The Indian Hotels Company Limited (500850) Earnings Call Transcript & Summary

Good day, and welcome to The Indian Hotels Company Limited Q2 FY '21 Earnings Call, being hosted by Mr. Puneet Chhatwal, Managing Director and CEO, IHCL; and Mr. Giridhar Sanjeevi, EVP and CFO, IHCL. [Operator Instructions] Please note that this conference is being recorded. At this time, I would like to turn the conference over to Mr. Puneet Chhatwal. Please go ahead, sir.

Good evening, everyone. Welcome to the Q2 2021 results presentation this evening. Let me begin first on a good note, the icon of Delhi, the Taj Mansingh or the Taj Mahal Hotel Delhi, as we popularly call it, is now open. And the lobby is fully renovated with the Emperor's Lounge and the Machan, with which a lot of Delhiites have grown up with, dating back to 1978, is open and running and has been restored to its old glory. I think this is a very, very important hotel for us, and we are very proud that we were able to retain this in our portfolio. Now let me move to a little bit on the macroeconomic circumstances. As we are all aware, we hear it in the news, we read it in the newspapers, there is a contraction in the global GDP by more than 4%. And within the global distress that is there, tourism and hospitality has been hit the worst. There is a $5.5 trillion estimated loss in this segment, and approximately 200 million in jobs. And when it comes to India, the latest IMF projection was a bit north of minus 10% on GDP. And I'll come to the figures of the loss of revenues in India and also on the loss -- possible loss in jobs in a minute. I think it is time that we took stock of where we are coming from. If we go back into this year, 11th of March, I remember very well that the Visas were canceled; and 13th of March, the OCI travel was also canceled. Then we had a national lockdown, which was announced 2 days post the Jantha Curfew on the 22nd of March. And then 24th midnight onwards, we had the lockdown initially till 15th of April, but which kept getting extended till almost September in certain states, even in October. The flights, then, on the domestic front started resuming around the end of May, the 25th of May. We had the first UNLOCK 1 on 8th of June, followed by a very important state for us, Maharashtra, allowing 33% of hotel rooms to open and not food and beverage as of 8th of July. And then we started international flights under Air Bubble on the 17th of July. In August, the hotel started opening up in Delhi. And Maharashtra then announced in September, the opening of the hotels, of course, the restaurants in Maharashtra with limited food and beverage activity followed on the 5th of October. Well, when coming to India, of course, it's an unprecedented downturn for the Indian hospitality sector. The branded hotels seemed to have lost more than INR 31,000 crores in revenue. And if we have the unbranded also, then it comes to INR 1,11,000-plus crores. Hotel occupancies when compared to last year April versus this year April, fell from 75% to just 7%, and there was a 55% to 60% drop in average rates, which is an expectation not for April, but for the calendar year 2020, that means from January till December. And these figures are based on estimates provided by Hotelivate Research. And therefore, a total loss in hotel revenues from Jan to December is estimated at INR 1,42,000 crores or INR 1,43,000 crores. Now having said that, there are certain clear trends that are emerging in travel patterns and guest behaviors. Some of these are short term, some of these are midterm, and some are there to stay forever. However, what we are witnessing is that the consumers are gravitating towards trusted brands as safety is the highest priority. There is an increase in the last couple of months in domestic and regional travel. However, the booking windows are shorter, and there is a willingness to pay premium for flexibility. This we had not seen pre-COVID that people pay a premium, there was usually a bargain. There is a shift in the purpose of travel. And if there is any travel at all in business, it is always linked to leisure, which we popularly call as Bleisure segment. There is a change in type of travel. It's more staycations, more drivecations, even though you have to drive for 10 or 11 hours. There is a multi-generational travel happening. That means grandfather, father and the grandchild maybe traveling together, which was not seen that often before, and mostly to remote locations. There is a surge in new products: vacation rentals, home delivery business, car rentals and homestays. Having said that, I think what we announced in the last quarter when we came up with the results was our strategy, our 5-prong strategy, which we called R.E.S.E.T. 2020. And just as a reminder, which -- the R.E.S.E.T. stands for revenue growth, excellence in our operations, spend optimization, effective asset management and being thrift and financially prudent. I would now like to walk you through some of the revenue initiatives that we have introduced under the R.E.S.E.T. 2020. The first one, obviously, is human, which is our home delivery business in the first half of this year, and although it was launched towards the month of June, [Audio Gap] of INR 10 crores in enterprise revenue more than 34,000 orders till date, I can even tell, in October. Despite shradhs and navrathris, we had a good October. So this revenue is increasing. We've just opened in a soft opening phase our first Qmin Shop, a gourmet shop, at the Hotel President in Mumbai. And