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

Good day and welcome to The Indian Hotels Company Limited's Q2 Full Year 2020 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 afternoon, everyone. As always, I'm here with my colleagues, Giridhar Sanjeevi, our Executive Vice President and Chief Financial Officer, to share with you our Q2 results for the quarter ended from 30th of September. Let me first begin with the news about the Lake Palace, the Taj Lake Palace, the most photographed hotel in the world celebrates 50 years this year, and we're very proud. And we have extended our partnership with the family with Fateh Prakash, which we announced and opened 1.5 years ago, which is also being renovated. The pool, the spa, the gym, have opened there. And we are extending this partnership about which you'll hear within the next 3 to 10 days. Going on further, I think it would be nice to mention that at the latest IMF forecast, India is expected to grow at 9.5% this year, in this financial year, and the world economy also at approximately 6%. This is important, especially for our sector, which relies very heavily on the growth of GDP. Not only GDP but today is a very historic moment and an important day when we completed 100 crores of vaccinations since May, there's a 90% drop in active cases for COVID-19 and positivity rate has fallen to less than 1.5%. The air traffic is increasing by leaps and bounds in the last 6 to 8 weeks at the moment, approximately 70% increase is ease and travel restrictions and leisure is driving the revival of room nights in our business. So all in all, some of these factors have been contributing positively in the second quarter. We all know that quarter 1 was a washout for us exactly like a quarter 1 last year, because in the first quarter, April and May had serious disruptions because of the second wave. And before travel could start, again we were almost towards mid end of June. And the real momentum we saw coming was first in the month of August, very surprised, positively in the month of August. We recorded the highest revenue in the month of September, as this chart depicts and the growth at the enterprise level as well as at a consolidated level, and we see this trend continuing in the month of October. So as I speak to you today, if we look at month-to-date revenue in October, it's experiencing a similar trend as we saw in the month of September. Strong recovery in Q2, this was a bit unexpected because it was the second wave, the aftermath on the second wave would derail the industry for longer period. So we are very pleased that in this quarter, we had a significant increase in revenue, getting us back to more than 70% of the pre-COVID levels, where it to be precise, 73% and 77%, respectively, on a consol and at an enterprise level. The consumer sentiments are positive in terms of travel and the booking windows were short, but a lot of travel started happening, especially, as I mentioned before, in the leisure. People really thought about doing the travel, right here right now because there has also been the inherent fear of the third wave and things shutting again, which is diminishing as we move from week to week in the last few weeks. Further, the outlook has got strengthened through weddings and MICE has started, as I speak today, a large conference is happening at Taj Palace in Delhi. A week or 10 days ago, there was a large conference, again in the Taj Palace in Delhi, and we did a few more bookings at some of the Taj properties for larger events of approximately 200 people. But there is [indiscernible] hotels in the lobby and the rest was pretty busy. And we are noticing another trend that the brands are benefiting not just in the hotel sector, not just in the hospitality business, but really the COVID impact has been lesser on the brands. So the brands are gaining and more market share and definitely with our Tata's brand, we are very well positioned to get a higher market share, definitely on the Indian subcontinent. One picture, which was negative for a long time, which is beginning to turn positive is, on this chart, if you see the industry recovery and the recovery of IHCL so on the right, the recovery is low, and I mentioned a few other times, they -- Mumbai, Delhi and Bangalore are back to 75% -- 80% of pre-COVID level revenue and the leisure sales at a disproportionate share, we would exceed the pre-COVID level. And now we are seeing the RevPAR is coming very close to the industry level, is beating the industry level. In what was the other market you might see that we are falling short, where we've performed very well like, Goa. We expect a 50% increase, but we have some new hotels. So it's not a like-for-like comparison. So not like-for-like, it might be showing that we are a percentage point behind, but I don't think Taj Fort Aguada and Holiday Village the last decade has performed as well as they performed now, including Exotica, they are already above pre-COVID levels. So that's a positive news and also all India level. It's a good news that we are having a higher share as [indiscernible] but all the percentages on this chart versus the industry level. And the source of this chart is STR Global. Moving on to the next slide is, we took the decision not to compare to Q1 and not to compare to Q2 of last year. I think it would be a fair to Q2 pre-COVID levels. So pre-COVID level, we are still down 23% on expenditure and 19% on total fixed costs and 16% on corporate overheads, and so very healthy decreases, because as we start to come back in terms of top-level revenue, some of the costs, especially the variable costs are going to increase and our job will be to keep a strict control, not only on variable costs, but a lot of our fixed costs to increase that high, but some of the rents payable negotiated with our landlords, some of the other payments negotiated, these will certainly go away. So some of the fixed costs will also climb back to where we were coming from. That's why it's showing a 19% decrease, which is a very healthy decrease because it's compared to Q2 of 2019 and '20. When we move further our staff to room ratio, as we mentioned that on a few quarterly calls, the industry has had a onetime opportunity, not just on optimization of manpower, but in-optimization of all costs. Before the COVID, there was enough time to review each and every costs. And as you will notice, the Taj brand, the manpower ratio reduced from 2.17 to 1.6. I recall [ there reason ] saying some of you might think that 1.6 is still very high when you compare to other brands, but I don't think those guys in India have the kind of Palaces we have, or have the kind of safaris we have and we definitely require a different room to staff ratio. We've been able to bring on the room to staff across the board in all the brands so that consolidated has gone