Kamat Hotels (India) Limited (KAMATHOTEL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q3 and 9 Months FY '25 Conference Call of Kamat Hotels India Limited. [Operator Instructions] Please note that this conference is being recorded. At this time, I would like to hand over the conference to Ms. Nupur Jainkunia from Valorem Advisors. Thank you, and over to you.

Thank you. Good afternoon, everyone, and a very warm welcome to you all. My name is Nupur Jainkunia from Valorem Advisors. We represent the Investor Relations of Kamat Hotels India Limited. On behalf of the company and Valorem Advisors, I would like to thank you all for participating in the company's earnings conference call for the third quarter and 9 months ended of financial year 2025. Before we begin, let me mention a short cautionary statement. Some of the statements made in today's earnings call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management's belief as well as assumptions made by and the information currently available to management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today's earnings call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review. Let me now introduce you to the management participating with us in today's earnings call and hand it over to them for opening remarks. We have with us Mr. Vishal Vithal Kamat, Executive Director; Ms. Smita Nanda, Chief Financial Officer; and Mr. Nikhil Singh, Company Secretary and Compliance Officer. Without any further delay, I request Mr. Vishal Vithal Kamat sir to start with his opening remarks. Thank you, and over to you, sir.

Thank you very much, Nupur. Namaskar, everyone. Thank you all for being here on this afternoon, and welcome to our earnings call to discuss the Q3 and the 9 Months FY '25 results. The results, along with the comprehensive presentation have already been shared with you all on the stock exchanges for your review and for you to look at. And based on that, I'm assuming many of you are all here. So thank you for being here. As you may have noticed, the company has delivered a very good performance in the third quarter across the various metrics, showing growth also year-on-year and quarter-on-quarter. Apart from growth, it's also shown some improvements on the various other factors, which we will take up further in the call. As per our long-term plan in terms of strategic, we intend to extend our footprint to many more geographies which we can deliberate a lot more in the detail to come. Mainly our Pune Orchid, which has been going on in terms of certain upgradations; then the Goa Hotel, our Orchid hotel in Goa has commenced operations on 17th of January. So we are very happy about that also coming on. It was a little delayed, but it's there. Then there are also expansion facilities happening at certain places, which will further increase our revenue and along with that, our EBITDA also. So the company is also dedicated to enhancing additional efficiencies in terms of reducing electricity, HLP which we call, certain labor costs by using various technologies and also enhancements to make the same efficiency and while also at the same time, keeping the service factors in mind. Our customer-centric focus -- that's what Kamat is known for, our customer-centric focus in terms of family and corporate as a company, which we focus on, we are committed to that, along with the environment because we are Asia's first 5-star pioneering chain of environmentally sensitive hotels and our customers recognize for that. And that is why we have a very high repeat of 34% repeat customers in our entire. So 34% of our sales, which comes is from repeat customers. So we are very grateful to our high repeat guests. With this, I'd like to hand over the call to our CFO, Mrs. Smita Nanda, who's done a fantastic job in terms of various aspects, and she will take you through the financials for the year to come -- for the current results. Thank you.

Thank you, sir, and good afternoon, everyone. Let me briefly touch upon the key performance highlights for the quarter ended 31st December 2024. The consolidated revenue for the third quarter was INR 111 crores, representing an increase of around 29% year-on-year basis. The EBITDA for Q3 FY '24 was INR 44 crores, reflecting the growth of around 70% year-on-year basis with the EBITDA margin reported 39.77% [indiscernible]. The profit after tax for Q3 FY '25 stood at INR 26 crores, decreased from INR 42 crores in Q3 FY '24. That is because of the last year, we have contributed exceptional items, IRA Mumbai sale. For the 9 months of Financial Year 2025, the consolidated revenue stood at INR 270 crores representing the growth of 22.8% year-on-year basis. The total EBITDA stood at INR 80 crores, which rose by 18.3% Year-on-Year with EBITDA margin reported 29.63%. The profit after tax was INR 36 crores. This is 16.6% lower than the previous year Q3 FY '24 on account of the same exceptional item, which is related to the IRA Mumbai sale. PAT margin stood for the period at 13.19%. With this, I conclude my remarks and request the moderator to open the floor for a question-and-answer session.

[Operator Instructions] We'll take our first question from the line of [ Raj Saraf ] from [indiscernible].

Sir, 2, 3 questions I have. So first of all, that as we know, I have seen in the past that our Q4 is generally nice. So can I assume that our guidance, which was lowered from INR 400 crores to INR 350 crores in the course of this financial year. So now we are on target to overachieve our INR 350 crores and EBITDA, I think, more than INR 100 crores.

So sir, definitely, we had given a revised guidance because of the certain outlooks at that particular juncture because we always want to be as candid and transparent as we can based on what we outlook. But this quarter has been very good. I am very proud of our boys and girls. Our team members who have done a great job supported by our admin at HO and other level because of which we had a really good this thing. And definitely, we seem to be on track in terms of the EBITDA for INR 100 crores.

Okay. So sir, this 40% EBITDA in Q3, close to 40%, is this sustainable going forward? Or what could be the outlook going forward from here on?