in the month of December, that means as of next month, we'll be launching our Qmin Food Truck business, and 3 trucks are expected to go live. Hospitality@Home, we started very early in the lockdown phase, almost towards the middle of April. That's also done around INR 14 crores in business. That is delivery of hampers and different kinds of hampers, we have come up with 3 different possibilities, which was very well accepted. And with the festive season around the corner, we are seeing a lot of surge in that kind of sales. Very proudly, our first announcement on our platform that we have with AB InBev, we just launched 7Rivers Brewpub in Bangalore. And in 40 days, it's already done INR 60 lakhs plus in revenue. So some of these -- this is not all the F&B innovations, but I think these are the most significant and relevant ones, which we wanted to share with you. With that, I move to how we went about unlocking the potential of domestic business. We had introduced our 4D strategy or 4D marketing initiative, which was: you dream, you drive, you discover and you delight yourself. This contributed more than INR 27 crores to our H1 enterprise revenue. But I'm also happy to report that this was also launched around June. And since then, it has picked up significant momentum. And we expect this to be a very large contributor to our revenue by end of March. Another important factor, which we did not stop doing in this phase is lose sight on our growth. We have signed 8 new hotels in the first half of the year. Obviously, our focus, as you will hear a little bit later in the presentation, was stronger on asset management instead of just signing new contracts. But some of the good opportunities we did focus on, and we signed 8 contracts, added them to our pipeline, totaling around 750 keys. A snapshot of a few new openings that are coming in this month: we will open the Taj Skyline in Ahmedabad. It's a large property. It's on a management contract. Then we'll open the Vivanta in Trivandrum or Thiruvananthapuram, followed by the Taj Wellington Mews in Chennai. This will be the first property in India that will be run done by lady associates only, whether in engineering or as general manager or as a chef or in the housekeeping area. And finally, the Taj Chia Kutir in Darjiling. So we are quite hopeful that in the next 90 days, we would have opened these 4, but we expect to open around 10 hotels, but by 31st of March. And one important opening that is not mentioned here is as expected around the 10th of November is the Connaught in Delhi. On the excellence initiatives, we have remained very focused. As you would all know, we launched as one of the very first companies, Tajness a commitment restrengthened. Why restrengthened, because Tajness as always there -- [indiscernible] to safety and security of our guests was always there. However, we have restrengthened it with the new norms of WHO and the Ministry of Health. Our NPS, Net Promoter score, has grown consistently even during this corona phase. And as you would have all noticed, we have been winning hearts and getting a lot of accolades, recognitions on various platforms, whether it is, Rambagh being rated as the top hotel in India or among the 15 best in the world or it is our properties, The Pierre in New York from Condé Nast, or the Maldives resort, the Taj Mahal Palace & Tower in Mumbai for 3 years in a row as the best hotel in the world from TrustYou; the Lake Palace in the Udaipur; the best resort, Taj Exotica in Goa; and this goes on. I think we have a lot of iconic assets, and they do win hearts and minds and souls of people handing out these awards. When we move on to our spend optimization initiatives, in Q2, we had the same result as you see in Q1. We had a 51% reduction in the cost. In Q1, the main reduction came from the variable cost and a marginal reduction from the fixed cost. But as you see in Q2, that number in the -- on the fixed cost reduction increased by 30%. And as obviously, the business grows, the revenue grows, the variable cost reduction becomes lesser. But in all, we were able to maintain a minus 51% control on the cost. And as management, we are very pleased with that number. When we move forward on the -- on where these costs optimization and which heads it came from, it's, of course, the raw material cost as the revenues had dropped to such a significant level. But also on the admin expenses, on heat, light and power expenses, these are semi-variable costs. We had good success in controlling them. Our fixed lease cost, which we'll talk about a bit more in detail, and as I alluded to you, on the asset management focus of our development team and our operations and finance has helped us a lot in the fixed lease cost reduction as well as manpower cost by almost 40%. When we move further into effective asset management, and here, it comes to how we secured significant lease waivers. And at the IHCL level, it is INR 31 crores. On subsidiary levels, it was INR 37 crores. On group companies, INR 24 crores. So totaling INR 92 crores of reduction in this cost, and the benefit received in H1 2021 for IHCL and subsidiaries amounts to INR 42 crores. Moving on to the thrift and financial prudence. I think on this, we did quite well. We saved INR 43 crores versus last year same time in the first half of the year. And we achieved this by exercising prudence in all corporate expenditure, and especially redeployments and restructuring. When I say redeployments, it is because of our growth, we have an opportunity to