down from 1.5 to 1.1. Some of this will increase as more and more business comes back maybe to 1.2 or 1.22, we'll hire some contractual and some fixed term contract manpower. So it will again go up, which is normal, because if the business is fully back, but we have been able to optimize this ratio without disturbing the quality of our service, without disturbing the quality of our brands and by eliminating things which were not needed, or areas that were not need. Going further, I think it's very important to us, it is very important for Tajness, it is very important for the culture of who we are, as we define Taj as a brand that stands for trust, awareness, and joy. And our staff magazine Tajness is one of the hallmarks of demonstrating Tajness at a staff level so that they can deliver the service of Tajness to our customers. We have recently launched an employee app, this was done just 10 days ago, on MyTaj so that employees can easily communicate to each other. This was done at a [ Taj ] function which we have in which some great exemplaries are honored and recognized, which we call the Managing Director's Club Awards ceremony. And to top this all up, our vaccination drive has been very successful, 82% of our staff is fully vaccinated and almost 100% partially vaccinated. In terms of unlocking value in new brands and business, this has been our area of focus since the last 16 to 18 months. Qmin has expanded its presence in 19 cities today, there are 4 lakh apps downloads, which are converted to 4x more in orders. So 16 lakh orders. 75% orders are from the top 5 metro cities in the secondary and tertiary markets, still the penetration of Qmin is not as strong as it's has been in the metros. And at an [ enterprise ] level, in the first 6 months alone, Qmin was able to generate INR 50 crores of revenue. This, of course, includes our efforts on Meals to Smiles, which we thought was a good service to the community in the way our founder had laid down in the philosophy when Tata Group was founded. But also a way to market the brand and taking it into the distressed areas so that people not only get healthy food and that they get the supply in time, but also get associated with our brand. So that was about Qmin, but when we get to our home stay brand, Ama, we had almost 60 properties, 59 to be precise in 30 locations across India. This year alone, we have signed in the first half year 21 new villa and 15 of them have also opened. So our portfolio is 59, of which 30 -- 34 are in operation today, and we expect to achieve our guidance that we have given, operating as close as possible to 100 Ama properties before the end of this financial year or the immediately thereafter. Moving on, I think Ginger is a very important part of our business and of the brand-scape going forward. We've worked a lot on Ginger in the last 3 years. We've communicated consistently on Ginger during our Investor Day, in all our investor meetings. Today Ginger has a portfolio of 80 hotels. And in Q2, Ginger actually achieved 84% of pre-COVID revenue. So that is significant development as far as Ginger is concerned. The EBITDA was not only positive in Q2, but also positive for the entire first half of the year. And very, very important is the Q2 margin of Ginger was higher than pre-COVID level. And this is coming through a different mix because the new properties that we have opened are in that category was a new reimagined lead position Ginger, and that is driving much higher margin so that means the Q2 margin hire and going forward. We do not seek any change in this type of development. If at all it will only continue to increase as far as the Ginger brand is concerned. Very important development. Today, we have got the approval from the Board of Indian Hotels to make Ginger 100%. I mean Ginger is 100% brand always owned by Indian Hotels, but Roots Corporation to be now 100% subsidiary or wholly-owned subsidiary of IHCL. We currently own 60.2% we will buy out the remaining 39.8%, and we think it's an opportune moment when the brand is well positioned to grow and has a huge scalable potential in all possible tiers, not only Tier 1, Tier 2, Tier3, but Ginger can be present in every location and could boast of significant presence in any key metros with more than 10 properties in one city. Moving further is the financial performance of Q2. We were up 132% on revenue on the top line and INR 180 crores of EBITDA from a negative to a positive territory. But I think very important is -- this July, August and September, all 3 were EBITDA positive months, of course, September being the best one. And we expect this trend not only to continue, but could exponentially grow in the month of October. And what will happen in November and December should normally be better than October, the only thing we don't know is uncertainties in the macro environment or anything else that may come up which we are not aware of today. Going more further to the revenue and EBITDA shapshot of IHCL consolidated for the first half year, I think it's a bit challenging for some people. We all know that first quarter was the washout. But still compared to last year, there was a 125% increase on top line and almost INR 300 crores or to be precise, INR 292 crores improvement at the EBITDA level even when comparing the first half of last year. The same picture we see on the standalone, the percentage is a little lower in terms of increase in top line, but again, an improvement of INR 180 crores at the EBITDA level for the first half of the year. And all trends are with all these last 3 charts that we've shown to you are moving in the right direction. I think there is a strengthening of balance sheet has been a key priority and there has been an increase in consolidated net debt. So it has been up 86% from the pre-COVID level, we were at INR 1,900 crores and reached INR 3,500 crores now, a marginal reduction from INR 3,600 croes to INR 3500 crores, but that's where we stand and that's why we will be very focused on strengthening our balance sheet because of the rise in debt level. Therefore, the Board has today approved an equity issuance to build a healthier balance sheet, and we are not only going to reduce debt, our aspiration would be to bring the debt to 0 level, not only through the rights issue or QIP, but also through internal cash flow because this amount is larger. So we are looking at INR 2,000 crore rights issue and INR 2,000 crore QIP. And a part of this monies would be used for consolidation as we just [ saw ] shares on Ginger or other companies, which is in line with the strategy of the company to drive simplification of our business model and also provide the necessary CapEx for the group of our portfolio and the renovations, which are needed in the portfolio on an ongoing basis. I think with that, I will hand over to colleague Giridhar Sanjeevi.

