EIH Limited (EIHOTEL) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and thank you for attending this virtual meeting. It's my pleasure to welcome you on behalf of EIH Limited and SKP Securities to EIH Limited's Q1 FY '25 earnings webinar. We have with us, Mr. Vikram Oberoi, Managing Director and the Chief Executive Officer; and Mr. Kallol Kundu, Chief Financial Officer. This meeting is being recorded for compliance reasons. And during the course of discussion, there may be some forward-looking statements, which must be viewed in conjunction with the risks that the company faces. We'll have the opening remarks and a presentation by the management, followed by a Q&A session. Thank you, and over to you, Vikram.

Good afternoon, everyone, and thank you for joining. I'll ask -- request Kallol to run through the presentation, and then we'll be happy to answer any questions you have. Thank you.

Thank you. Thank you, Vikram. Thank you, Navin. We'll quickly run through the presentation. This is for quarter 1 FY '25. The general outlook of the hotel sector continues to be good for now. It's poised for significant expansion, key growth drivers. And these are as per analyst and consulting reports. Inbound tourism, wedding, MICE, sports tourism, et cetera, all segments are looking towards positive growth. Next slide. The Indian hotel market, this is based on HVS Anarock report of July. The occupancies in June have been more or less similar to what they were last year. And the ARR has also been similar but slightly higher than last year. The RevPAR is at least about 2.5% higher than last year. The market size one assumes as per this IREF report will go to about USD 31 billion by 2028, the industry and so far as India is concerned with the average revenue per user going up from $163 million to -- sorry, $163 per room user to $174. Next. This story continues. This is a chart that we present in every meeting, we have been presenting since the last several years. And the story continues unchanged, where EIH maintains consistent RevPAR leadership over STR competition set. So the RevPAR index -- overall RevPAR index for the period is 127%. Insofar as the positioning is concerned of the various segments of our business, Oberoi Leisure is slightly down compared to last year on a RevPAR basis by about 2%. Trident Leisure is also slightly down as compared to last year same quarter again. Oberoi Metro and Trident Metro -- sorry, just go back. Oberoi and Trident Metro has gone up. Trident Metro has actually gone up by about 9%. And Maidens Hotel has gone up by about 7%. Next, please. For the international hotels also, it's a mixed bag with UAE doing better than what happened in the past. Egypt is slightly off because of the effects of the war. Indonesia is doing much better. And Morocco is more or less at same levels, but rates are slightly down than last year. And that again has some impact from the Middle East war. The quarter 1 RevPAR grew by 5% and 3%, although more or less, this is taking the owned hotels as well as all domestic hotels into consideration. But if we were to take the entire market, including international and all, it's almost similar to last year. For the 3 months within the last quarter, obviously, the month of May was something where the occupancies were down. Room rates were similar. And this -- the effect of this is mainly due to the impact of the elections. Rest, I think we've -- we were higher in April. And June is almost similar as last year. And of course, the period ahead is not looking bad. City-wise RevPAR year-on-year, Agra, Hyderabad, Bangalore, Mumbai, Chennai, these have all done well. Delhi, some of the satellite cities: Bhubaneswar, Jaipur, Shimla, Chandigarh, Cochin, Udaipur, these are on the downward side. The strong room revenue tailwinds across segments, they continue. Of course, this part of the year is the downward cycle. And from second and third quarter onwards, we should look at an upward cycle again. I think corporate does show some kind of buoyancy here. Direct is similar to what was happening last year. Leisure is also slightly higher, but levels are still to go up as compared to pre-COVID levels. The flight catering and the airport lounge business continue to be very robust. Margins have also expanded, and total business has also expanded. And so has the total EBITDA growth been for this part of the business. The financials, the results have been declared, as you all would have seen it. On a standalone basis, revenues were up from INR 455 crores same quarter last year to INR 498 crores. The EBITDA is slightly down -- sorry, the EBITDA is slightly down, and the PAT is also slightly down. That is more to do with a sort of rates being at similar levels, so, therefore, obviously, profitability while expenses are slightly inching upwards, rates are at similar levels at what they were last year. And therefore, there is a slight reduction in the PAT and the EBITDA, but this is not anything appreciable and something that we hope we can recover in the balance 3 quarters. The story is the same with consolidated performance. So trends are pretty much similar. We obviously continue to build on very strong funds position. Basically, we've now got a sort of war chest of about INR 650 crores, which is net cash, which is currently awaiting deployment in the various projects that we are going to undertake. Two of the major projects were announced in the stock exchange: the new project for Hebbal at Bangalore, where planning is on at an extensive -- at a very advanced stage and also the renovation project for the Oberoi Grand, where we will get a brand-new renovated property in about 3 years' time from now. Next, please. So the consolidated funds position is now at INR 818 crores. Obviously, many of these funds are parked overseas in our various subsidiary companies. But the total converted into Indian rupee -- the total amount converted into Indian rupee is about INR 818 crores. The financials, I won't run through. This has already been declared, and it's available to everybody. So this is more or less something that we have discussed from the various quarters starting from '22 to '25 quarter-on-quarter. Navin, we can proceed because this has also been published. We are extremely happy to announce and report to everybody that the recent travel and leisure rankings have rated the Oberoi Rajvilas, a hotel managed by EIH Limited and owned by EIH Associated Hotels Limited, as the best hotel in the world. And of course, there are many other list of awards that the group has been showered with. These are all listed here for people who wish to go through the details. There is no change in the footprint as of now except the new projects that are going to come up as has been announced. That's all in the presentation that we have here. And we are really happy to answer any questions that you may have. Thank you.

