you all, and we'll close the session now. Thank you.

Thank you very much, Amit.

Thank you.

Thank you very much. On behalf of Nirmal Bang Institutional Equities, that concludes this conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.