Thank you, Puneet. I think going into some more details, I think Puneet has reviewed. I think essentially, you see the Q2 performance, there is a significant recovery as compared to '19-'20. So the INR 481 crores top line in standalone represented a 77% recovery as compared to '19-'20. EBITDA was positive at INR 80 crores, and PAT was minus INR 54 crores. And if you look at the consolidated numbers, INR 752 crores has represented raised a 73% recovery as compared to Q2 of '19- '20 actually. And the good news is EBITDA was positive in all 3 months of Q2 resulting in EBITDA of INR 97 crores and PAT was INR 121 crores as compared to minus INR 230 crores, in the previous year. Similarly, I think if you look at the H1 performance, the H1 of course was colored by the second wave -- the pandemic in Q1. So at INR 707 crores, it was minus 57% recovery as compared to the '19-'20 period and consolidated was -- crossed a INR 1,000 recovery -- INR 1,123 crores which represented 54% recovery. EBITDA was positive, as standalone level for whole H1, and EBITDA consolidated figure was marginally negative at minus INR 26 crores. Overall, the PAT losses have also come down to INR 398 crores, and consolidated at INR 244 crores in standalone level. I think this is an interesting chart, which is at an enterprise level, which talks about what is the [ pattern ] of recovery. And I think the way to read this chart, if I take a the top box which is domestic hotels, the bottom box is international hotels. In the top box, in Q1, we were INR 415 crores in -- at the network level, which represented 38% recovery as compared to '19-'20. And you see what happened in July, August and September from 38%, it went to 80% in July, 88% in August and 88% in September. Overall, we hit to 86% recovery as compared to the same period in '19, '20. And on international hotels, we were at INR 176 crores in Q1 37% recovery as compared to '19, '20, and that jumped to 58%, 63% and 66% initial months from July to September, overall we did 62% recovery as compared to '19-'20. So therefore, I think Q2 has seen a dramatic shift in terms of recovery. And if you see the performance in the different cities, it fairs exactly the same, which is 66% in Bombay, has come back to 33% and if you see the leisure cities, of Goa, 121%, Rajasthan 152%, I think very strong recovery in the leisure cities, strong recovery in the other cities as well. So we have seen clearly a very strong recovery in Q2 which is continuing in October as well. And if you look at the international hotels recovery as well, the USA jumped from 13% to 56%, is very well [indiscernible] '19, '20 in the same quarter. U.K. was 56% and those 2 geographies matter, because these are consolidated numbers. Maldives is an associated 108%, Dubai is 136%, but of course, on management contracts, Africa is small, 40%, [indiscernible] also Africa's small community. And Sri Lanka is gradually coming out of the pandemic in terms of recovery. It's also a very small business. But it's clearly strong recovery in the international cities as well. And this is going into a little more detail in terms of the performance trends and total revenue, EBITDA, PBT and PAT, where it is -- as we just discussed at INR 1,123 crores in revenue, EBITDA marginally negative at INR 26 crores and PAT was also was minus INR 398 crores, and Q2 EBITDA was obviously positive at INR 97 crores, quarter's [indiscernible]. Similarly the standalone trend mirrors the consolidated trend with very strong EBITDA of INR 80 crores coming through in this quarter and overall being positive EBITDA and the losses coming down, at a PAT level minus INR 244 crores. I think the other thing to note is in terms of how the leisure is there -- non-leisure has [ time level ] performed both on occupancy and ARR. And as you see what has happened in occupancy level has jumped from in the previous year Q1 2021 -- Q1 was 20% and Q2 was about 51% in leisure segment and the non-leisure segment jumped from 30% to 57%. And the ARR, the leisure segment grew INR 9,098 to INR 10,305, where as the non-leisure segment went up from INR 4,530 to INR 5,697. So we have seen consistent growth both in occupancy and ARR, in both the leisure and in non-leisure segments. In terms of the key international geographies as well, in terms of occupancy and ARR we do see big growth occupancy, 41% in USA, 41% in the U.K. Maldives 59%, and also Dubai 66%. And ARR is also have gone up in the year say, in USA, in U.K., in Maldives, and in Dubai. Dubai has been of course sort of drawn the [indiscernible], similar levels actually. But I think the point is that though occupancy and ARRs are showing growth in international geographies as well. In terms of the key revenue drivers, I think if I sort of divided it between revenue recovery asset-light growth and the new and reimagined business, occupancy very clearly 43%, [indiscernible] as well 17 percentage point recovery. In ADR, it was INR 7,800, which represented a 51% recovery and RevPAR INR 3,342, which represented a 143% recovery. So this is for standalone for the H1 current year versus the previous year. And in terms of asset-light growth, we continue to sign contracts. We have portfolio of 225 hotels, 27,700 rooms in the pipeline. We openings expected '21-'22 is 13 plus, management fee has been about INR 58 crores, this is a 71% jump as compared to the previous year. And new and reimagined businesses, Ginger portfolio is now 80 plus, Qmin is now in 19 cities, 37 hotels, and 75 restaurants -- 75 plus restaurants and Ama has [ signed ] 59 bungalows including the pipeline. On the cost management, very clearly, cost management is driving operating leverage. We did see the revenue grew by 125%, expenditure grew by 41% in consolidated and stand-alone, the revenue grew 113% and expenditure grew by 38% and corporate overheads, these have shown a 25% reduction in H1, at INR 112 crores compared to INR 149 crores in the previous year. Overall, fixed cost per month has been INR 129 crores as compared to '19-'20 at INR 164 crores, which is a 21% reduction. And manpower rationalization through redeployments continue. So 312 people are redeployed till September 30, 2021. And lease rental waivers continued [ as earlier ] for INR 17 crores or so achieved during the half year. On the international hotels, if you see the performance, the U.S. performance has definitely improved in terms of revenue of 254%. But more importantly, if you see the losses, the losses have come down to INR 71 crores to INR 18 crores at an EBITDA level. And in the U.K. as well, the revenue has jumped to INR 93 crores, with EBITDA which is positive at INR 8 crores. Occupancy improvement in the US has been 27% to 41%, ADR as well has been higher to the pandemic level, The Pierre posted positive EBITDA in Q2, marginally positive but it was still very good, which is a result of the cost reduction efforts in terms of manpower reduction, in terms of [ rents ] renegotiations, [indiscernible] rental restructurings, all those [indiscernible] coming well. And also UK concerned occupancy has improved, ADR is GBP 274, which is close to the pre-COVID level and St James Court posted an EBITDA positive in Q2 and in H1 actually. So that is what has happened on the UK side. On the exceptional items, there are -- just a very quick comment, nothing major with the exceptional items. Some marginal exchange [ vouchers ] [indiscernible] more than INR 9 crores -- coming out of JV, and we had in H1 some lease rent concessions of INR 17 crores on the operating and non-operating revenue [indiscernible]. On the stand-alone, what is notable here is that since we provide for cash losses in Pierre, at the standalone level, you will see that the INR 71 crores of cash losses last year came down to INR 24 crores, and for the current quarter, it was INR 7 crores as compared to INR 29 crores in previous year, nothing else to report, I think, lease rental concessions are worth INR 13 crores in H1. Performance of key subsidiaries, very clearly having said, St. James Court was positive, UOH was positive, PIEM Hotels also improving performance, at INR 92 crores, so a significant jump, INR 19 EBITDA loss was there, but that is again recover in time we go forward. And we also discussed in terms of [ clubs coming down ]. In terms of the debt position, I think for the first time, we have seen a reduction in net debt at a consolidated level I think about INR 3,571 crores, marginally as compared to the previous year. So the point is that we view our liquidity and we have loan repayment coming up in the month of November. And for the first time, we are unlikely to do recurrent debt, we will have cash to [indiscernible] [ debentures ] actually. So that's a big shift. In fact this cost of debt needs to be competitive, and we'll continuously focus on that. And as we mentioned in the first part of the presentation, we -- earlier, the Board approved a INR 3000 rights issue, and now we have decided to up the amount to INR 4,000 crores by doing a modification to the rights issue of about INR 2,000 crores and a QIP, [indiscernible]. We will do the right now, to be completed mid of December. And the QIP, which will go for the shareholders' approval, will potentially be done after the Decembers numbers, especially in some time in month of February. So bottom line is that we'll avail this money before March, it gives us that not only reduction of debt, but the ability to do some of the consolidations. We spoke about the Ginger acquisition of the balanced shares, all of the [indiscernible]. So I think it's really giving us ability not only to reduce debt, but also pave way for growth as well actually -- growth capital. Yes. I think the aggregate purchase consideration for Roots cannot exceed INR 500 crores. And [indiscernible] we expect to [indiscernible] this transaction by mid December. Emerging from the pandemic, I think what is going to happen now is that we'll witness stronger revenue growth than the industry. We will be driven by asset-light growth, to achieve a balanced 50-50 portfolio. We will drive growth in new brands and businesses, these should become very light [ businesses ] -- are much more visible as we go forward. We will reshape the P&L with continuous intervention, new ways of working and business model innovations. We will reshape the balance sheet, not just with capitalizations, now the time is also right, [indiscernible] monetization, and we will work on the simplification, like the Ginger consolidation and [indiscernible] has to get finance structure. And we do want to move to a zero debt balance sheet to [indiscernible]. I think rest of it is really detailed, I think it is all being uploaded, which is all consolidated balance sheet details. I'm not going to go into the details. I think is there anything I need to speak? Nothing more. I think it's all there for the analysts to see. Now I think we are open to questions now.