The company's historic performance even before the last 2 years, which has basically been where we have been out of our financial challenges, the company's historic performance has always fluctuated between 33%, 35% and 40-odd percent, if you've seen. And in the last 2 years, since we came out of various financial challenges, we were using the -- whatever things to clean up and smoothen all our -- in fact, the new balance sheet when you will see it, will be much thinner than the previous one because various things which were contingent liabilities and other aspects, all that has been cleaned up systematically. And we will come back to our normal efficiency, which is ranging between 35% and 42%, that will come back. So it's more or less -- I would say it's fair to assume 35% to be our standard benchmark, which in the last few years or the last 15 months has not necessarily been the case because like I explained. A lot of things have been done streamlined, smoothened because of which the company is now neat and clean in that regard.

Okay. And sir, the last one is, sir, we have...

I would -- sir, in the interest of the other people also, may I request we normally give one question per person. I think, we have already given 2.

We'll take our next question from the line of Jay Kant Beria from IIFL Securities.

So I had a question on the state of the Pune market. It's one of the key markets for us besides Mumbai. So just wanted to know your opinion on how do you see it going forward?

The Pune market is a fantastic market. It used to be a terrible market about in 2012, 2014. But Pune as a city and hoteliers over there, along with various other private players have been able to make it into a really fantastic commercial hub plus MICE city, plus it is a fulcrum city more than Mumbai is to various other B-town cities around in that zone of, say, 100, 200, 250 kilometer radius. So people from Kolhapur, people from Sambhaji Nagar, people from other places all prefer to go to Pune rather than even Mumbai. And Pune has become that fulcrum of business also, education also. And when it comes to hospitality, MICE, events, conferences, exhibitions [Foreign Language]. So it has certain plus points which Mumbai at times may not have, which is basically geographic more than anything else. And there is a little more comfort and emotional connect, which Pune as a city has with the certain Ahmednagar and all. So Pune market will continue to thrive. It is extremely well supported by a lot of GCCs coming in, a lot of other kind of businesses which are coming in, which are not only manufacturing, but service-oriented also. So the long-term prospects for Pune are very robust, and we are very bullish on Pune in that regard.

We'll take our next question from the line of [ Ankur Kumar ] from Alpha Capital.

[Foreign Language] But this quarter, we are at INR 6,377 with 65% occupancy. So what is our plan to increase both?

So sir, one of the thing is -- one of the reasons the ARR is not a very good metric to take is because the ARR is a culmination of all the brands of Orchid. Now today, the average ARR in Orchid Mumbai is sitting at around INR 8,000 to INR 9,000. But it is still showing as a metric on a whole as Orchid brand at INR 6,000 like you mentioned, the reason being that there are certain other hotels which are either they are new or they are in a low ADR competitive market, but the ARR is not only driving the revenue. The revenue is being driven by F&B and ARR: banqueting, restauranting and rooms business, apart from any kind of miscellaneous income, which may be there, which has also grown. Simple thing like car rentals. It's not a very big line item, but [Foreign Language]. So overall, the boost which has happened. So while ARR of the brands we give because people ask [Foreign Language] city-wise. Like example, ARR has a comparatively lower ARR shown, but IRA by Orchid Ayodhya is doing an average INR 10,000 ARR, okay; INR 9,000 to INR 10,000, going up to INR 11,000 fluctuating between that. Same way, IRA Mumbai is doing anywhere between INR 7,500 to again INR 9,000, is fluctuating between that. So the brand as a whole, we have given these metrics, but it is not a true reflection of every property's individual performance.

[Foreign Language], that will take some time, sir?

It is very much possible once now other hotels also in those brands mature. Like example, recently, we have opened the Orchid Passaros in Goa, which is at Benaulim. It used to be Lotus. It is now Goa -- sorry, it is now the Orchid. Earlier, the average rate over there was INR 3,000, INR 3,500. Today, average selling rate in Goa Passaros is around INR 7,000, INR 7,500. So that jump will definitely reflect in the times to come. And that is why the -- and this is just now. We have just now opened the what you call hotel, and this is the ARR. So if the ARR, we expect to obviously go north of INR 7,000. So systematically, the ARR, which you see will definitely increase as hotels stabilize and mature. And that is also one of the reasons of the better performance that many of the hotels, which opened last year have this year done their due and added to the overall kitty.

We'll take our next question from the line of Rusmik Oza from 9 Rays Equity Research.

Sir, just wanted to understand the time line for the expansion of Pune property rooms from 410 to 500. And also, the number of rooms now in Goa has gone up to 58. Is it right?

Yes, sir. You're absolutely correct. We have taken the number of rooms up. Right now, it is 57. One room is pending because that is sort of different than a unique room, and that will take a little longer, but we are at 57 right now, but it will eventually be 58. So it will just be a couple of months more for that one particular room. But that said and done, coming to Pune, Pune will take approximately anywhere between 12 to 15 months to come to the 500 mark. The reason being that the current rooms also of Pune were upgraded, upscaled to a very upper category, okay, whereby -- that's why basically while we will have some of the rooms ready, we will be taking out some inventory. And at any given point of time, the hotel will always operate with 350 to 380 rooms depending on floor to floor so that we don't lose revenue. Because Pune Orchid last year also did almost INR 80 crores, and we intend to take that upwards towards the crossing of INR 100 crores systematically. So for us to do that, we don't want to lose the number of rooms. So that is why we will add these rooms. But yet, while we add certain rooms, say we add 30, 40, 50 rooms, we will take out also 30, 40, 50 rooms based on that to balance out and make sure that we always have around 350 rooms. Because Pune Orchid being a MICE destination, always is having a high demand for bulk rooms. So we do a lot of events where there are a lot of bulk rooms required, which a normal hotel cannot -- so a normal business practice of a prudent good hotel will always not give more than 50% of the inventory. Even if you're doing a wedding or you're doing a conference or you're doing something. Unless it's a resort, they will not give you the full inventory because they don't want to upset their routine guests and regular guests. On an average, any hotel does 60% to 80% occupancy. So you don't want that 60% to get upset because you have given the whole hotel to someone. So we are lucky that as having such a huge inventory of 380 rooms, we can give up to almost 200 rooms and still maintain our corporate relationship where they are not unhappy that [Foreign Language], that doesn't work. That doesn't happen rather. So that is the plus point which the size of Pune Orchid and same advantage is there for Mumbai Orchid also. So this is where basically the expansion will take about 12 to 15 months of the additional, but it will always operate with 350 to 380 rooms approximately.