redeploy our associates in new properties that are opening up. We also have an opportunity to redeploy some of our people in other companies within the group that are growing despite the pandemic. And so we are very content to have had that opportunity and have done successfully, and we feel that this number would only go higher because the redeployments did not happen in the month of April or May. It took time for it to kick start. So most of the amounts that you see, they are really an impact of mid of June till end of September for the first half of this year. Then further on the liquidity. We have taken multiple steps. We have draw down in IHCL of INR 750 crore of long-term debt from April to September. We have secured additional lines for any further requirement. We are exploring on a daily basis, monetization opportunities. It was part of our Aspiration 2022 strategy. It's a part of our R.E.S.E.T. strategy. And we have deferred any nonessential CapEx and renovations that could have been [Technical Difficulty] So therefore, if we were to summarize on the revenue growth initiatives, we had INR 135 crores, which would be not like-for-like revenue versus last year's same time. That means the source of this revenue is the new revenue initiatives and not what we had last year. We had spend optimization means control on costs of another INR 149 crores in first half; then on effective asset management, around INR 46 crores and INR 43 crores of corporate overhead reduction. With that, we move on to some of the performance highlights in terms of how our portfolio of brands have performed. Now these are figures based on all brands. If we look at the RevPAR on the domestic hotel spaces, we see some early signs of recovery. As I mentioned in April, from 75% occupancy last year, we went down to 7%. Of course, the RevPAR dropped to INR 340 approximately, and it is up to INR 1,340. So INR 1,000 have been gained on the RevPAR. And now this is on all portfolio, whether the hotels were operational or not operational. When it comes to operational portfolio, the drop was to INR 700 in April, which is more than doubled from April till September. So if we look at it this way, there is also a 4x growth from April to September, if we look at throughout the entire portfolio. But on the operational portfolio, it's more than doubled. In terms of our performance to the industry, IHCL had in Q1, a RevPAR of INR 513, which grew to INR 1,061 end of September. That is 2.1x. The industry RevPAR based on STR Global that we have received was at INR 465, which went to INR 796, so 1.7x. And we are seeing a large growth, especially in Q2 on our portfolio. And this is really for 2 reasons. I think one is because we do have a lot more resort assets, so which helped because the demand is really domestic and is leisure driven. But the second reason is also the trust, which I alluded to. There is a trust in the brand, especially Taj as one of our brands is benefiting significantly from the trust and the love and the emotion of the people, and it is currently outperforming its competitors in almost all markets with the exception of one. Going forward, I think it's very interesting to see the slide on Ginger. As you will see, Ginger also came down from very high occupancy to low occupancy in the crisis, but it was the first one to recover. And in September, it already went north of 50%. I can also inform you that even October, it finished north of 50%. And its RevPAR index grew from 0.7 approximately in April to almost doubled or more than doubled at 1.48 in September. And we are very pleased with this also because Ginger as a brand has already achieved for the first half of this year, 53% of last year's revenue. Now as we all know, most of the companies struggled in Q1 and most of the brands struggled, I mean almost all, but I think Ginger has shown a lot of resilience, and we thought this slide is worth sharing with all of you. Another thing, when we move forward, you see the decline in revenue was as dramatic as we are seeing the increase in numbers on a month-by-month basis. So as we hit a low in April, going down to as much as INR 35 crores, in September, it almost went close to INR 150 crores. And when we move on to the EBITDA, which was negative in April at INR 100 crores, has actually turned positive in September, and the trend continues that way that the losses are getting narrowed on the PBT level and on the PAT level, and the EBITDA is turning positive, and we see no reason why this trend should not continue in Q3 with similar kind of increases in all these 4 segments of revenue, EBITDA, PBT and PAT, if that's a kind of -- without giving a number to it, kind of a guidance in terms of trends. Coming to our consolidated performance. In Q2, we had a total revenue of INR 324 crores. That's an increase in -- over Q1 by INR 150 crores almost. We narrowed the EBITDA loss from INR 234 crores to INR 83 crores. That's an improvement of INR 151 crores. I think more important is that although there was an increase in revenue of INR 149 crores, the EBITDA improved by INR 151 crores. So the flow-through that the management team has been working on has been quite positive. We've also narrowed the losses on PBT level at INR 263 crores versus INR 336 crores in Q1, and PAT from INR 280 crores went down to a negative of INR 230 crores, which is another improvement of INR 50 crores. With that, I would like to hand over to my colleague, Mr. Giridhar Sanjeevi, to take you through the details of the financial performance.