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

This is Nihal Jham from Edelweiss, and congratulations on the great performance, Mr. Chhatwal. Just 3 questions from my side. First is, obviously, we've seen a strong trend of leisure revival, probably call it revenge tourism that has happened. I just wanted your thoughts that incrementally, as you look forward, maybe until November, as you said, there could be a lot of wedding. But beyond that, is there a possibility that maybe the tourism or the leisure part of it stabilizes and you see a revival in corporate demand potentially taking you back to the recovery? And a related question to that would be that -- is it that the level at which leisure is happening, it could fall off partially from here, given that there is a one-off trend that is currently being seen. So that would be my first question. I'll come to the other 2 after this, if you want.

Nihal, I think it would be fair to say, and I mentioned that while presenting that corporate demand is showing good signs of recovery. All of that is evidenced in Ginger, which has gone to plus 80%. So it's not -- Ginger is not leisure-driven brand, and that means that travel started happening. And this is a direct correlation between the number of vaccinations and travel. We can feel more and more secure or less prohibitive when it comes to traveling now. Also, we are seeing a lot of conference bookings are beginning to come in. So there are still some restrictions of number of people in different states and different cities and in terms of timing. But the positive trend is that every day, we hear something, which is helping corporate travel recovery, whether it is allowing international travel, whether it is allowing some visa as on certain dates, whether it is people starting to do physical events. So they are combining the physical presence with digital. It's not only digital anymore. And I think tourism is very well positioned as an industry. I'm not talking about leisure now. As an industry in helping build the relationship capital that has got lost. The relationship and social capital that got lost because we have targeted [indiscernible] of reserve as a man kind over the last 2 years in trying to do whatever we could on a digital basis or a platform so that there will be an extraordinary need going forward for people to meet in person because in order to do business for the next 5 or 7 or 10 years, you still have to build the results for the future. So you have to build that relationship capital for future. And I think that is what will drive demand besides the normal demand in corporate sector coming back.

That's helpful. Would you expect maybe leisure travel slightly moderate from here? And these are obviously trends that a lot of travels happen together because of lockdowns [indiscernible]?

It's a difficult one to answer. I personally I can say that personally I feel that it will not, it will only increase. So having myself lived in the Western part of the world, I saw a lot of people traveling by boat. And it was not happening as much on the Indian subcontinent and as they used to have. So what COVID has done is has got people out in their own vehicles or by traveling by road with family are far more frequently than it was evident pre-COVID. So I think maybe the leisure and vacation displacement might happen to some extent as more and more people get back to work. But the private holidays of families and the extended weekends will only increase, they will not decrease.

Sir, my second question was, Mr. Giri, that on the cost-saving part of it, I just wanted an update that if you compare to pre-COVID level, what is the kind of assets that you still expect you'll be able to achieve? And if it's again possible to bifurcate it between the key line items, specifically employees, marketing and maybe other major hits.

Yes. So I will answer this as a headline level. I think on the specific line [ on what amount ], maybe we can do it offline. But in essence, I think if I kind of look at the overall H1 number last year, if you remember, the overall fixed cost number reduction is about 28%. And in H1, we have seen the reduction vis-à-vis '19/'20 has been about 21%. And I think -- and therefore -- and for the quarter, it's around, I think, 23%, 21 -- 21%. So I think we will continue to target that. This is a very important number in terms of the leisure that the fixed cost per month is kind of kept at a reasonable level, and we've got to focus and not allow this to go back. I think just a very simple number at the management level, INR 164 crores was a monthly average on fixed costs, and that has now come down to INR 129 crores in H1 of [ '21/'22 ].

Very quickly, just last question. Out of the INR 4,000 crores variance, would it be right to understand INR 3,500 crores just to purely pay down the debt and the remaining INR 500 crores in the Ginger acquisition? Is that the way it will be used in the coming 12 months?

I think wait for the documents to come up, which will give more clarity. And I think very clearly, the increase is from 3,000 to 4,000 is a combination of the different factors. Number one is to sort of not just a [indiscernible] but also get growth capital consolidation [indiscernible]. Ginger is one of them as far as consolidation.

I would like to add that if we did that, I think we don't expect to generate any cash on our own. It's only [indiscernible] I hope that does not happen for the sake of the industry, not just for Indian Hotels.

We will now take our next question.

Hello? Can you hear me?

Yes. Who is this speaking? Who is this?

Yes. So I just want to find out like the Indian hotel sector moves in cycles, right? Even pre-COVID, it was a little tepid. So do you think it's a long upcycle from here onwards?

Well, firstly, your observation is accurate in that it has no correlation with our strategy on going towards over 0 debt over time because of things that are happening, which are beyond anyone's reasonable control. Having said that, there is a unique situation and that impact supply levels are very constrained. So when demand comes back, your denominator is that at a constant or a shrinking level because some hotels pressure on community or some of the supply might go out of the market, then the [ sizing ] could be stronger. It was not very easy to build this or that quickly. Definitely, not in this part of the world.

Okay. Okay. So you think it can be a durable long cycle ahead because of what you just mentioned?

So that is anybody's guess, but the fundamental point in that direction that whenever you come after the crisis, this industry has bounced back far stronger than it went into the [ size ]. So if we go to [ 9/11 ] as an example in different parts of the world, the sector was weakening and then there was 2 years of [indiscernible] or 1.5 years, and then it came on very strong in the years 4, 5, 6, 7. Similarly, after the other crisis, it has been a [ very able operation, Blue Star], the oil crisis. What do we want to call it? So the sector usually and historically has bounced back always stronger. And only unknown that we have is the global geopolitical situation as well as the mutation of this virus, how difficult it will be or not? Are the other vaccinations good enough? Are they going to hold that? That's unknown. But otherwise, yes, I think you might be spot on that drilling for an uptick in the cycle.

Points like why don't make a suggestion, you would be knowing better. Like in the Indian Hotels Company, why don't you form a subsidiary which has a much wider play and stronger play in weddings, like wedding being what it is in India, like [ Hadiqa Com ]. So that's one suggestion. Second is like even the catering part, it can be a much stronger play for you. Can you comment on that?

I think that we're already acting on most of this. So maybe on offline, if you contact us, we will be able to show you all of our new brands on catering, on our wedding services, on our promotional wedding issue even take out the latest book magazine. You will see in 6 different pages addressing that. So I think we have to always make sure that we do not dilute the positioning, especially of the [indiscernible]. It is [ rated as good from the brand ]. So [ it can be any lever that we do ]. We have to be careful on how we find the right balance.

We will now take our next question.

Puneet, this is Amit Agarwal from Nirmal Bang. My question pertains to what you've just talked about the equity issuance about INR 2,000 crores and the rights issuance also. I was reading in the press about some of the hotels of ITDC getting sold off. So firstly, are you bidding specifically for, I mean, amongst others, probably for Ashoka Hotel? So could that be one of the reasons where you're kind of putting some money out there? And secondly, is there a possibility that this period of hotel development could be finally taken up by you instead of having somebody else coming as an equity partner?

Amit, firstly on ITDC, we are together with LIC, we own 15% of ITDC. So if hotels are sold and we get money back for our shareholding, that would good news for us. So that's the one thing. The second is Ashoka Hotel is, at the moment, we have had no discussions and nothing that we've looked at as far as Ashoka in Delhi is concerned. And thirdly, on Sea Rock, we have not changed our strategy. We will not be doing, and we have communicated that in the Investor Day presentations and in previous calls. We will do it in partnership with someone who brings in the remaining equity or [indiscernible] share of our existing investment in [indiscernible] to build that property. It's very large project. And I think we need to have a partner, whether we find it within our existing partnership or outside of that, we work very diligently on getting the permissions. And once we have that, we will seek a partnership and use capital from not our sources, rather from external sources.