[Operator Instructions] We take the first question from Vikas Ahuja.

My first question is post COVID, we have witnessed a strong double-digit rates growth. Now we saw some moderation in Q4 growth of 10% and low single digits growth this quarter. Is it fair to assume that base is catching up and events like World Cup and G20 closing, which are missing in September and October, then achieving mid- to high single-digits rate growth would most like -- would be a most likely scenario this year? Or you think the momentum will improve from maybe this month onwards?

Vikas, nice to have you here with us today. Really is a function of supply and demand. We had in -- we had the election this year. And I think at least our analysis shows that when compared to previous elections, which we looked to or the previous election we looked at, the impact on this election has been more than in the previous election. We looked at the last election as well. That's one. And I think the other things are, unfortunately, in many cities in Rajasthan, where we have leisure hotels and in Agra, temperatures have been extremely high this summer. The -- we still remain optimistic that foreign travel is bouncing back. And with strong Indian demand from the domestic market for luxury hotels and luxury travel, we should be able to take rates up. But that's really a prediction of -- or that's under the assumption that demand remains strong. This was just a temporary circumstance, which I've explained. And therefore, we should see strong demand and occupancy, both reflected in rate and occupancy, particularly in Q3 and Q4 of this financial year.

Okay. Okay. I understand. So is it fair to assume what your larger peer has also called it that from July onwards, we have seen a very strong recovery. I mean they even quoted a number of more than 20% growth they saw in the month of July. Is it more of we are also witnessing a similar kind of a trend, that's a fair assumption?

Sorry, I didn't mean to interrupt, Vikas. Please go ahead. I apologize.

No, sir, you go on. I mean I'll ask my other question once you answer here.

No. So business on books, that's a look at the pace of reservations. And it does vary across hotels. But overall, we remain positive.

Okay. Okay. Secondly, on margins, the decline in EBITDA. And I mean, this is in line with what you have anticipated earlier or any particular cost which has come as a big surprise to the management that led to this decline? And how should we look at the margins from here? What are the puts and takes from here onwards? Are you seeing any other particular costs which expected to be elevated this year?

Yes. No, sure. I think that's a very good question, Vikas. And we -- if you see in the details of closed presentation, I think it's there and also in the other declarations that we've made, employee cost has gone up. And that's for 2 reasons really. One is that in Q1 of last year at the same time, we had a number of positions that were vacant. So this year, fortunately, we're not in that position. I'll talk a little bit about that further. The second aspect is that also our industry is -- faces a challenge of attracting people. I think across the industry, there is feedback on work-life balance. And as an organization, we're committed to addressing that. So there have been some increasing -- increases in numbers in frontline junior managers and staff as well. Now that's one aspect. But the other thing I just want to talk about is that we, as an organization, select people who are hotel school graduates. Most of them, it's their first time job. And so you will see a spike in the summer months because we take people on board, we train people so that when occupancies pick up in winter, we're able to have consistent and good levels of service that we provide. So I think this will even out in the rest of the financial year. But one reason why margins have been suppressed is because of the higher labor costs. Now there are other things, for example, Trident Nariman Point is operating with fewer rooms because they're renovating some floors. And these things happen in our hotels, Trident Nariman Point probably being the most pronounced in that. Vanyavilas was impacted because we are adding a certain number of tents there to increase room inventory. And we had to, therefore, remove the tents which are closest to that and not sell those. So those blips, of course, happen. And this is the time to do it. It's the time to do it as in the summer months when demand isn't as strong so that we can really capitalize on business in H2.

Understood. So is it fair to assume the 17% increase in the employee cost, it's partially because we are anticipating strong demand, and we are just -- we have filled up most of the open position. And that's why we just want to have enough people to start with to cater that demand going forward. That is my last question, sir.

I would say that's a reasonable assessment, Vikas, yes.

We take the next question from Sanjay Kohli.

Am I audible now?

Yes, you are.

Mr. Oberoi, can we have a little bit of a discussion around Wildflower Hall? And so our understanding is that basically, there's about only a year left now for us to manage this property. And there is a carrying cost in the balance sheet of a mere INR 26 crores. So is this management sort of conservative estimate of all the claims and counterclaims and then we arrive at a sort of a net asset value and hence, this number?