Yes. Thank you. Moving on to the consolidated financial performance, the details. I think, as we can see, the Q2 revenue was INR 324 crores, which we represented as compared to last year's decline of 69%, but represented a significant improvement from the first quarter number of INR 175 crores. In terms of expenditure, as was highlighted earlier, we continue to maintain total expenditure of 52% as compared to last year in Q2, which was the same levels for the whole -- the entire H1 as well. This is driven by all around focus on all the lines of costs, corporate overheads, employee benefits and all other lines of costs actually. On finance costs, the finance costs were steady at around INR 97 crores, and H1 was at about INR 185 crores. We had an exceptional of INR 20 crores due to some exchange gain/loss on all derivatives. We ended the quarter with a loss of INR 230 crores, and the total half yearly loss is INR 510 crores. Moving to the next slide. This is just some details of exceptional items. I think early in the current quarter, lease concessions comes as part of the top line, and we have revalued some of our liabilities in relation to the purchase of the Sea Rock shares, and that gives us a gain of about INR 23 crores. I think those are the 2 exceptions worth noting this time. Move on, please. In terms of the stand-alone reported revenue, we reported a revenue of INR 215 crores. Expenditure was at INR 253 crores, which was minus 47% as compared to the previous year. It was at the similar level even for the entire H1 at minus INR 46 crores. Finance cost was at INR 69 crores. There was some marginal exceptional gains in this quarter of about -- loss of about INR 16 crores or so, getting a net loss after tax of INR 142 crores. And for the H1, the net loss was about INR 380 crores for stand-alone. Moving to the stand-alone exceptional numbers. I think, as you know, we do provide for the U.S. losses, and that was about INR 29 crores in the quarter. Move on, please. In terms of some stand-alone revenue metrics, essentially, what you see in H2 -- in Q2, from July to September, is that between August and September, clearly you see a steady improvement in occupancy. You see a significant jump in ARR from INR 4,500 to INR 5,000 to INR 6,500. That's a significant jump in ARR. And RevPAR also going up from INR 1,400 to INR 1,500 to INR 2,200, a 50% jump plus in terms of RevPAR. And there was definitely a shift in business. Post August, we saw the quarantine business come down and the regular FIT business coming up actually, and those are reflected in the numbers of Q2 and September action. Similarly, on the domestic revenue, the network is we see the same impact where the occupancy does go up by 6% or so, from 26.8% to 32.4%. ARR, there is a significant jump of about 10%, from INR 3,645 to INR 4,100, and RevPAR of course you see a significant jump of nearly 50% in RevPAR. So that is reflected in the domestic network metrics as well. In terms of the debt position, I think we continue to be prudent in terms of drawing down on debt. We have help managed for -- we are well positioned for liquidity. Our net debt in stand-alone as of September 30 was INR 2,100 crores and consolidated was INR 2,900 crores. Weighted average cost of debt continues to be well-managed at 7.8% for stand-alone. Net debt-to-equity is still comfortable at 0.5 or so. And net debt-to-EBITDA on a 12 months trailing clearly has gone up to 4.97. Consolidated numbers similarly are 6.7% for debt, net debt-to-equity has been about 0.68%, and net debt to trailing EBITDA has been about 7.54%. So overall, liquidity position remains comfortable. I think before I end, I just want to highlight some trends which are relevant for IHCL. I think these are external trends and those which are relevant and within the IHCL circle of control and influence. From an external macro trends perspective, very clearly, in India, we are seeing that the COVID cases are going down. There's a 30% drop in new infections. And that augurs well, I think that has allowed the government also to reopen all the hotels and allow restaurants and all other parts of the hotel operation to open. Domestic aircraft is definitely going up, 40% improvement in September versus August. And steadily, we have been seeing -- if you look at the airline results, we are seeing the air traffic numbers are going up. Domestic tourism is definitely going up, and there is almost like a revenge travel in terms of, especially in the leisure destination actions. [indiscernible] So you're seeing a in domestic tourism and leisure travel rebounding, and some of our destinations like Goa, Rajasthan, Rishikesh and other leisure destinations are doing very well actually. And as was described earlier, Taj as a trusted brand stands to gain more, and people are willing to pay a premium for all their travels actually, and that is something which is important for us, actually. And within IHCL's control of influence, very clearly we are focused on revenue, including the new lines of revenue through our R.E.S.E.T. initiatives, and there's a visible increase in revenue month-on-month, and we hope that will continue. And we are in the season at this point of time. And with the unlockdown and being in the middle of the season, we do believe that this quarter and the next quarter, we will see the momentum in terms of revenues. Very strict cost control and spend optimization is there. You have seen it in the 52% cost savings during this quarter. We have outperformed the competition in key leisure markets, like Goa and other key metros. Ginger hotels has exhibited very strong performance, exceeded and sustaining 50% plus occupancy levels. And we continue on our growth momentum in terms of opening hotels, which have largely, which are asset-light, except for one property, actually. So I think -- so we continue to sort of watch the external environment and do all that we can in terms of optimizing revenues, managing costs and managing balance sheet and liquidity. With that, I kind of open it up for questions.