Sure. And one last question, probably not focused on this particular quarter results. In terms of Qmin, and let's say, Chambers membership, et cetera, as a percentage of total top line, where do you see it in the next 2 to 3 years, if I may ask?

We see that as a percentage of our target for what we call the [ new age ] businesses is around 25% of the top line and the contribution of around 35% to the EBITDA. This is the issue we work on. And today, they are less than 5% to 7%. But as we add more brands as the previous person had asked some question on catering and other verticals that we have. And as these brands grow and stabilize, we think they can get to 25% of the total revenue mix.

We will now take our next question.

Sumant here from Motilal Oswal. So my question is, we have seen a good recovery in the month of September and August. And as per the [ PPT ], 86%, 88% of the business has already recovered of the pre-pandemic level. So can you talk about what is the gap of, say, ARR, 14%, 15%? How is the F&B recovery at the -- compared to pre-pandemic level? And occupancy side, we are seeing a good recovery. But ARR side, when we can reach at the pre-pandemic level in the coming quarters?

So as and when the occupancies have stabilized at a higher level, the rate will recover. So you see that in the leisure destination. If the demand for leisure is high, most of the leisure destinations are doing higher rate than the pre-COVID level. So whether it's, let's say, [indiscernible] in Shimla or in Goa, we will include -- we are performing at a higher level than pre-COVID both on rate and on RevPAR. When it comes to SMBs because of the restrictions, and most importantly, restrictions that we have had in Mumbai and in the state of Maharashtra, also in Delhi in terms of events. So we are still -- as a company, I would say, we are still at 50% on food and beverage of the pre-COVID level or just a second on [indiscernible]. So 50% of the recovery on the pre-COVID level in terms of combined, the meetings, incentives, conference, wedding, that kind of business. The restaurants are more or less back. And the more we open up, including in Mumbai, we see that the pent-up demand is so strong that the visitation to restaurant is very high. But that has been the norm, it relaxed about 50% below seating capacity, et cetera. I think these numbers are expected to grow. So the trend is positive. The trend on larger meetings is also positive. It is positive because we are coming almost from 0 level, right? So the restaurants for a major part of the first half in Mumbai was only open until 4 in the afternoon. Then we were allowed to open until 9 in the evening. Then we are allowed to open until 10. So I think once everything opens up fully, this should not take a very long time to come back.

So overall, leisure distribution has already crossed the pre-pandemic level. And overall, occupancy and ARR side also, we have seen a growth, I think, from the pre-pandemic level. And talking about the business destination, what -- can you talk about the Mumbai and Delhi market, how things are happening in the October month and September month?

So Sumant, October should be better than pre-COVID. Why? Because pre-COVID October had Diwali and Dussehra in the same month. So it's not a real like-for-like comparison. So but we are expecting that for our portfolio, we would have a better October than in October '19 and '20. Both.

Can we talk about the new Delhi and Mumbai market, how is the occupancy last 2 months and ARR, how things are moving?

Yes, the Delhi and Mumbai markets are lagging behind and also Bangalore is lagging behind, but it is recovering faster than we thought. So the occupancy rates are increasing rapidly, which will obviously lead to higher rates. So like 3 months ago in Mumbai and some of our hotels, we did a rate of INR 3,000. So suddenly, it is at INR 8,000 or INR 9,000, but it's still far away from the INR 15,000 or INR 16,000 we did pre-COVID level. So the recovery there from 3 to 6 or 7 or 8 has been like a 3-month period or 100 days. So we have to see what happens in the next [ 100 days ]. It's very difficult to predict but the occupancy levels are very high.

And the last, what do you think about MICE activity, how things are happening?

Sumant, I answered that question a few times as well. So the MICE activity is picking up. A lot of big events are happening. They're happening in digital and physical format, both of those formats are happening. There is a [ feed start ] in Delhi and Mumbai, which is very good, very encouraging. As I said before, there was an event, which as I speak today, a very big conference is happening in Delhi in Taj Palace. There is a [ NAPCOM ]. There is an [ ESYCOM ]. There's a lot of such events. [ Today, there is a form of progress ]. [ It's the other form of government ], the government delegation that has gone to [indiscernible] for foreign delegation that has come in. There is a CII event being held in Delhi, the first time after 2 years in digital format on the [indiscernible]. So this is a lot of activity or reservations and inquiries which are coming in and are getting confirmed, which are incremental because they're not just a wedding. These are actual meetings and conferences happening. They were not happening in the last 2 years.

We will now take our next question.

Shaleen from UBS. Can you hear me?

Yes.

Many congratulations, sir, on a very good set numbers. Really pleased to see them. A few questions. I could notice that our peer is profitable in second quarter. And when -- U.K. business is profitable, both in second quarter and first half, can you talk about the sustainability?

Yes. No, sustainability is good. In fact, I think as we always told you, Shaleen, I think as far as the U.S. is concerned, there are 2 things the cost measures are very significant, number one, has been production and head count this quarter is something like $2.5 million. The second one is the -- giving up the market shares and save about $2 million in terms of the [ impact was ] plus the lease negotiation, so more than $5 million of savings and expenditures. So that's number one. Number two, I think what has happened is that we are managing the property category in terms of lower F&B, the restaurant in [indiscernible], that has allowed us to even manage costs actually. Third, I think, we have seen demand also being more in the [ screens and the higher category ]. So ARR also be kind of maintained, actually. Our view is that the U.S. performance is definitely sustainable. In fact, that's still a -- if I just talk about the cash losses, by last year, the cash loss was significant. This year, we hope we can come back at levels of cash losses, which are not very different from what was there pre-pandemic year. So therefore, I think the recurring question is sustainable in [indiscernible]. That's number one. As far as the U.K. is concerned, U.K., we never had any doubts because the U.K. has already been a market, which has bounced back from these challenges very fast actually. And we have seen that come true. So I think -- so both of these markets, in my view, are strongly sustainable actually. And now you get things like Chambers that we've added is also contract to the -- what do you say the [indiscernible]?

Second question -- my second question is there has been a reasonable amount of cost prudence. Can you hear me all?

Yes.

I can hear you, Shaleen. I can hear you.

All right. Okay. So there has been a good cost prudence from our side, but do you think that there would be some need of increase in investments towards brand building maintenance CapEx going forward, which we might not be doing during the pandemic time that may increase a bit of a cost from our side?