Next question is from the line of Pankaj Bobade from Affluent Assets.

Just wanted to understand whether this is sustainable. Earlier, we used to have our top line in the range of INR 80 crores, INR 90 crores. This quarter, we have reported INR 110 crores plus. So where do you see quarterly revenues going forward? And is this sustainable along with the margins which we have reported, 40%?

Sir, it is only sustainable if we continue to do what we are doing, which is, one. Expand new hotels which come in will add to it to existing hotels who are there to make them sweat better. The team has done a very good job. In fact, considering that previous to this quarter -- previous to this result, the last 4 months and 5 months, there have been various reports on consumer sentiments being down, other aspects being this and that and X and Y. So when there has been not necessarily the same kind of buoyancy, which we would see in terms of people talk in 2022, and yet we have done this number, which goes to show that our brand is appreciated. Our customers appreciate us. We are able to hold them, retain them, give them the right kind of deals, which are helping us and them both. And that's basically why it has to be sustainable if we have to -- to answer your question, it has to be sustainable because of, like I said, expansion, existing sweating of assets and not being complacent. While you might think it's excellent, we think it's good. We don't want to get into the euphoria [Foreign Language] because this is not our standard. Our standard is even better than this, which we will work towards driving.

Next question is from the line of Jay Kant Beria from IIFL Securities.

So just a follow-up question on my previous part. So on the Pune market, so as you mentioned that you see it to perform really well. But we do hear a lot of industry experts who say that Pune is a very rate-sensitive market and that a majority of the business is driven by corporate. So what is it for your hotels? What is the mix? And do you think that there is some stickiness around ARR?

So sir, ARR is always, as I've said in my past also, ARR is not in my hands. It is a function of the market, and ARR boost is always a function of the market. If the market is buoyant, you will have a better ARR, okay? Occupancy is in my hands because based on how the market is behaving, I can drop the prices, I can get customers in, I can do whatever I want. But ARR is always a function of the market. If there is a conference, like example, when there was a Coldplay conference, the entire city got booked out regardless of the category, whether it was travel agent, whether it's corporate, whether it is FIT -- FIT means, people who are free of -- individual travelers [Foreign Language] individual person going on his own account. So ARR is definitely something to keep a track of because it shows you the kind of robustness of the demand, which is why hospitality as a whole -- when I was asked 2 years back, will this ARR sustain? I said, no, they will grow. But why I said that is because I could see the future pipeline, I could see my competitors. And earlier hoteliers were insecure. They were [Foreign Language]. So ARR will sustain and continue to grow. Obviously, they will continue to grow. Whether they grow in leaps and bounds, that is the different perspective. But overall, what scenario we see is here to stay. Again, micro climate-wise, it will definitely grow. Like example, in certain cases, like today, see Ayodhya. Ayodhya, the ARR is stabilized and it's going to continue to grow on this stability. Because as we are maturing in that market, we are understanding the trend, next year, I wouldn't be surprised to see a 20%, 15% minimum growth in ARR next year because this is our first year of operation. On Ram Navami, we started. And this Ram Navami in April will be our 1-year completion. So we know the entire cycle that when do people come there? Why do people come there? How do they come there? How are they coming? How are they going? How many flights are there? The flights, touch wood, have been not only stable, but going full. So ARR aside, overall the operations which we see and coming to a mix, broadly, broadly, all our hotels operate on a mix of right -- which I feel is right, sir -- I feel right is 30% corporate, 20% -- assuming that we are going 100% full, 30% to 35% corporate; 20% travel agents; around 30% to 25% to 30% being OTA; then approximately 10% to 15% being our own website, our own channel, which is basically our market reward members who are there. We have so many repeat customers, like I mentioned. Our channel itself also, sir, is very robust in that regard. So around 10% to 15% of our own -- [Foreign Language] I'm missing out somebody. Then in some cases, we have some airline business also, which is your anchor business, which could be around 5% to 7%, okay? And broadly, this some segment -- and FIT, balance are FITs. Now FITs are basically the pillars which give you a higher ARR. They don't have a corporate tie-up. They have not come to a travel agent who has tied up. They have not come to -- or they have not seen your website. They've just landed up at the door. So even if they come to the website, they come to FIT. So that is basically the thing. Broadly, sir, I've given. It again changes from hotel to hotel. And even like resort destination may not have any corporate. Resort destination will have higher FIT, and higher travel agent, and higher OTA, that way.

Next question is from the line of Maanvardhan Baid from Laurel Securities Private Limited.