[Operator Instructions] We will now take our first question.

This is Achal from HSBC. So I wanted to understand a few things. So first of all, if you could please talk a bit more about your new revenue initiative. So you have given INR 135 crores of number as a new revenue from the initiative. How much of it flew through to your bottom line? So what I wanted to understand is that if you could talk about the profit margins you earned in your different revenue initiatives like Qmin and all, that would be very helpful, please.

Okay. Should I take it, Puneet?

Yes, you can. I will add if I want to.

Yes. Yes. No. I think if you look at businesses like Qmin, I do not know if you have experienced Qmin in terms of the F&B. I think the average ticket for 2 people is approximately INR 3,500 to INR 4,000. And then we sell at the same prices as the restaurants. The margin of this business is very high because we are not discounting these. These are not Swiggy type of revenues. Hospitality@Home also, these revenues are all at full pricing actually. So some of these initiatives like Qmin and Hospitality@Home are completely at full pricing. The 4D initiatives, which are in terms of taking advantage of the leisure destinations and maximizing those, the INR 27 crores that was pointed out, these are also at a significantly good ARR levels. So therefore, I think there is no compromise at all in terms of the margins on some of these initiatives. Puneet, do you want to add to that?

Yes. I think there is -- just to add to this, a lot of these businesses are incremental. So the costs are incremental and so is the revenue. So for example, Qmin. It's the same kitchens. It's the same chefs, cooks who are preparing it. The incremental cost is really the raw material cost and the cost of delivery. We are also not using a third-party provider. So that makes the margins even larger. And we are looking at margins. Most of these businesses, I would say, as a hybrid north of 50%. And why north of 50%? As I said, this is not where we have deployed capital in building a space. It's using the existing spaces and using the existing facilities, existing manpower, the cost we would -- which we would have had [Technical Difficulty]. Also, I think the same thing on hampers or the Hospitality@Home. The same on the 4D initiative. And I think there is a lot of wellness retreats that we have launched, staycations that we have launched, temporary office working that we have launched. And you'll see more and more of this coming because partly, we have to adjust our business model to the new reality, and we have to try to find latent demand that did not exist before and try to capitalize on it. But yes, one line answer is, all these businesses are very high-margin business because we cannot be, on one hand, saying, we will not be doing any CapEx and actually reducing and deferring any planned CapEx, and that's how it makes the model very, very asset light.

Right. So sir, is it fair to assume that out of the total new revenue of INR 135 crores, almost like INR 60 crores, INR 65 crores, or slightly more, would have flown to the bottom line, right?

Absolutely. It's fair to assume that. Even a little higher than that.

Yes, yes. Sure. No, by the way, I used [indiscernible] Qmin and it's a great initiative. It's a great thing, to be fair. The other thing also I wanted to understand about the cost evolution. So how -- so sir, of course, you maintain your 50% cost decline. How do you see going forward, as the business picks up, as you open more hotels, so I think some of your employee costs will come back and all those sort of things. So how should we expect your cost would evolve over the next 2 quarters, at least? And then probably, if you can talk about a bit more on the next year?

Sure. I would go first and then maybe, Giri, if you want, you can add something. You see, this is a historic opportunity also, and as bad as this COVID news has been. It has been an eye opener for the global hotel industry to check every cost that we had. And note that we were not looking at costs before. But when your revenues come down to almost 0 level and the hotels are shut, then you have all the time to keep looking at every possible cost 10 times a day than you did when it's business as usual. My personal opinion for the industry and especially for IHCL, I would say, let me limit it to our own company, is that we came up with this R.E.S.E.T. strategy, and that means it's also a R.E.S.E.T. on the cost base going forward. This is not a temporary thing. We don't do those temporary things. We have not furloughed any staff. We have not taken employment away from anyone. Our salary contributions that we have done, we have created Taj for families, supporting staff who have lost jobs because they were not directly employed by us, rather by one of our partners or something. So that way, I think we do see this as an opportunity to come up with new operating business model. When we are doing that, we're going to redefine our business class, rooms proposition, our business -- Taj Club launch proposition. Everything will be reset for the time coming ahead of us and going forward. Giri, if you want to add something to it?

No. That is right. And I think what you saw, Achal, in the first quarter was a reduction, which was more in the context of variable cost. And as we go forward, in Q2, we have seen that the cost savings are more in the fixed cost. And you will see much more fixed cost reductions coming through. In fact, if you see the Q1 fixed cost number last year, it was about INR 156 crores. It came down to INR 123 crores per month. And in Q2, that came down from INR 157 crores to INR 112 crores. So therefore, I think there's a lot of focus in terms of trying to drive down the fixed costs. And as Puneet said, it is all changing the operating model and trying to make fundamental changes in the way we are working, starting with the corporate office to everywhere else actually. So there is a very strong focus on improving the cost base.