No Chambers side, I think the cost prudence, we have done in a very clever way is we are not cutting to the [indiscernible]. It's just stopping the message because we have an obligation to protect the brand. On the contrary, if you recall, we upgraded 19 of our hotels just before the pandemic. We are putting significant amount of money in Taj Mansingh and The Chambers in Mansingh is a model for private membership clubs. If anyone has seen it, they would confirm that to you. And this is going to continue. We are building the flagship Ginger with our own money in Santacruz will feature 371 rooms which will be ready by December of next year. So there is no -- and we have operated a lot of Ginger properties to Lean Luxe is what we call them in the newly reimagined and repositioned Ginger is one of the exceptional companies we not only treated our staff with materials and respect they deserve, when we get our growth going. So of course, we were not using our own capital to grow. We are doing it more on an asset-light basis, but still there is time and money that get spent in doing contracts and doing travel to these places to have negotiations with owners. So we have been spending money and looking at the mid- to long-term future of our company and our brands and not doing any short-term drastic measures. And I think gearing at that on the slide, if you would recall, that we have redeployed more than 300 people. We never had got rid of 300 people. [indiscernible] within the other group companies, so that they are more agile and cost and less heavy in the corporate overhead. And finally, if you recall the figure that we had last year, it was 39% reduction in corporate overhead. We will not be able to maintain 39% because some of the travel and business and all that is back, but we are still very confident to keep that figure at north of 30% even in this financial year. So -- and that is what you will see also in the corporate overhead reported in the first half is more or less the same as at last year's level. So I think some of these cost savings we're going to keep because we've changed the way we work. And also every month we get Ginger, the Roots Corporation integrated into IHCL. That does not mean we disclose off, but we don't need to have different infrastructure. So it will make us more efficient on the matters in terms of corporate overheads.

I just want to understand consumer behavior towards human. Since I think the right to open up and even -- also about experience when we go to a premium restaurant like premium brand of Taj. So how is the month-on-month trend for Qmin? Like -- my fear is that it shouldn't reverse like people to start prefer more while it will be accretive for you, but people preferred coming to the restaurant than ordering. Is the reverse happening or you're seeing strong strength in both the places?

It's a very good point, I mean, and we've been very, very aware of that. And that's why we introduced this target with [ 2 of the Taj to be brought ], which we are still doing, but we introduced 3 months or 4 months ago, human comfort. So it brings down your average rate, but not number of orders. On the contrary, we expect Qmin to stabilize at the level it was. And also, [ gearing ] on this slide that the first half between an enterprise level revenue of INR 50 crores or so. That is what we did in the last year, 9 months that Qmin was open. So we already crossed the first 9 months of revenue in the first 6 months of this year, and we target to somewhere -- anywhere between 80 to 100 for this year. And if we get to that level, it is good because it is built on an incremental cost and incremental revenue and incremental profit. It's not some kind of upfront capital cost, building a cloud kitchen, building -- taking on a third-party app, paying a third-party as a commission, [indiscernible] that's what makes it highly profitable. So with the revenue of anything north INR 50 crores, we expect Qmin to contribute north of 50% in terms of margin. So that's why it is an interesting business. That's why we say, even if some of these [ new age ] businesses may not be that big as a portion of the revenue, the contribution to EBITDA would be far higher as a percentage.

We will now take our next question.

This is Achal from HSBC. First of all, a nice number. Thanks, that's a great result. So congratulations. Sorry, your voice was echoing. So I didn't get much of it, but I'll start base offline on some of the questions. But a couple of questions here. So first of all, on the Qmin, Puneet, as you said, you've done INR 50 crores in the first 6 months. But what is the latest trend? So coming to the last question, the first 6 months was fine. But then in the month of September and sort of August and September, how the trend looks like in Qmin?

It's to say we have been able to stabilize. Actually, it's not the month of September that is so critical. I think it's whenever we have festivals, so when we have Diwali, when we have a Parsi, New Year, when we have Dussehra, then we have this [indiscernible] -- or whatever the sales increase more during that time. So this is a direct correlation where we are seeing with Qmin either with the lockdown when people are doing virtual celebrations. A lot of celebrations were having virtually, that is slowing down and that is not happening to the same extent. But celebrations of festivals and getting that pool at a reasonable cost is still happening. And don't forget one thing, there is a certain trust in the brand where the food is coming from, how it is packed and who is delivering it. That trust we enjoy so we have not of seen a big volatility in the Qmin sales is more of a stabilized at the level that we have had a month-on-month basis. Of course, as I said, we have to learn to replace virtual corporate celebrations, not the private ones. On the contrary, we expect Qmin, Qmin Food Truck, Qmin Trailers et cetera, to pick up. We had some initial starting challenges in terms of licenses, in terms of getting a part in different buildings. But I think this time we also -- we should be able to exponentially grow also the Qmin shops. We only had 1 in Brazil, and we expect to open at least 5 more before the end of this quarter, if not more. So the [ canot ] will open, [indiscernible] will be open, we will open in Delhi. There will we -we have opened also Taj Wellington, Qmin is open, that's already 4. And then we're identifying the 5th but it doesn't take that longer time to do a -- shop in the property that we have.

Right. Could you quickly talk about the chambers. I mean you had 2,000 members. So what -- how are you growing? I mean are you expected to grow at 10% per annum in terms of number -- addition of number of members? I mean, how are you doing on the chambers?

Chamber is doing going quite well for us, do you want to....

The chamber the globe membership is back being in fact, the run rate is being approximately about INR 5 crores month at this point of time in terms of global membership. And I think [indiscernible] what do you say chambers and also the Delhi what do you say, chambers, I think we are definitely winning response. And in the current year, 156 members in the first half in new members actually. And so this is a very strong set of numbers. And previous year -- full year was 164. So between that came back 164 full year last year. This year is 126 and H1 is still flat. So therefore I think it's a very strong demand for chambers.

We will be adding the chambers -- sorry, go ahead. We will be adding the chambers in Bangalore and eventually also in 1 year or 1.5 year. So I think this whole proposition of chambers will keep becoming more and more important and critical, as it is again a very high margin business when it comes to [indiscernible].

Right. Fair enough. The other thing I wanted to understand, Puneet, last time, I think you said that the average length of the space has increased because people are actually driving down, so they are spending more time on the road and hence, they are spending more time in the hotel. So the average stay length have increased. So how the trend looks like now? Is the trend continued? Or do you see there's a change in the length of the stay has come down? How do you see that? And similarly, booking window has that squeezed or do you think -- or still passengers are really -- sorry, has that expanded or the passenger is still booking at the last minute, I mean, very close to the date? I mean, how the trend looks like?

So very good question. So that has changed in terms of the booking window. It's starting to increase because especially the leisure properties as they're getting fuller and fuller. People are a not trying to book in advance because those last minute deals are more expensive and people want to plan the Christmas, New Years, et cetera. So that window has increased in the last 2 weeks. Before the pick up was very -- it was a very short booking window. In terms of length of stay, I think that will -- there are 2 trends. One is the QT side, the quick turnaround time, is that you go from Mumbai to LA to -- and come back, these will not happen because it's still with all the vaccination, with all the checks, there is a quarantine or no quarantine, it's also a health issue. I think those kinds of travels in [indiscernible] maybe 90% only 10% would be -- I do think 10% would be an overstated figure. It could be almost anything between 0% and 10%, as we speak today. So not many people are traveling for like 2-day or 3-day trip, as it is still considered risky to travel. So if people travel, they will try to combine other businesses, whether they do it in different countries. Let's say, if you are traveling to Europe, of if you are traveling U.S., you would combine the East Coast, West Coast and not do it in two different trips. So that makes you a length of stay in the country or in a continent longer. When it comes to domestic, that is getting balanced all because on leisure, you were staying longer, but the visitations will go down. Why it will go down because it is a call by the majority of the companies post Diwali for people to come back to work. We cannot just work-from-home wherever they are. I think it's Diwali, it's a global trend. The people are being asked to come back. So I think that will balance out because people will come back to work. There will be more meetings, conferences and business travel. So it will be one segment replacing the other.