So sir, at our end, there are multiple lease properties. Can you share the sort of the return metrics for these lease properties, the terms of these lease properties, when are these lease expiring and the nature of these leases from property to property so that one can understand the whole business in detail?

Sir, mostly, our lease are signed between 12 to 15 years, some may be a little longer than that. So none of the lease are expiring anytime soon because they're all, like I said, new leases entered in either 1 or 2 years old and the minimum life cycle of this -- minimum is 12 years to 15 years. So all those are the thing. Secondly, sir, it depends broadly -- what the thing is generally a hotel, if it does a 35% EBITDA and your revenue share is 20%, then broadly you will take home 15%.

Okay. So broadly, this is the ballpark that one should work with for these leases on an...

Ideally broadly, 15% can become 10%, 12%, but broadly, this is the ballpark to work with. It's a fair metric. If suppose someone 20% rev share become 21%, 22%, 25%. Broadly, this would be the metrics to work with. Within this also, sir, I mean, yes, that's broadly how I would break this down to, sir.

Okay. And on the expiry of these leases, where do you see this business going? Because, let's say, 10 years down the line, there will be 5 or 7 expiries. So then...

Sir, why do we feel that there'll be expiry? Why don't you feel that the owner is so happy with us that he'll renew and we just continue renewing on a revenue share. So that way, sir, 10 years down the line, we don't know whether I would want to continue that hotel. Maybe by then, that hotel may not be worth continuing for. So these are all things for 10, 12 years down the line. Let us sir, my horizon is the next 3 to 5 years. Because the world is so dynamic, you don't know what is going to happen every 4 years in America and every 5 years in India, then we need to see both and balance it out. Trump has come with now all these trade warfare and other things, whatever he's doing, and it is working in his favor. Now, if it is working in his favor and he's finding that people are fostering and then giving in to him, all the more the world will be a very VUCA world. So we should take everything as a short innings, T20, rather than thinking of a test match. And that's why my horizon last is basically more important to see 18 months, 3 years and the little of 5 years in terms of strategically where we want to grow as a brand, which are the tier 2 cities, tier 3 cities? In tier 1, what is the long-term aspect? If I'm especially acquiring an asset, then I'm looking at a decade horizon. But otherwise, sir, in terms of rental, please, it's not necessary that we need to worry about 15 years from now because it is not our asset.

We'll take our next question from the line of [ Ankur Kumar ] from Alpha Capital.

Sir, if I look at Q4, generally [Foreign Language] because there are a lot of demand in Q4 also. So what are our guess sense on that, sir?

So sir, Q4 is always a little lesser than the Q3. I don't think that it will be that little lesser. It might be a little lesser than a little lesser. But in a practical sense, I'm saying, I don't want to -- while the books look robust, I don't want to unnecessarily give you any great guidance. I would like to tell you that while this month has been good, the month of January has been very good, the month of February always is very good. It is a traditional thing, because it's the budget time, that's when a lot of travel happens, and then it is historic that February is one of the best months, even though it has 28 days. So again, I would not necessarily base it on what will happen in Q3. But at the same time, if I have to say that will it be better than probably next year's Q4, it could be. As of now, the signs are positive that I would say that even if we achieve last year's Q4, still the overall net result of our operations is very interesting.

[Foreign Language]

[Foreign Language] just we discuss this 9 months. We'll see, sir, in that meet and accordingly, see. Okay? More important than guidance is basically being able to -- which I mentioned that earlier also that we will do INR 100 crores plus EBITDA. There were some skeptics, and they are right to be skeptical because technically, it did not make sense, how can it be in Q2 that we will achieve INR 100 crores, and there were a lot of skeptical people. But I think my team has done me a great favor in terms of proving me correct by seeing what we saw on the books. Ultimately, sir, we have to see our business on books along with that our experience and pray that it comes perfectly together. And that basically is what has happened here also. The conviction we had in our team, the conviction we saw in our books, and based on that, what the team has done. And that is why when I saw before also, I mentioned INR 100 crores, that time, of course, there were some on the call also would have felt that way. And they are absolutely right in thinking so. Here, I would not because see, I'm day-to-day doing it. You guys are analyzing us only once in a quarter when the quarter results come out and you have hardly any knowledge other than what is shared in terms of the balance sheet or the result. Whereas I, day-to-day, I'm in the grind. So I am obviously having first-hand knowledge about certain things, which gives me that confidence to say, [Foreign Language]. So I don't want to do [Foreign Language] or give any higher expectations. I would say [Foreign Language] and we'll make sure that INR 100 crores EBITDA has already been touched for me, which I have promised my investors and all you people who take the time out to listen to us. So that, I'm at least grateful for.

We move on to the next question from the line of [ Komal ] from Tradewalk Research LLP.

I just had a couple of questions. The first, in one of your interviews, you mentioned plan for overseas operation. Is that still under discussion?

Sorry, madam, in the middle, I could not hear you a little. Could you please repeat, sorry?

In one of your interviews, you mentioned plan for overseas operation. Is that still under discussion?

In my interview planned for overseas operation? Okay. I'm really sorry. It may not be in the recent -- is it a recent interview?

Yes, a couple of months back, I guess.