I'll let Kallol answer that, but our initial investment was INR 26 crores. And just to also answer that the property based on the Supreme Court ruling is it will revert back to the government on the 31st of March. So Kallol, I don't know if you want to add anything.

Sure, Sanjay. So the fact is that as per the accounting standards, we have classified the property as an asset held for sale. That is what you would see in our year-end accounts as well. And therefore, you won't see the numbers separately. So the initial cost is -- the initial cost of investment, which is different from what the property is. So obviously, that is our investment into the company, and that continues to be investment which we are going to receive back. However, the claims that you talked about, those are -- yes, those are in court. We have already filed our application quite some time back, actually in May. There was a hearing on the 25th of July. On the same date, the state is known to have filed a rejoinder, which we still don't have a copy of. So that part of the case is ongoing and is sub judice. And it will be difficult for us to comment. But as we've mentioned in our year-end annual report, if you see, there's a very detailed note where we've laid out what our claims are and the reasons as to why we have taken a prudent accounting measure to spell it out but not to recognize them into our accounts.

So just to follow up to this too, in all these years of litigation, is this in hindsight, it's easier to analyze? And taking on what are the key learnings from this about our relationships with state governments on projects like this? And is it just prudent to surrender at some point in time?

Sanjay, I think, first of all, this goes back to well over 20 years, if I'm not mistaken. Am I right, Kallol?

Yes, more than 20 years.

It goes back more than 20 years. And at least many of the people who were there 20 years ago, let me not even try and speculate on the reasons what happened, why it happened, et cetera, and what we could have done differently. I think what we need to look -- focus is rather than looking at the rearview mirror, rearview mirror is important to learn. I completely agree. But I think we should look forward. And with any partner, it's very important that we have the best possible relationships, whether that is a supplier, whether it's our guests, whether it's our colleagues, whether it's the investment community, whether it's government. So -- and that's what we're focused on to maintain the best possible relationships, the relationship based on strong foundations and values in all these relationships. And that's what we will -- what our focus is and will be. I don't know if you want to add anything, Kallol.

That's fine, I think.

I'll rejoin the queue, and very excited about the development in Bangalore.

Sure, Sanjay. And we're equally excited with Bangalore. It's a great opportunity for the company.

We'll take the next question from Tushar Nischal.

Sir, I would like to ask you in the last con call, someone asked you to comment on the 6% revenue per available room, specifically from Bombay. Would you like to comment on that now?

Sorry, Tushar. My memory isn't as good as yours. Could you just remind me, the 6% of room revenue, I'm not sure what that you're referring to.

6% revenue available per room.

I beg your pardon?

6% revenue per available room.

6%. Is it 6% or fixed? Sorry, Tushar.

Sir, I am saying 6%.

6%. It doesn't strike a bell.

Yes. Tushar, sorry, could you just remind us? I really apologize. I can't remember. But if you could give us a little bit more detail, maybe it will help us remember better. 6% of room revenue in Bombay.

6% revenue per available room.

That's RevPAR.

6% revenue. Yes, 6% revenue per available room in Bombay. I'm sure our RevPAR is -- would be stronger than that. So I'm not sure, Tushar.

Maybe if you can come out with a question a little more clearly.

Yes, can you just tell us specifically what you...

Okay. I would be specific in that. But how do you see it improving in the next coming quarters?

In Bombay?

Yes, specifically Bombay.

Okay. So in Bombay, actually, Tushar, we added, and there was a slight delay in completing the 20 residential suites in the Oberoi Mumbai. And they were completed. The delay was caused because, obviously, we have a fully occupied hotel, and we don't want to delay or disturb guests. So we had to be careful in the work we did. And whenever there were any guest comments on noise, then we had to respond to that immediately. But those have been completed. These are long-stay residential suites. That will take -- help enhance RevPAR. We're doing around a -- the last big I saw was we were running about an 80%. So it's built up already fairly quickly to an 80% occupancy. I haven't seen the figures as of today or yesterday. But a couple of days ago, we were doing 80% on these 20 suites with an average room rate of over INR 30,000. So this will enhance the RevPAR of the hotel. In Trident Nariman Point, 4 floors under renovation. And the -- this is along the same lines as the floors done earlier. And I'm sure this will also help in driving both demand and rate. And Bandra-Kurla, touch wood, continues to have very, very strong demand, both in terms of corporate demand, MICE demand, et cetera. So I remain optimistic for both external and internal factors on the Bombay hotel operations.

That was it.

Certainly. Thanks so much, Tushar. And I apologize, I couldn't remember that, but thank you for clarifying the question. So much appreciated. Thank you.

We take the next question from Prateek Maheshwari.

Please tell me what is the current demand trend? And how is the July and August growth?

So I think demand has really actually -- sorry. So we saw April was, touch wood, very good. May and June weren't as good both because of the elections and the high temperatures in many locations where we have hotels.