Right. Fair enough. Finally, I also wanted to understand on the point which you raised last time about the loyalty members and that could actually increase your business significantly. So how are we doing on that? I mean Super app is still yet to be launched. But otherwise, how are we doing and now, of course, being Air India holding to Tata, I mean I think Air India has itself 1 million members. So how do you see the loyalty program playing in this? And then how -- when do you expect some -- to see some results from that?

I think as a hospitality company in one of the largest players, I think we are very well positioned to benefit both from the digital initiatives of the group as well as the airline business. You already benefit because of Vistara and AirAsia and Air India comes in. It will be very beneficial for our airline catering business. We already do almost like in Delhi we do 50% on Air India flights already before even such a new scale. But getting other businesses were delayed by flights -- cruise I think -- and we are hopeful that we'll be able to see the impact. So yes, of course, at the group level, we hope and we will do everything possible that we are well positioned to benefit from such possibilities.

What is your time line in terms of the Super app? Are you -- do you have any time line?

See, I can -- we are at IHCL, we don't have a time line on this app. That is a question to be raised to a different company. But we are one of the members that are very keen for this to come as soon as possible. And I'm sure it will be communicated by the right people in the right time in the right fashion. It has been launched for the staff. It is coming out every time in the press for the internal people to do it. So that is And why -- and that is important so that when we go to market, everything works seamlessly. So I do prefer if you ask this question to the CEO of that.

We will now take our next question.

Himanshu from PGIM Mutual Fund. So my one question was on the capital raise, what we have, okay? And we plan to be debt free, okay. Generally, the way we look at hotel industries, the return on capital employed is across the cycle, if we average 5 years and 10 years, it is high single digit and low double digit, okay? And if we even do not keep any debt on the balance sheet, will not be return on equity will be also in a similar fashion? And is it right for us because -- so we have seen a very tough period, but do you think you will be happy for an ROE to be between high single digit and low double digit? What is your sense and what are your thoughts on that something you can share your thoughts?

I think, I'm not sure. I think you will have to look at our overall steps in multiple inventories. So number one is that as we highlighted in the beginning of the presentation, I think because of the cyclicality of the business, basically we're coming down to 0 debt kind of position is useful. That's number one. But beyond it to answer your question in terms of return on capital and return on equity, what are we doing it. So number 1 is that our growth is last year effect, which means the entire to act to the base because of growth is kind of minimum. So that's number one. Number two is that if you look at the shape of the P&L, you've seen some of the changes to shape out the P&L being driven by cost reductions and now has the new businesses start to begin at high margin, you will see that the revenue lines are also giving us the diversity beyond the room revenue and is now chambers and Qmin and Ama and Ginger and all of those actually. So the revenue base is getting stronger, asset lines high margins the expenditure rate is reducing so our profitability should go up. That is the second one. The third one is really from a balance sheet perspective, I think it is not just about this capital raise. I think made also focus on simplification which means Ginger has one of it, but I think you will see monetization kick start now. You will see some more simplifications and kind of hopefully happening in the next -- starting to happen in the next few months. So the next [indiscernible] you take a lot of it together, I think what you really see is that we don't expect a challenge to return on capital. In fact, in the 7th July investor call also, we segmented the balance sheet into domestic asset and other asset. Our domestic asset, as you know, domestic has return on capital employed is 20%, whereas if you look at, there have been challenges among the other elements whether it is 0 investment, whether it is some international investments actually. And those that are running on a systematic basis, it could be a monetization of probably a within the scope. It could be a statement that we are not bringing in new investors. I mean bringing in more capital visibility of doing it in partnerships. So I think our own approach to P&L balance sheet and growth has to viewed in totality. And I think what we're doing in terms of inflation INR 4,000 crores to compound to 0 debt is very one part of ratio. And as Qmin, other thing is that it is not just driven by the capital range. Very clearly, we believe that this is going to be a sustained recovery in the industry performance. I think what you're going to see is the cash generation, free cash flow should go by. So it's a combination of all of that in. So don't look at and we are very conscious that we don't want to be surpassed in terms of RSV [indiscernible]

See, I take your point because if we see last 10 years' history or the best years even in 2010, '11, the numbers were not very high or significantly higher than 12%, 13%, okay? And so that is the reason this whole question and thought is. Yes. Secondly, we have this Ama, Qmin and all those ventures, which we are doing but for our size of revenue, okay, do you think all these measures can be significant EBITDA or bottom line contributor even if we have 100 Ama what type of service standards will we be able to deliver, okay? and with those service standards, can they be cheap -- can we make significant money, which can change our ROCE profile or keep our ROCE profile higher? So some of these measures and how are you focusing on those measures if you can put some light on that?

Okay. No, I think the business is new age business is what we call the new initiatives. So you take Qmin as an example, I think we are not speaking which deliver the good amount at [indiscernible] what you say margin actually, so we are doing it, our pricing has not come down. I think in comfort, I mean, pricing for specialty index comfortable is really being maintained, so the on profitability Qmin is still at a 50% level, actually. So therefore, these are high margin businesses. And as Puneet said, we are not looking infrastructure. We are existing in where the infrastructure already increased the infrastructure has not implemented investments we are making. And therefore, the margins, of course, in June will be high is not going to be to low. So that's number one without capital investment. Similarly, with completely asset-like model where we cash 15% of top line as a management fee and 15% on top of it in terms of marketing fee actually. And now we are already at 59 properties being signed. And as this growth and in terms of sales delivery, we have question, we are now placing them close to IHCL hotel, Taj, and they are now located in 90-odd locations. So therefore, there are a supervision from the hotels actually and because it is asset light. I think even if I assume that an average top line of an Ama is good as 50x or it could be better, actually, let's say 50x [indiscernible] and you 100 villas -- INR 7.5 crores and therefore, and with an orbit of as we stated in the 7th July meeting is to really take it up to something like 500 -- so the net result is that these all will be significant amounts. So Qmin will be high margin, Ama will be completely asset-light chambers is high margin in terms of what we are adding. So all of these really speaking, I think it's very important to understand that the new initiatives being asset light management fee growth. In our management fee growth also added the potential in our dental all in terms of that [indiscernible] So the net 7th July call in terms of [indiscernible] so the net result is that should add significantly to profitability and [indiscernible]. It's a very deliberate shift in terms of the way we are approaching traditional business growth as well with new initiative growth.

And one thing, we had properties where a large number of foreign tourists used to be there on the tourism space, okay. Have you seen domestic tourists taking over those places or the occupancy has reached with what we were having even with the foreign tourist was allowed in some of the premium properties? Or you think there is still in those properties, but others are doing well, and hence, the tourist is looking better? So some light if you can throw on that?