No, madam. I can assure you, I'm very happy in be India, buy India. I've already been abroad. I know how it is over there. Today, when God is giving me so much opportunity over here and today, thanks to the kind of push the government is giving, both state-wise, central-wise -- and I say state-wise, Odisha state government, I'm grateful to Maharashtra government is there. Himachal government also has been doing -- especially the previous government was doing a lot. So I don't have much to complain about in terms of within India. So I'm very happy doing business here. I don't think it might be my interview, madam. Because I'm very clear that I am not really very keen right now to go abroad because of so much opportunity and work happening here. I mean, within India also, we are having some more sign-ups to come up, which we will announce at the subsequent time once it is on the dotted line. What is in the pipeline? I don't want to speculate on. But let me tell you, we've a very robust pipeline. Because what has happened is Kamat also has come out of its shadow and Orchid as a brand also has come out of its shadow, whereby we are -- today, hoteliers are giving us -- or rather potential tie-up partners are giving us our due. So I don't think I mentioned about it. It might be a similar named person, but not me. I don't know who was interviewed, because I am totally not very sure that -- keen -- I'm not very keen and I know very clearly. Traveling within India, madam, I feel like sometimes I'm an Indigo or Air India staff member. They know me -- I kid you not, they know me now by so well because randomly you fly and then the same people have the same circuit. So that I don't want to add to my pain of traveling abroad.

Okay. And are we looking for any progress in terms of adding keys going forward?

Adding keys?

Yes.

Yes, madam. Of course, we are. Right now, we have so many hotels. Chandigarh will open by March. So we will get a full financial working of the year for Chandigarh hotel. It's a fantastic 5-star hotel and really come out beautifully. We are really very proud of how the thing is. So it got delayed, but it's came out fantastic. Hyderabad will open within the first quarter of this thing, and it's a high-tech city, which is a prime area. I'd rather tell you -- I'll tell you all where exactly location that it opens. Then Bhavnagar also will open by around October. By December ending, our Dehradun hotel will open. Gwalior also will open by December ending. Our Puri hotel will open by December '26. Work is going on in full swing on that property also. So when we have all these things in pipeline, which is in hand, apart from this, we have properties coming up in Sambalpur. We have properties coming up in various other locations in Odisha. We have some more signing ups, which, like I said, once we've signed up, I will inform you all. So the pipeline is quite robust.

We'll take our next question from the line of [ Trisha Kansara ], an individual investor.

Sir, I wanted to understand the breakup between, let's say, our new properties versus the old legacy properties that we had. So whatever growth we are seeing in this quarter or, let's say, even for the 9 months in FY '25, how much was contributed by new properties, which were, let's say, opened in last 12 to 15 months versus how much was contributed by our old properties, the growth as well as the profitability?

So you are saying that new properties are opening? [Foreign Language] Around 65%-35%. That is what Smitaji has just updated me. I thought it was around maybe 75%, 80%, but no, the company has balanced itself very well in terms of revenue from new properties coming to 35%, which is very good, actually. Thank you, Smitaji, for highlighting me also. I was also under wrong impression. Because this shows that the company is moving away from its dependency on its traditional core hotels and balancing out with now new infusion of -- so that means we are deleveraging, derisking and at the same time, being able to get additional revenue streams. So this is already in a 65%-35%. Then by next year, I would not be surprised if it comes to almost 50%-50% or so, which is a really great thing. So that's the reason.

Next question is from the line of [ Vedant S from KG Securities ].

Sir, I wanted to check, are you planning to expand your rewards program to include some banks whereby your customers can pay and their customers -- common customers can book the reward points or something like that?

That's a very good question. Actually, we have been pushing our agency who handles our program. And we have been telling them that we don't want to only restrict our members to only Orchid hotels, IRA Hotels, Lotus Hotels and Fort Jadhavgadh. We want this program to be that if you are an Orchid reward member, you should get benefits in various other firms, banks, various restaurants. So they are already working on this. In fact, they were even looking at [indiscernible] to do this whole thing, in fact, but they did not materialize due to certain other financial and other challenges. But in terms of the bank, yes, there are certain banks also who are keen now because we have almost 8 lakh members. And its' 8 lakh members to have a co-branding card or to have various other benefits, add points and redeem. And we want people to not only earn and burn in our ecosystem, we want them to either earn and burn in any ecosystem, but they should either earn with us or burn with us. So this is also something which is basically this thing.

Okay. Any time line, sir, when we can see that materialize?

Sorry?

Any time line by when we can see this materialize?

No, sir. This is something which is part of this thing, what you call -- it's part of this thing, what you call, time that you take to negotiate. So we are pushing. There are actually some other hotels also who would like to be a part of our program. And we might, in the near future, have some properties which are not exactly owned or managed by us, but a part of our program because they are also excellent operators and they also want business. And then we also should be able to send our members and probably earn some revenue stream from this also to look at that if we can have a revenue stream. See today, it is not only money. Today, it is something about more than money. It is about being able to connect and have that person come to you again and again. Even if I don't earn a rupee, but if through my Orchid reward program, I'm able to send someone to an exotic location or if I'm able to send someone to a resort, which is in line with he wants to aspire and he goes there. Then automatically, what do you remember? As an Orchid member, I was able to go here. So my repeat customer in my own hotel -- see, we have to see the long game where today, if we are proud that almost 34% of our repeat customer is coming back to us, I want to see how is he coming to me more and more even if he does not always use me. So because obvious -- but naturally. How many times will he go to Fort Jadhavgadh, 1 time, 2 times, you might find in the best place in the world, but then he'll try something else. But when he goes to that other place he tries through our program, he is remembering Orchid, he's remembering us. So that's how basically we look at. It's a more open, more iOS type of thinking rather than -- it's a more Android type of thinking rather than a closed system iOS thinking. So that's how we are looking at. So let's see how it goes, sir.