No, no. I'm asking about July and August, current demand trends, Q2.

Prateek, please allow me to and then I will come to the point.

Yes. Sorry, sorry.

No problem. No. I just wanted to put it into context. And what we are seeing is a greater buoyancy after a somewhat subdued demand for the reasons that I've explained. So we are seeing a pickup in pace of reservations.

We'll take the next question from [ Hriday Choksey ].

Sir, my question would be for the future of our company and in terms of growth. You had given an interview a couple of months back where you spoke about how we're looking to add about 50 more properties by 2030. So my question would be, how do you envision the portfolio 6 years out from now? How many hotels would be managed? How many would be owned? And how many are you looking at adding in India versus how many you're looking at adding overseas?

So our focus will continue to be in India, although we are looking at opportunities outside India as well. So -- but our focus will be India. We hopefully will be able to share more news on our expansion in -- I hope soon. And as and when things develop, we will announce those. I hope we'll have more news to share with you in the not-too-distant future.

Got it, sir. Sir, and the second question on the room rates. Do you -- what is the headroom for growth there? Do you foresee them increasing more towards the end of the year and towards the festive season? Or do you think that would be stagnant and flat?

So I always remain optimistic. I think, again, it really -- if demand is strong, I still believe, which I've said many times before, that for the quality of hotels that we have in our country, rates need to be much, much higher than they are. But that really is a function of demand. And I continue to be optimistic to say demand is strong, and you typically see that in India, in the winter months, rates will continue to rise. We've already seen last year a sharp increase in rates, at least in our hotels. And we still believe that, that will continue. There's nothing that would cause that to change, no external forces that will cause that to change based on what we see today.

Got it, sir. Sir, and just a clarification on the first question. You said you'd like to continue with the majority of the focus in India itself. How are you looking at the model in terms of owned properties versus managed properties going forward?

We're looking at both. I mean our preference is to put in either through partnerships, through joint ventures or our own hotels. So Goa, Hebbal, et cetera, are our own hotels. We have trust subsidiary companies. It's Gandikota, Vizag and Tirupati. And we will look at joint ventures and Bandhavgarh, this is opening this year. Rajgarh is opening this year -- this financial year. So -- and Bandhavgarh is a management contract. Rajgarh is an EIH hotel. The advantage you have with an owned hotel is a profitable owned hotel is what it brings, the value it creates for the organization. You need to sign up many management contracts to achieve the same results. But having said that, we want to be in locations where our guests travel to. We want to give opportunities for growth to our colleagues. And for that, we will pursue both options, both managed and owned options and, of course, JV opportunities as well.

And just to add to what Vikram said, if you see the 7 projects that are currently in pipeline, which are under construction or about to start construction, out of those, 3 are our owned properties, 3 are owned by our subsidiaries or associate and managed by EIH and one is a completely -- it's a management contract entirely. So that's the current composition. We've talked about 50 hotels, 7 are already in the pipeline as we speak.

And may I just add one other comment to say that we -- in city locations, mixed-use developments are the -- really, in our view, the only way forward. Hebbal is one of those examples and just because of the very high price of land. So that's something that we would continue to pursue is development through mixed-use developments.

We'll take the next question from [ Deepak Verma ].

So just wanted to check what is the impact of quarterly seasonality in the financial performance this quarter?

I think more than seasonality, Deepak, the seasonality has been more prominent because of the elections. So really speaking, if -- theoretically, if the elections weren't there, then we would certainly had looked at numbers which were better than last year's same quarter. And that was also a record quarter in all our history. So while seasonality continues to exist and Vikram made the point of extreme heat in various cities, in -- not only in places like Rajasthan, et cetera, but also in places like Delhi, for instance, and then rains. So it's anybody's guess. But by and large, I think, the business is becoming more evenly spread with even our first and second quarters now doing much, much better than what we used to do or anybody -- any hospitality player used to do in the last, let's say, 10 years ago.

Yes. I think if you take -- just to add to Kallol's comments, if you -- and I'm sure this data is with you. If you look at old data and you go back, let's say, 10 years, we'll see far greater seasonality variations than you will see today, which is, I guess, a positive development for hospitality in general.

Yes. So I think this quarter's performance may be -- although it's not bad, it's good, still may be taken as an outlier.

Indeed.

Yes.

We'll take the next question from [ Rajeev Bharti ].

Sir, can you split the Oberoi Grand's -- what are the CapEx there, renovation CapEx?

When we're in a position to share that, Rajeev, with you, we will. The hotel is, as you know, a grand hotel. Sorry, I'm using the word grand. And it's a heritage hotel. We really want to redevelop that hotel to make it a very special hotel. We will do everything possible to preserve its heritage and to bring it back to beyond glory. And this will involve a complete renovation of rooms, public areas, food and beverage, back of house, all MEP, et cetera. And the Chowringhee wing, which is the part right overlooking Chowringhee, the main road is not occupied right now. So that will be the first part of the renovation with about 50 rooms and like I mentioned in the stock exchange declaration that we made all the other areas. And then the balanced rooms will be done subsequently with room inventory from 209 coming down to 200 keys with the addition of Chowringhee as well. So room sizes will increase. We'll preserve the -- all heritage aspects of the hotel.