Great. Great. So sir, basically, I'm assuming that these cost efficiencies would continue even once -- even if the full business picks up the original scale, and then that will benefit, right?

That is right. That's what we want to do. In fact, one of the things we talk about is that in the previous year, we needed INR 4,500 crores of top line to generate say [ INR 1,000 crores ] of EBITDA. I think the attempt is to say that, can we do it at a much lower -- similar EBITDA at much lower levels of top line? So therefore, I think the focus is very clearly there in terms of bringing down the cost base to a different level, actually -- absolutely.

Right. Right. Fair enough. Sir, the other thing, I also want to understand more about the change in customer mix. So until recent quarter -- or the quarter of September probably, you would have had many, many people saying -- I mean so most of the traffic would have been driven by the COVID, the medical staff and quarantining people and all. So -- and then that must have been changed or that must have been replaced by the normal leisure demand. So I just wanted to understand, if you could talk a bit more about what kind of change are you noticing now from your traffic in the quarter to September to now this starting quarter of December? And [Audio Gap]

Yes. I think -- I mean, what I can say is that with the change in the -- with the reduction in the quarantine flights, what we are now seeing, as we had predicted earlier, the leisure luxury business picking up. The wedding is picking up. And therefore -- and what we are seeing in terms of some of the destinations, like Goa and Rajasthan and other destinations, we are definitely seeing people willing to pay and kind of take their -- and kind of stay in all these hotels. So therefore, I think it's more IT, it's more domestic tourism related. No international tourists are clearly coming. But the people are willing to pay, and that is really the change here.

Sorry, looks like the participant's line has been removed from the Q&A section. [Operator Instructions] We'll take the next question.

Sorry, am I audible?

Yes, yes, sir.

Sorry, I think my line was -- had some problem. So Giri, sorry, just continuing on that question. I mean, so the destinations which you just talked about are more of a sort of a leisure destinations, so probably that highlight that there's some recovery in the leisure demand. But how about -- because if you see air travel, there is a lot of recovery in leisure demand, but -- sorry, there is a slow recovery in the leisure demand, but more of MSMEs travel, which is taking place. So if that is the case, how kind of -- what kind of traffic recovery you are looking at in terms of business destination, like Mumbai, Bangalore, Delhi and all?

Business travel clearly is low. You're right that the MSME business has picked up in terms of travel. And that is one of the reasons why you see the incremental occupancy is also coming through in places like Ginger, where the occupancies have gone up about 50%. So Ginger clearly benefits in that segment. As far as the premium hotels are concerned, I think it is more leisure luxury than [indiscernible]

Right, right. Last question from my side. I'm really sorry for a long list. In terms of liquidity, so if you could please guide us on what kind of cash burn now happening on per month basis, that would be helpful.

No. I think between cash and lines, we have more than INR 1,000 crores. And I think we have been very prudent in terms of expenditures actually. And I think the good news in this business is that as the revenues pick up, as they have started to, the requirements of cash drop. So we believe that we are well protected for now in terms of liquidity.

But how the cash burn has improved versus the last quarter?

I think cash burn has definitely improved. I think in the initial months, it was INR 400 crores a month in terms of cash burns. But I think operating cash burn now has come to less than INR 50 crores or so because there's always other things which come up. But -- and this, as it goes forward, hopefully should drop. But we will keep a close track of it.

Giri, it could be fair to say that we should be -- sorry, it would be fair to say, given the current business on books and whatever we know, we should be cash positive as of November because we have the wedding season, which is kicking in; we have the festive season, which is kicking in; we have no shradhs, we have no navrathris, which was there in October, and October also ended up in a similar trend as September was over August, October was over September. So if November goes that way, then I don't see that we would have need of cash burn. But that's all if and but -- what we can see today for the next 3 weeks, it does look that the jumps would be similar.

[Operator Instructions] We'll now take our next question.

Sir, first of all, during your opening statement, you have talked about -- this is Vikas from Antique. So during your opening statement, you have talked about that you have deployed the employers in other group companies. And clearly, one of your group company is hiring pretty strongly. Is it possible to quantify what percent of the total employees we are transferring to the other group companies?