The next question is from the line of Pankaj Bobade from Affluent Assets.

Sir, just wanted to understand if we own the Royal Orchid outside Mumbai Airport? And secondly, can you please repeat the new hotels program, which you recently mentioned?

So madam, Royal Orchid is not part of Kamat Group. Royal Orchid basically lost the case. They cannot use the word Orchid. Actually, no one in India can use the word Orchid with prefix or suffix as per the Supreme Court, and this is a landmark judgment we won many years back. That is why they only opened their hotels under name of Regenta or others. They don't open any -- only the 12 which are there, which again, as per the order is in -- as part of the suit. So there are only 11 or 12 Orchid hotels which they have called as Royal Orchid Hotels, which are there. And those also as if they removed the name or if they shut them down, like example, one of their hotels in Bangalore was Royal Orchid, but now it has become another brand hotel. So it's become a Lemon Tree. So now they cannot reuse and take that name elsewhere. So that's the condition of the court. So they are Royal Orchid. We are Kamat Hotels, and we own the brand Orchid in India. So I hope that clears your query to rest.

Mumbai Airport [Foreign Language].

So that is the Orchid Mumbai, sir. So that is the Orchid Mumbai.

So it is with us, right?

Yes, yes. That is with us. Yes. You mentioned Royal Orchid, so I thought I'd just clarify that, sir.

We'll take our next question from the line of [ Randeep Kapoor ] from [indiscernible].

My question is regarding the joint venture, which was for the Puri Hotel. What's the latest update of that, please?

Unfortunately, we could not continue with the joint venture. It is better to have a positive and an amicable, happy separation or I would say, a discontinuation rather than have a thing. So we had a discussion. There were certain things, it's very dynamic. So based on that, they had thought that they would like to participate. But we are still moving ahead on that, and we have some other things in line. Let us get back to you, sir, once we have some more details on that.

No. But the hotel is coming up by December?

Yes sir, yes sir.

It's a joint venture or it's totally by yourself now?

Sir, it will be a joint venture still. It will still be a joint venture. I will share the details once that is first approved by the Board and other things. Then, we can share to the public.

Next question is from the line of [ Kaushik D ], an individual investor.

So I was just checking your [ IRA ] properties. The room rates are showing in the range of INR 15,000 to INR 20,000. So can you throw a light on the occupancy and the average room rate for these months of January and Feb as part of Mahakumbh?

Right now, sir, you're talking about Ayodhya, sir?

Yes, yes.

Ayodhya, sir, we are selling anywhere right now between INR 15,000, INR 20,000 it is fluctuating because a lot of people are going to Mahakumbh. Myself, I'm trying to go on Feb 13 to Feb 15, but it's very difficult. I don't know who are these 40 crore people who are reaching there because -- these 30 crore people because I'm finding it difficult to go there. I must appreciate the U.P. government. It is a phenomenal achievement. And I think, not only U.P. government, it is a testament to all of our -- all Indians, how amazing the whole place has been in terms of whatever feedback I've got, what my friends have gone and seen. So that is also affecting us positively in Ayodhya. Because from Mahakumbh to Ayodhya, our hotel is only 4 hours, maximum 4.5 hours. So people are going in a circuit. They're going to Varanasi, they're going to Ayodhya, they're going on a tour. So overall, U.P., apart from Mahakumbh, is benefiting and booming. So I think that's something which is there. And occupancy-wise, sir, right now, we are going at 90-plus occupancy. And hopefully, sir, we'll give you some more good news of some additional hotels in Ayodhya. At the right time, we will announce that because we are doing so well that we are right now the #1 hotel in terms of the government people. We have all various kinds of central ministers staying with us. Even though we are not the biggest hotel there, we are the second biggest. And yet, we have a lot of central government people, who's who of anyone if U.P. government wants to showcase. Because our food is so much appreciated that people have been coming and staying with us. Mr. Gavaskar stayed with us. I mean the list of luminaries are huge because again, our food, our personal connect with most of them and again, the overall team that is doing a great job in that location. So -- and it's just only about 2.5 kilometers from the temple. So hardly 10, 15 minutes, you are there. So it's a perfect location, perfect things have all come together. Thank you. sir.

Next question is from the line of [ Chandan Mishra ] [indiscernible].

My question related to Mahodadhi Palace, sir. It has seen a decrease in occupancy rate from last year. And as well as it has seen average room rate also decreased from year-on-year and Q-o-Q. What is the reason for that, sir?

Sir, unfortunately, that project behind, we are not able to command the kind of rates that we expect because the property right now, the 25 rooms which are on, that is on basically because -- behind, there is a work going on. There is a project work going on because of which we are not able to necessarily command that kind of demand from the guests. And we understand that because it's only 25 rooms. So 25 rooms has no major consequence even if our occupancy over there is -- even if the AR is double, those 25 rooms are not going to give us any kind of return as compared to when the whole hotel of 160 rooms along with banquet and all that comes in. So we are willing to sacrifice those 25 rooms. It's just that we don't want to shut it. Ideally, we may have shut it also, but we don't want to shut it. That is why those 25 rooms are on, and we are doing the work. So it's not exactly in the scheme of our things right now to focus on the ARR or anything because we don't want guests to be unhappy. Those guests who are willing to compromise, then they are expecting a rate also of compromise, which we're okay with because right now, it's running in a very simplistic fashion. But once it's done up and upscale, that's why we'll shut these 25 rooms also, and it will be upgraded into the luxury heritage hotel.