Just directionally, is it possible that this can go off a similar order like Oberoi New Delhi renovation?

I think as far as cost goes, let me not get into that. But what we have seen is -- well, first of all, let me take one step back. We -- each market is different. And therefore, we need to assess our capital expenditure on the hotel based on the market in which we operate. That's number one. But having said that, what we saw at the Oberoi New Delhi renovation was the Oberoi New Delhi, and I don't know if I can give these figures, it dates back to a long time, used to do about an INR 60 crores GOP, INR 61 crores, INR 62 crores, INR 63 crores GOP. This increased substantially. And when I mean substantially, I'd say maybe not doubled in the first or then the second year of operation after the renovation. But we saw a sizable increase in GOP. And what we would like to do is replicate that with the Oberoi Grand.

Great, sir. Sir, with regard to your Hebbal project, is it possible to segregate the commercial real estate part of CapEx out of the INR 1,350-odd crores?

Rajeev, our numbers, which we speak of, are per square foot or per key cost for Trident Hotel, for Oberoi Hotel. And today, our Executive Chairman in his speak, he covered it as well as to what is our cost per key for both. So it's a simple mathematics for you.

No, sorry, I missed the entire opening remarks. Sorry about that.

He said the cost of a Trident is around INR 1.4 crores a key although we internally like to refer to cost per square foot as the more appropriate measure. And a cost of an Oberoi room is about...

INR 2.5 crores to INR 3 crores.

Between INR 2.5 crores to INR 3 crores a key.

Depending on city or leisure or all of that.

Depending on city and all of that. So if you do the math, then the balancing figure is commercial.

Great, sir. Lastly, on this -- you're looking to get an investor on this project or this entire thing will be done by us?

No, no. It's entirely our own project.

Entirely done by us.

Sure. And last, on the profitability part of it, the margins. So assuming that the hiring is now frozen -- the 18% hike. So these margins are going to be stable? Or there is more employee cost-related hikes which are coming in subsequent quarters?

Sorry, I didn't understand.

So I think Rajeev is asking that with the increased manpower cost that we have now, is it reasonable to assume that this will now be stable or that more...

I think that would be a...

I think a good way to state that, and this is Vikram's spot, but I'm taking the liberty of answering is see, the good part of this increase that we have done is we have seen our attrition come down. And what we see is a direct cost sometimes comes back to us as an indirect cost because with more attrition, there's more cost -- associated costs, which is not featured into the payroll cost. So when you look at that increase, you should also look at the benefits that are there. Vikram, you may want to share the figures of attrition?

Yes. no. I'm happy to share them -- or should I share attrition figures?

It's come down so basically...

But our attrition has come down in -- not on a percentage of -- or I can do a percentage of 100. I just need to calculate. But let me just see. It's come down...

By about 20%.

Yes, maybe slightly less than 20%. So I'd say about 15%. I'm not sure on the math. I'd have to use a calculator to give you an exact number. But let's say in a ballpark figure of 15% amongst colleague attrition. We've also seen a decline in executive attrition, which is very important because that's really the -- drive -- helps drive culture, helps drive our service. They mentor our younger colleagues. So we're seeing positive results in attrition, both at the executive level and at the team level with the changes we've made. And like Kallol said, there are a number of costs that are hidden that typically don't get measured, which are a result of high attrition. So those -- we should see improvement in those as well. But to answer your question, Rajeev, directly, the bulk of our hiring happens in the summer months because we need to get people up and running for the winter. And our industry is -- 40% attrition in team level is not unusual for our industry. We do better than that. Our attrition isn't as high, but that's a number that I'm told is the norm. So yes, that's all that I can say. And we really want to -- we have young team members in our hotels. And today, people do care about a balance between their personal life and their work life. And as an organization, we have an obligation to respect that.

We'll take the next question from Sunny Roy.

Am I audible?

Yes, you are.

Just regarding this Hebbal Bangalore project, I just wanted to know whether the land -- we are already owning that land?

Yes, sir.

Okay. Okay. Okay. And for the commercial portion, what would it entail actually? Would it entail like retail, the malls or office space?

It will largely be commercial office space with -- it's about 50,000 -- 55,000, 57,000 square feet of retail and F&B.

Okay, sir. And sir, lastly...

Sorry, the 700,000 square feet of commercial office space and the balance, 55,000, I'm just rounding numbers off, of retail, which includes food and beverage and the hotel is the balance.

The hotel is the balance. And sir, a general question. How much should we expect the revenue growth to be in this financial year, given that we have had a very tough first quarter? So just an estimate.