See, it is not just transferring people. I think the strategy that we announced 3 years ago was the 3R strategy of reimagine, restructure and reengineer, right? When we reimagined our brandscape, we needed certain skill sets, so we hired certain kinds of people. In order to reengineer our margins, we started changing the business model. And restructuring is as per the needs of today. So there are different examples at corporate level. And I did mention that we have the ability to redeploy because of the needs and wants of business are different. So as an example, when we opened the Connaught in Delhi, almost 100% of the employees there are from other group properties. So whether they are from Taj Mahal Delhi or they are from Taj Palace Delhi or from Vivanta Dwarka or from Taj -- even from Taj Wellington Mews in Mumbai. So it provides -- the growth provides a normal progression for the employees, and we are able to become more efficient in the operations. And that's one kind of redeployment. The other redeployment is, as an example, if we club the functions of a couple of departments. So recently, we aligned revenue management and finance into one function. And that way, we don't need to, because one person retired, so the other one could take over 2 jobs because both is numbers driven. And that's another example. The third is, there is a possibility as one of the group companies, as you said rightly, is expanding, and we would be working with them very closely. We are on the Qmin app, for example. It's good for them to have some people from our own system because it would help them in doing a Super app and addressing the needs and wants of our business. So that's how we have been very, step-by-step, mindful of our also midterm and long-term needs because just redeployment is not what we do. We have to address in a very smart way, the talent that is needed to take the company where we wanted to take it to, where we were 80% there on the pre-COVID level and how we are going to get to 110% there in the next few years. So I don't think that kind of a quantification would be -- you will see the results in our corporate overhead quarter-on-quarter basis, if that's a way to answer it. But we cannot quantify these kind of numbers. Giri, you want to say something on this?

No, I think that's fine. Nothing else to add.

Okay. My bad. I thought the move is more to do with managing the employee cost in the near-term. Secondly -- second, my question is on the corporate side. How the demand is shaping up? And I'm looking for this answer more from a medium-term perspective and not near-term, because clearly most of the tech and consulting companies are talking about medium-term saving coming from travel and work from home with the use of collaborative platforms and all. And the dichotomy is, when we look at the smart money, private equity players, especially, they continue to invest in commercial space. So just want your view on this, and what you're hearing from your corporate clients. Do you think the mix between leisure and corporate travel will change meaningfully? And again, maybe from 3 to 5 years perspective, if you can throw some light on it, not near?

Well, I am a firm believer that corporate travel will be back and will be back very strongly. And it's a matter of a few more months at the most when there is a vaccine. But also the work from home for the tech companies is there to stay. It's not -- as I said in the presentation, some of the changes are short-term, some are medium-term and some will be there forever. It's like getting through security at the airports. Before one could go in the airport, now you cannot go unless you have a boarding bus. You could enter hotels and leave them without going through the baggage check, putting the mobile away and the scanning, et cetera. So some of these things are there to stay for ever. But if anyone believes that now business can only be done on Zoom or like what we are doing now, and we will never have an investor meet in our crystal ballroom, I don't think that is true. It is just -- if it's not 3 months and it is 6 months, and if it's not 6 months at the most, it is 9 months that we will be meeting you in person and doing these investor meets. So I'm already -- I have been traveling. I went to -- I've been to all major metros. I've been to Hyderabad. I've been to Bangalore. I've been To Delhi. I've even traveled abroad. And I'm going again at the end of this week, some private, some on business. And I can tell you, I've seen empty airports in July, and I've hardly seen flights, and now I see almost a lot of activity. And if you look at the latest statistics prepared by, I think, MakeMyTrip, and it was on a CNBC channel, the growth in September over August was 40% in air traffic. And as per also the Ministry of Civil Aviation, a lot of traffic is back to pre-COVID level. And all of that is not leisure. Some is also corporate. So I think it will keep increasing as time goes by and as numbers keep coming down in terms of infections. However, and having said that, if there would be another second wave, which nobody believes in India, like there has been one in U.K. or in the other parts of Europe, then it's a question mark whether it's a 9-month story or a 1-year story or longer. But the way things have moved in the last 60, 90 days, I can tell you, not a projection, but based on my personal experience of traveling to these cities, that there has been a marked improvement versus when I first came after my first trip maybe in July or something, indeed. It was like you end up in a haunted airport. There was hardly anybody around, in Mumbai. And it was also very carefully opened in Mumbai. It took much longer. Delhi had started. But Mumbai had a lot of breaks on, and corporate travel has -- or corporate business has a correlation to corporate travel. And most of the corporate travel does not happen on drivecation. You don't drive to destinations unless you're at a Ginger level customer. They're usually flying from one destination to the other.

Sure. This is very helpful. I just have one last question. Firstly, it's good to see we turning EBITDA positive in September. My last question is, how is the overall booking for -- comping up for the holiday season? And any early signs you are seeing would be helpful, if you can share. If possible, to also quantify bookings for the -- holiday bookings compared to the last year, where we stand. If you have that -- any kind of a rough estimate around it and stuff like that.