Next question is from the line of Gunit Singh from Counter Cyclical PMS.

So firstly, I would like to congratulate you for the great work that you've done, which is also showing in the numbers. So in the investor presentation, you have mentioned that we would be looking at 24 hotels by FY '25. So I just want to understand what is the growth strategy going forward? Are we targeting a certain number of addition of hotels every year as an internal growth strategy? And what efforts are we putting in to sort of increase the average room rates for our hotels? And how does the growth in our ARR compare with peers or the industry?

Firstly, sir, the first strategy is basically to add number of hotels in the states that we are in and to use a fulcrum kind of situation, like example, if I'm in Dehradun, that's why I would look at Rishikesh, that's why I would look at Mussoorie, that's why I would look at a place around that because I'm in that state, because only hotels is not, you have then to do localizing, you have to local connect, you have to have a lot of -- you have to be able to add value to the local society and make sure that any issues are there, they are resolvable. So one is whenever we are now in Shimla, we are in Manali, so we are looking at other locations in Himachal. So that is basically one of the strategies, somewhat like a hub-and-spoke style. So it is more across the social connect and other aspects. So one is that. Secondly, sir, you said about increasing of ARR. We are spending a lot of money on technology. We spend a lot on social media. We spend a lot on tools of technology, which basically goes and tells you how to drive the traffic. Then we also have a lot of investment in Google Analytics. We are spending quite a bit of money with our OTA partners to work with them to help drive traffic to us. Then, we are spending a lot of money on our Orchid reward members who we regularly contact, give them schemes, offers, because of which it is very commendable that a company of our size and a hospitality play in general has a comparatively very robust direct web page booking, which normally does not happen for even [Technical Difficulty] because most people prefer to go to OTA. So how to bring them to us. It's a constant effort. So this all helps you systematically bring your ARR up also. Along with that -- because as your books build up, then you can start selling better and better on the -- this thing. So overall, this basically is the kind of tools that we use. So we have a lot of technology at the back end for all this.

All right, sir. Got it. So sir, a follow-up question, if you allow me.

Yes. So a quick one, please, sir.

Sir, what percentage of our total bookings would be from direct website? And also, in this quarter, our revenues went up drastically Q-on-Q and Y-on-Y as well. But I have observed that the operating expenses are still in that range, about INR 67 crores, INR 65 crores. So sir, I would like to understand that, is this economies of scale coming in that expenses should not -- I mean, would not go up with the current set of hotels that we have about, say, INR 65 crores, INR 70 crores. And anything we earn in the revenues would directly translate into EBITDA. Is that a fair understanding?

Sir, a lot of the -- basically boost has also come from the F&B, the F&B business, wedding business, that has helped. I did not exactly get what you meant. What exactly, sir, apart from the rooms business and others, you're asking the increase?

Sir, so basically, our revenues this quarter went to INR 111 crores from about INR 85 crores last quarter. But our expenses -- operating expenses went up from this INR 63 crores to INR 67 crores, which is just an increase of INR 4 crores. So what about...

Okay. Sorry, I misunderstood. Sir, basically, when your lobby is your lobby, your lobby when you're doing a 50% occupancy or 100% occupancy will consume the same amount of electricity. So when you end up doing more business, your basically metrics of these things come down. What will increase is your food cost. If your party is of 200 people and it becomes 300 people, max to max my food cost will increase, which has increased. But my light bill -- my labor will more or less be the same -- or not same, but it will come in percentage terms down. So when you are doing more business, your profitability and EBITDA, that's why naturally will increase. That's why our EBITDA has gone up because the expenses remain almost same in most cases. The rent is going to be the same, sir. The light is going to be the same. The labor is going to be the same. Your elasticity of expenses becomes better as compared to when you're running the same show with a lesser occupancy or lesser banquet utility. So that is basically how the reasons of profitability is also enhanced and the costs have gone up incrementally, not exponentially in line with the revenue. It's actually a good question, sir. Thank you for asking that. I'm sure that will help a lot of the other people on the call also.

Right, sir. Also probably INR 65 crores to INR 70 crores would be like your saturation for expenses even if revenues go further with the current set of hotels, that's a correct understanding, right?

Sir, expenses will basically -- I'll end it at this one with you, that expenses basically, sir, will go up based on new hotel addition also. As new hotels are added, there is an increase in the expenses, which affects the EBITDA of that time. But after a year, it pans out because the EBITDA gets covered up in the profit that the hotel operates. So a lot of the hotels in the starting last year, 3 of them like, say, Jamnagar, Sambhaji Nagar and others which were new, those basically have taken a hit on our EBITDA at that quarter, but they get panned out like -- right now, you're seeing them adding positively to the EBITDA. So this is, but natural, sir.

Next question is from the line of [ Prashant Sethia ] from [ Hastakshar ].

I just had a question. Given the legacy that we have and the brand loyalty, are there any plans to sort of get into high-growth adjacencies like stand-alone F&B or cloud kitchen, et cetera? And secondly, what is the mix in terms of leased and owned property in the existing portfolio and the upcoming portfolio?