I'm not going to give you that number.

Sunny, the tough quarter that you talked about, that tough quarter also revenue has grown by 10% so -- over last year.

If we can just throw some light on the ARR, that would be helpful because, I mean, you have already said it should increase, but I mean whether -- I mean I just wanted to know where is the more headroom, the city hotels or in leisure destinations?

Again, Sunny, it's really a question of demand. Sorry, I'm going to give you a long story. I worked in South Bombay at the hotels at the Oberoi Mumbai many years ago. And this is just after India -- this was after the first Iran -- Iraq war and in the Middle East. And the Indian economy started to open up. This was when Manmohan Singh was Finance Minister. And we saw an unbelievable increase in demand. In fact, we had never looked at such -- and it happened very, very quickly. Demand surged at a phenomenal rate. And in those days, I think we used to charge -- I'm trying to remember what they were. But I feel like saying the Oberoi Mumbai used to charge, I'm going to say 14 -- INR 13,000, INR 14,000. The dollar was much -- the rupee was much stronger against the dollar. So you can do the math. Really rate is a function of supply and demand. And if there's strong demand, which you're in a better position to judge on what's happening with the Indian economy. But we remain very bullish. And if there's strong demand, both in leisure and in city hotels, we should see strong increases in average room rate. I think the propensity to pay in leisure hotels is greater. So if you look at our leisure hotels with Udaipur -- and I don't know if I can give the average room rate. Can I give it or -- Okay. So Udaipur, for example, Udaivilas does double the rate of, in fact, slightly over double the rate of our highest city hotel Oberoi average room rate. So It's a multiply of 2. And yes, that's what I can say in terms of your city versus leisure rates.

That's very helpful. Yes. And lastly, just a question on the international operations. What is your -- currently, what is your most profitable international hotel, given the current scenario in the Middle East and all? So which is -- which one of your hotels like Mauritius and this Indonesia and the Middle East one, which one is the most profitable in our group?

So I would say some of them are quite close, but the Oberoi Bali -- Bali has seen a strong surge in demand. And believe it or not, actually, a lot of that demand is coming from India. The figure I met -- I read, not for the Oberoi Bali, but for Bali in general is I think India is the third largest inbound destination to Bali. And at the Oberoi Bali, we also have fortunately strong Indian demand. That hotel has seen very high occupancies and good rates. I think the potential for the Oberoi Bali is significant, and that's another hotel where we're looking to renovate. And I think we can easily achieve what we did in the Oberoi New Delhi with doubling of our average rates while maintaining or even increasing occupancy, maybe reducing room count a little bit. And that's something that we are working on as we speak today.

Also, I would add to what Vikram is saying. I think, Sunny, you didn't specify when you meant -- when you said profitability. Was it operational profitability or the last -- the net profit after all kinds of corporate costs. But I'm assuming it's operational profitability if that is the question.

[indiscernible]

Yes. If that is the question, then I think our newest property, Marrakesh is pretty doing good with high rates, et cetera. And it's still in a growing phase. Egypt typically does extremely well. Our cruise and -- on the Nile, extremely profitable, but currently it is facing difficult situation because of the Middle East. Equally, Mauritius is...

Good rates.

Yes, from a rate point of view, it's good. So I think our properties are, by and large, profitable hotels. We need to undertake some restructuring and some attention and care, which we are in the process of doing. And obviously, then that will help us to really turn around the international operations completely.

Okay. And have you finalized the CapEx for [indiscernible] in Thailand or that is not yet finalized?

This is a management contract. So it's basically [indiscernible].

We'll take the next question from [ Rushabh Doshi ].

Yes, am I audible?

Yes, you are.

So recently, I read that Indigo for the business class has chosen Oberoi. So -- and our airports and the aircraft carrier business also doing quite well. So if you could just tell us going ahead, do we see the demand still sustaining there? And also, could you just give an approximate split of how much is coming from the airways -- airlines and how much is coming from the airport lounges?

Do you want to take that?

Okay. So airport lounge, we have just one lounge. Currently, that's a very profitable lounge.

It's extremely profitable.

And it contributes about almost 40% of the GOP that the OFS and the OS units together generate. Having said that, the airport lounge is a limited lease period. So obviously, at some point of time, this lounge will not be there. But on the flip side, the flight catering business has been bouncing back in a strong way. And with the growth in this sector, especially with new aircraft being procured by two of the most prominent airline players in the country, this looks really robust to us. And we believe that despite the lounge business not being there next year, let's say, we will still be able to sustain the profitability to increase and growth in our flight catering business.

We'll take a question from Amit Kadam.