See the thing is that there is a lot of pickup, has become very short-term. If you had asked this question 3 weeks ago, I would have said it's slow. But in the last 3 weeks, we have picked up a disproportionate amount of business, especially for the 3 months, October, November, December because when I said 3 weeks ago, it included the remainder of October. So last 10 days of October for us, and going forward, November, December, have seen a significant pickup. But as your question, the previous question rightly pointed out, and also the previous person who had raised the question from HSBC, most of these pickups that we are seeing is on leisure and, obviously, all of it is domestic. We'll see what happens once international travel opens up. And on leisure, definitely, Rajasthan is leading the way, Goa is leading the way, Coorg and areas around Coorg are leading the way, Shimla, Rishikesh. These are destinations that are doing very, very well. And if somebody is going to Shimla, then they're also stopping a night in Chandigarh. So a lot of those kind of travel is happening. And there is a lot of pickup on that. Definitely, Christmas, New Year, we are seeing a surge in bookings. And the destination, I just mentioned, I can tell you they might even be performing better than last year.

We'll take the next question.

This is Kaustav from Rare Enterprises. So I just wanted to understand what did you exactly mean by you've turned EBITDA positive in the month of September? Did you mean for your stand-alone business or the consol business as a whole? And also could you just go a little bit more into detail in this as to how we have achieved this and the key components to this?

Yes, sure. I think we did see that both in stand-alone as well as in consolidated. I think in terms of general EBITDA positivity, what we're now seeing is that with the pickup of business, we are slowly seeing the increase in the number of hotels, which could potentially break even on EBITDA actually. And I think that is definitely now the language has changed. I would not use the language in the first quarter. But as the second quarter progressed and the unlockdown has happened, we are gradually seeing that hotels will start becoming EBITDA breakeven -- hitting EBITDA breakevens, actually. So that is definitely a trend. And therefore, we are looking forward to Q3 in terms of business to see how many of the hotels get to EBITDA breakeven and what does it do at the network level. As far as September month is concerned, I think it was aided not just by operational incomes, but it was also aided by the nonoperational incomes, which resulted in the EBITDA positivity in the month of September. And I think one of the things we -- I want to emphasize, both operational and nonoperational, is that these are extraordinary times anyway. And therefore, I think what is very important for us, Kaustav, is that it is nice to see a marker which is EBITDA positive, which we have been wanting to see for a long time. So I think, frankly, it doesn't matter whether it comes through operation or nonoperation, September was definitely aided a little bit by that. But the bigger picture, as I said, is that as the performance improves, I think you will see cities like Goa, cities like Delhi, cities like Bombay, slowly start getting to EBITDA breakeven. I think that is what is the more important thing, and that's why this quarter, Q3, is important for us to see the pickup in business and achieve those milestones.

Okay. Could you just -- what was your occupancy rate in September on a stand-alone basis for the domestic business?

Yes. I understood.

Just trying to relate EBITDA positive to your occupancy rate, and then the remaining would be nonoperational. That's right?

So as we saw in the presentation, the occupancy in September was about 34.5%. That was the occupancy in the current year in stand-alone for the month of September. And there was, as compared to 30% in the month of August, the ARR definitely jumped. That's the other thing. It was not just an improvement in occupancy from 30% to 34.5%. The ARR jumped from INR 5,087 to INR 6,500, which is nearly a 30% jump in ARR. So I think the quality of business because, as I said, the quarantine life came down and the FIT business has picked up, so I think it's a combination of occupancy increase as well as rating, which is where we saw [Technical Difficulty] actually.

Okay, great. And lastly, when you speak about nonoperational income, which aided EBITDA turning positive, could you speak a little bit about this? Do you mean the Foodservice business? What else do you mean by non...

No, no, Kaustav, I think if you see the stand-alone exceptionals that we have just highlighted in our presentation, so we had a couple of stand-alone exceptionals. Like, for instance, number one was the lease rental concessions under the Ind AS comes as, what do you say, in the top line. But be honest, even if it has taken as expenditure, the EBITDA positive would have still occurred actually. We had a fair valuation of one of financial liabilities, which gave us about INR 20-odd crores in the exceptional. So that is the only thing which came in, which is, I would say, nonoperational. There was a small payment which gave us INR 3 crores or so. That's all.

Okay. And any progress on our monetization strategy, simplification of organizational structure, anything from last quarter, which is moving towards the right direction?

I think as we have always discussed, monetization is something -- we are progressing on 1 or 2 of the monetizations. They are work in progress. I think some diligences are going on. So hence, I think my sense is that in the next 3 months or so, we should be able to announce the first of the significant monetizations, actually. As far as the restructuring, if I remember you are right about restructuring in terms of structures. I think that will take some time, that will take some time.

We'll take our next question.

Sumant here from Motilal Oswal. So my question is, particularly for the International business performance. So, can you give more update on that?