So sir, we have no intentions to go into cloud kitchen or into any segment like that. That segment, sir, is a different segment altogether, and it is not something suited for us. We are a brand. So why would I want to hide my name in a cloud where I'm unknown. I'd rather, in fact, pay front foot and say, here is Orchid, here is IRA, here is my [ South of India ] restaurant and take advantage of the fact that people want me. So we don't have any interest in per se a cloud kitchen. Secondly, in terms of the -- what you asked in terms of the stand-alone restaurants, we do have some stand-alone restaurants. We operate a stand-alone restaurant at Konark Sun Temple. We operate a stand-alone restaurant in Puri and near the beach. We operate a few stand-alone restaurants. We may look at certain stand-alone restaurants further, but there is no active plan to go after it. It has to be able to, one, make financial sense to be extremely near us to be able to operate in an effective manner. The problem when you do a stand-alone is that the cost is okay. That is one side. But the quality management becomes a big issue. So we would be basically -- the hotels -- the stand-alones we have right now are more or less where we have operational hotels. We can support it because we don't want someone to come and not get the same what we expect them to. So stand-alone. And that's how basically we are not looking at it actively, but a few opportunities have come and we have taken those, like I said, of these 2 places. We also do, by the way, which is part of the hotel budget -- not budget, sorry, the hotel revenue, it's not a separate head, is we do caterings. We do some level of caterings. We do some level of outdoor catering or some exclusive catering, but it's a very niche thing, not a very big revenue stream. And we are not focused on it, but we do that, just to tell you. So that's how the banqueting helps that way.

And the owned and leased properties, if you can just give...

Owned and leased? What, do you want to break up? The breakup [indiscernible]. The owned and leased is there mentioned in our presentation. So sir, in the interest of time because almost 1 hour is over. So in interest of time, I would request that you get it in the chart.

We'll take our next question from the line of Rusmik Oza from 9 Rays Equity Research.

We are adding around 380 rooms next fiscal year. Just wanted a color on what could be the occupancy in the first year because these are all new destinations and 3 of them are Orchid and 2 are IRA. Just blended, what could be the occupancy in the first year of these properties? What could be the average room realization? And since these are new properties, and as you said, there will be a lot of expenses in terms of promoting these properties, what could be the first year EBITDA margins of these new properties that are coming up in next fiscal year? That's it.

So sir, I'll give you just a thumb rule. Basically, broadly, they will have around 60% to 65% occupancy because in the first year, stabilization takes some time. So it will be fair enough to take 60% to 65% occupancy. EBITDA, you can take at around 30%, okay? And room revenues will be varying for each of the market, okay, wherever they are opening based on whatever the market would be. So that's the broad take on that, sir.

Next question is from the line of [ Prakash Shandilya ], an individual investor.

First of all, I must congratulate on setting a good set of numbers, sir. My question is regarding from, sir, we are focusing on digital and strengthening the digital media sales and online marketing. So what -- my question is from that, sir, what is the revenue share through digital media sales? And what is the company's target on that, sir?

From all digital put together, sir, all the digital, what you are seeing, okay, it would be prudent for me to say that approximately INR 150 crores is all -- is the revenue that comes from the digital streams, which includes your website, your Orchid reward program, your online marketing, your travel agents like MakeMyTrip, Booking.com, ClearTrip, Agoda, Yatra, all these people, they have put together would be basically the broad figure which I have given.

Next question is from the line of [ Trisha Kansara ], an individual investor.

I had a doubt in the INR 100 crores guidance that the management gave. So I am assuming that this INR 100 crores guidance is excluding the onetime provision reversal that we took in this quarter, which is around INR 8.8 crores. Just wanted to confirm that.

Yes, madam.

We'll take our next question from the line of [ Chandan Mishra ] from [indiscernible].

Sir, my follow-up question regarding, sir, with respect to IRA occupancy rate, sir. Sir, IRA occupancy rate reported this quarter is 71%, which has decreased Q-o-Q from 76% and yearly 77%. Now it is not a bad number, but is there some reason for this decrease, sir?

Sir, [Foreign Language] some new hotels have also got added up. [Foreign Language]. Then, that has basically impacted the overall drop of the brand IRA in terms of the occupancy. IRA by Orchid Noida is one of the reasons. But overall, sir, the occupancy has been very good in the other hotels. But we have shown a metric. That is why, sir.

Sure, sir. One more question, sir. Revenue share from F&B segment, sir. If you give some light on that?

It's 40%, sir, broadly. Hotel to hotel, it fluctuates between 30% and 45%, okay? We have also given it in our presentation. There is a metric which is there, which is around 37%-63% as a whole company, whereas we have also given this revenue mix of the things. It's on Page #4 of the company overview. You can please see that, sir. The other details are there. Also, moderator, if we can take maybe last one question, and we can end because -- in interest of time. Thank you.

Sir, there are no further questions. You may please give your closing comments.

Then I think I'm very grateful to all who have taken the time out today and midday and come to listen to us. Many good questions were asked, and I'm very happy that some of the people who are there are repeat people. So they take so much personal interest and always they are there. So I'm grateful to all our well-wishers, all our supporters and all you people who take the time out and follow us and guiding us to improve. So thank you with that. And I hope that this year ending will be, again, a happy time for all of us. Thank you, Namaskar.

On behalf of Kamat Hotels India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.