Yes. A couple from my end. Starting with Slide #9, whether we have said -- like that [indiscernible] ARRs have moved for April, May, June. And then above that, we have also mentioned how May occupancies have also moved for the domestic hotels. So largely, it could capture how much standalone business have -- would have also moved. On that basis, when I just compare, it had been -- ARR had been fairly flat, and occupancy was also like barring April, we had similar intake in that particular thing. On that basis, when we -- still we were able to report some kind of a growth in our standalone business. Just a question number one is that what attribute to still that delta in that business? What are the elements which still were able to contribute, which led to that top line growth? Second, I just wanted to understand on the extension to this particular slide that how the numbers -- or I would say, how the demand is looking forward in terms of July, August, September? Because you would have a reasonable understanding about those particular things because some forward-looking would have also happened. I just wanted to reconcile this number with one of your peers, which in the earlier month had reported, they had given a very strong commentary about very healthy 20% kind of a growth. They were very confident on that. And they also mentioned how the future numbers have also -- or the future months look like. So based on that, if we don't want to call out the numbers specifically, we being we. Still like if we can help us to understand where we are flickering in that particular 20% range because our key geographies are broadly like Delhi and Mumbai figure into that particular predominant where the strong demand recovery has been seen. So that's question number one. And then there are a couple of -- 2 or more. I'll just come back.

Go for it.

So I think, firstly, it's a good question.

It's a very good question.

Yes. I think what you would have noticed is that May was really down because of the factors that we mentioned. April was a really strong month. So I would attribute that increase that happened is mostly because of April. And if the May month's occupancy was to be normal, then obviously, we would have surpassed the previous year's same quarter numbers by a much larger margin. So that's point number one. And on point number two, we -- as you rightly said that as an organization, we do not believe in giving forward-looking numbers. The booking windows have also shortened a lot. So therefore, it's not right for us to give a number going forward in the next 3 months when we know that really booking really picks up, especially in the city hotels in a much shorter span especially post-COVID. Having said that, the overall trend is very positive, and this includes some of our international hotels also, where we don't have any reason as of today to believe that there is any reverse trend towards that aspect. So while you would have got cues from our peers, I think we will refrain from giving any number, but it is healthy.

So at least on a confident basis, are we aligned to that particular thing that the momentum is again back in the Q2? And in fact, they were so confident that it could be one of the better Q2s of -- looking to the -- usually Q2 is assumed to be weak -- muted of all the 4 seasons. But they were like or the thing that because there was some pent-up from quarter 1 to quarter 2, there were some like higher wedding dates, hence some MICE events also like followed too in quarter 2, that kind of things we also would have observed in our business. At least on that basis, we can summarize the question number one?

Yes. No, Amit, sorry, but we really -- that's -- to us, that's a bit of speculation. So we wouldn't like to give really numbers. But as we said, and we've been repeating this, Vikram said this in the beginning that it is healthy. There is no reason for us to believe that the trends are anywhere down. If you look at June also, June also has been -- it's been one of the weakest months in the past, but this year was same as last year. So obviously, except the blip of the elections, the other 2 months are -- have been good. So there's no reason to believe that -- and given the business on books that we have, we don't believe that July, August, September will be worse or something. It will definitely be better.

Okay. So I'll leave it there. I'll just go to my question number two is on the -- like as we had few quarters back alluded to this particular Vision 2030, where we have an ambition to double our rooms. So from there, the visibility at least I have on my side is just like a 1,000-odd room kind of a visibility for the next 2 years, where I assume if I want to double my room, and so what -- I need a little clarity on how much it would be owned, managed. Second is that when -- like the time lines of those things happening. I understand that because it will be largely back-ended, large part would come beyond 2027 because something like we have to act now to show that after 4 years of property terms. So I assume that large part of that additional upwards of 4,000 would be coming in the later part of the [indiscernible] or maybe the -- beyond 2027. So just like if not now, but some time in your presentation -- through your presentation or some better forum where you can actually share the insights on how you're trying to plan your capacity planning. And what are the things already in place, be it land or be it some like some kind of a -- if you need some like a resource from a JV or something like that. Just help us in that thing, which will get the medium-term outlook of our business. I understand these ARR-related occupancy questions are very near term, but like from a medium-term basis, when we want to take a sense on this business, it will help us, sir. And I think that has not been captured in any of our slides. So I'll appreciate if you add that particular thing in your presentation.

We've once given, and I think you're basing your calculations and your spreadsheets on what we have given in the past. Yes, it's true that we have not given now because there's a conscious decision that as and when we -- especially after the last LODR amendment in 2023, a decision was taken by the company to announce projects as and when they concretize. And when we say concretize, it means that everything is done and tested, and we are in a position to make that announcement. So unlike many other companies, we really have chosen to follow this path. But your point is well taken. And if there is a case in future for us to give more concrete visibility of what is the difference -- I mean what is the segregation between management contracts and owned hotels, et cetera, then we will certainly come ahead with it.

Okay. And just one final question.

Amit, I think...