No, it's a very good question because -- and I will also add to the previous question, but let me first answer this one. There were around 25 million people also traveling all of India. We were unable to travel as much as before. So if you look at one of the slides we showed Rajasthan, there is so much better in this first half and also the last year. And recently, the Secretary of Tourism or one of the government officials of Udaipur, news saying that with the room nights was the highest in the last 10 years, right? More [ of ] a for a very big recovery and at very good rates. So that's also what we have said consistently. Same is true for most of the leisure destinations, the ones which is suffered is really are still having the need to come back up is Delhi, Mumbai, Bangalore this kind of big metros, but the trend is positive and the people who are not able to travel out there definitely more than compensated for the lack of foreign travel that was happening. So for us, of balance properties in Jodhpur, in Udaipur, in Jaipur and Hyderabad have done relatively well and having exceeded our expectations also. Now the other question which you had asked before, see when we talk about Ama, 50% of that portfolio is coming from our own group companies, whether it's the Tata Tea or Tata Coffee. We have also taken on the role of an internal aggregator. So your capital investment, it's a model based on 0 CapEx. It's a model based on the same general manager of the hotel looking after a few bungalows, so if you not go - is the same person was running [indiscernible] and all the village looks after these villas. It is, of course, a charge, which is put on each of the villas from an P&L perspective. So we're not adding a huge corporate overhead or other kind of cost structure to it, which makes this business very attractive and also very powerful. And we are not going to stop at 50 or 100 because you're absolutely right. If we stop at 50 or if we stop at 100 with 4 or 5 rooms on the average that is like doing 500 room hotel. But our feedstock that we have thought of ourselves is around 500 over the next 3 to 5 years. And if we are having 500 villas, you just correct my colleague Giri I think if you look at our revenue for villa on an average going forward both pandemic, why post-pandemic because during pandemic even villas were shut. So they were not operational. So the effective revenue might have been INR 50 lakhs, but it was for 4 months or 5 months or 7 months, population I think it will get two or more and if you INR 500 then you take your fees on it then it becomes a substantial amount of business without any big capital cost which you're incurring upfront or any other kind of tristate you're making off. So I hope it answers both your question. I think the domestic demand on the Indian subcontinent is strong enough on new initiatives and new brands, these are supposed to complement what we have been doing well for 100 years.

One last follow-up, okay. So on Ama's type of property, where in last year because of COVID wanted exclusivity, okay, and want to be at a place which was less crowded, okay? But if something -- but do you think once the fear of COVID reduces, people will move back to hotels and stay? How do you look at that? Or is there any fear or just some understanding?

No, we don't have -- I think what has happened is that this hosted business is nothing new. What is new is a company like us went in to so that is only new thing. Overall all around the world, this has been a very strong business model, including in India, there are different other companies, which have been running the business very successfully. So home stays or having these villas, if you live in Frankfurt and you want to go to Spain, your first choice is not to go to home stays is to go and book a villa with family or 2 families sharing a large villa together or even within the Germany with East Coast or West Coast, this is what you do. Because hotels in such locations are sometimes are not sustainable because it's a very seasonal business. And so people use that as a real estate play. If there is a villa they use it for realty, use it for themself and their family also for a month in a year or 2 months in a year and rent it off for the rest. What we are doing is just taking away the hassle of security from them. The hassle of sales, marketing and distribution same time provide a brand, which helps the capital appreciation and still provide them a month of sale free and one or else comes all of it, we make our fee or money or, what we are charging is 18% of the top line. So that way this is model is a good model, and it's a very futuristic model, and it is definitely the best. Actually, it will grow exponentially in India, even after COVID is over.

Should we see the last question.

Okay. We will now take our next question.

This is Deepika from JPMorgan. Congratulations on a great set of numbers. Just 2 questions from me. You mentioned 0 debt target, any time line for that?

I think what will happen is that -- I think, very clearly, you will see that with the completion of the capital raise, we will use it primarily to reduce debt along with Ginger we announced and a few other end users that completing the balance of the acquisitions all that in concrete. Then the one that -- the second lever is we will have to start correcting the [indiscernible] subsidiaries as well actually, which means that whether it is Ginger, whether it is [indiscernible]. My own sense is that the substantial debt will come down by March. And in relation to the subsidiaries and other entities, I think it will probably take us maybe another 18 months, I would say, 12- to 18 months in terms of going to that level. I think they have to work through the detail but definitely, it's an aspiration to have in terms of doing.

Got it, sir. And on the new initiatives, you mentioned about 25% of your revenue as an aspiration. I mean, that seems like really substantial if you had to look at some of the pre-COVID numbers, which of these, I mean, do you think is the most scalable one in your view?

It induce advance initiatives, where we spoke about 25% it includes Ginger, Qmin, Ama, Chambers and the management fees, actually, those are the 5 streams. And I think -- so I would say that Ginger is definitely scalable I think Chambers is getting, Ama is just discussed, Qmin, we discussed and management fee also we discussed. Setting all of these 5 streams that there ends up constituting the 25% in terms of truck.

Okay. And sir, just one last one from my side again. Do you worry about corporate demand not coming back to full and like the metro city hotels basically lagging and you're needing to source demand from, let's say, lower ADR sort of segment? Or do you think that all of this should basically sort of normalize with the kind of traffic that you're seeing?

No, we don't worry at all. Actually, we are seeing a lot of this coming back in faster than anyone first of all. I think it shows in the numbers. All this that we are showing is not coming only from national. There is already some corporate in there. And whatever that we have is, you will see that at the end of quarter 3, unless there is some bad news, as I said before. In the month of November or December, you will see that a lot of this demand is coming back because it will not be just leisure doubling for that's happened. So there is no capacity available. If you've taken all of it, it was up 120% and 80% of business comes back then you have to 100% of pre-COVID levels. So while presenting again different examples of conferences happening or delegations coming back in the government business, which is needed to kickstart activity in Delhi and Mumbai, which typically they come to both the cities, national days of embassies have started. National days, never happened, happen, they happen digitally. So okay Qmin was a beneficiary. Well, 27 of this month, we are the first one of Spain being strong. So this is another activity because there are other ones of those companies, they all start doing it. So I think it's more like people -- I don't believe in the same that people do not only work digitally or only from home. This is not a phenomenon that mankind is ready for.

We will now take our next question. Please go ahead.

What is your occupancy monthly?

We can't hear you. We can't hear you. Can you come closer to mic and speak.

Occupancy rate, monthly?

Sorry, I think you are not very clear.

We can't hear you.

Yes. Your voice is not clear.

So can you tell me the occupancy rates for the last quarter? And what's the current rate? I mean what is expected occupancy we see?

It is there in the presentation. You see what has been uploaded, if you see in the end after the presentation in the annexure, so we have given the occupancy rate as well. So you can see there.

It appears there are no further questions at this time. Mr. Sanjeevi, I would now like to turn the conference back to you for any additional or closing remarks.

Yes. Thanks a lot for participating in today's call I think and for the realistic response for the questions. We remain available, I think in terms of any further questions that you may have, please do not hesitate to reach out to us and then we can set a [indiscernible] in the subsequent days. Thank you very much.

This concludes today's call. Thank you for your participation. You may now disconnect.