Sorry, Amit, and I don't mean to interrupt you, but just I think, number one, I think what you're asking is a very reasonable question. But I'd like to answer it slightly differently. I think as and when we finalize a hotel whichever way, whether it's owned, managed, a partnership, et cetera, and we make those announcements. And we share that with the stock exchange and with you, I think that will, hopefully, I hope, give you some level of comfort because then you can see what we're seeing and what we're announcing and then extrapolate from there. So that's what we are committed to doing. And as soon as we're able to share details, we will do so.

Amit, we need to wind up quickly. So I need to take some other questions, if you don't mind.

Sure.

I've shared my e-mail ID. So for any unanswered questions, please write to me. We'll take the last question from Sanjay Kohli, and then we have a few questions on the Q&A board. He put a little question out here. Will the Hebbal Lake project serve as a prototype for [indiscernible] to follow?

I think mixed-use developments, I hope there will be more to follow. That's what we would like to work towards.

So is there a possibility of getting a sort of a big announcement? Let's say hypothetically, these 100 industrial parks that are coming up. And government gets into dialogue with the leading hospitality chains and says that, "Look, we need you guys here." So would the Oberoi Group be amenable to that sort of big bang expansion suddenly? And in the coming quarters, is that a catalyst to look for, for investors and analysts?

I don't want to speculate, but if -- we are an Indian company. We are committed to India. And if the government were to ask us to support the Indian growth story, absolutely, we would.

But Sanjay, I'll add, too. I think it's a good question to ask. And I think one of the things that you would have probably followed is since the last 1 year, there are at least 2 solid templates now which has been created and announced. One was the model where we went with a lease model with the state governments where we were offered land by states. And therefore, we are able to reduce our cost of acquiring, our cost of creating that property. And that's a very good model to follow. And that's -- that template has already been established. This is the second one that we've now come out with, Hebbal. And if this can happen in 1 year's time, then obviously, there's much more to come in the years to follow.

We'll take the last 2 questions on the Q&A board. Manoj S., can we please talk about blended rate hikes percent taken in the beginning of Jan for corporates that is trying to gauge starting point of revenue growth year-on-year.

I think if we can get that question. I don't -- first of all, I don't want to give an answer which is not accurate. But if we could just get that question, Navin, then we can -- I don't have that data with me right now. And I'm not going to quote a number which may have some margin of error.

Sure.

If we can get that, we'll be happy to respond to it.

Just note -- take note of that. Give me a second, please. Okay.

I think the question if I understood correctly, is what are the corporate rate hikes that operate for most markets on a calendar year? I think that's the question. Is that correct or not really?

Can we speak on the blended rate hikes in the beginning for corporates?

Yes. Okay. So yes, we can respond to that. And we'll do that. I don't have the numbers in front of me.

Okay. One more question is from [ Deepak Verma ]. Please elaborate on our mixed-development project through process in cities due to high cost of land. How will the other issues like commercial and retail yield better results for EIH?

Do you want just the cost of development, but maybe you can...

Yes. So obviously, the cost of development for commercial is much lower -- much faster than a completed hotel, which has a large element of FF&E. But more importantly, as a business model, I think it works very well in risk mitigation because with long-term lease, et cetera, with offices. And we have a template for that because we have the Oberoi center in Gurgaon, albeit a much smaller development where we have commercial spaces, we have created that asset. And it appears as an investment property on our balance sheet if you can look up that. And we've seen the model work very well as providing us steady inflows. So I think that sort of -- that creates sort of a hedge for us in times of volatility, where at least there is a free flowing cash, which comes in from the commercial side. And along with that, we are coming up with 2 very prominent hotels and very good quality hotels, which will help us in targeting the upside that is there in the hospitality business. So it's basically capturing the best of both worlds. And obviously, the synergies between the commercial and the hotels -- the commercial element and the hotels is really going to help both symbiotically. So I think there's a lot of merit in the model that we are pursuing.

My apologies, but we ran out of time completely. And we won't be able to take any more questions. Any unanswered questions, please write to me. And before I hand over the webinar to Kallol and Vikram, many congratulations on Oberoi Rajvilas, Jaipur being ranked as the best hotel in the world to you and to your entire team.

Thank you.

Thanks, Navin. Credit to all our colleagues at the hotel. They really do all they can to look after our guests. And they are the true heroes. So thank you. Thanks, Navin. We really appreciate the opportunity. And thank you, everybody, for participating and for the questions you asked. And if any unanswered questions, please let us know. We're very excited about both Hebbal and the Grand and also on other opportunities that we're working on, which we hope we can share with you in due course.

We are, of course, very excited to open the Oberoi Rajgarh and the Oberoi Vanyavilas this year itself. And those are pretty marquee projects that are going to come up.

Thank you very much. On behalf of all of us at SKP Securities, thank you very much, Vikram and Kallol, for taking time to interact with the investors, and I look forward to hosting you again in the next quarter. Thank you, and have a wonderful evening.

Thanks so much, Navin.

Thanks a lot.

Thank you, everyone.

Bye-bye.

Bye.