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

Ladies and gentlemen, good day, and welcome to The Indian Hotels Company Limited Earnings Conference Call for Q1 FY 2023-'24. On the call, we have with us 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. I now hand the conference over to Mr. Puneet Chhatwal. Thank you, and over to you, sir.

Good evening, everyone, and thank you for joining our global conference call for Q1 '23-'24. To begin with, we are extremely delighted to inform you that Taj has once again being recognized as India's strongest brand across all sectors for the third time by Brand Finance in the last 4 years. This achievement is a testament to our commitment to excellence, customer centricity and innovation. We are grateful to all our patrons and our colleagues who have made this possible. Also, Rambagh Palace - Jaipur has been rated by TripAdvisor as the world's #1 hotel in the 2023 Travelers' Choice Awards. On this call, I would like to just present to you 7 key takeaways from the quarter that has gone by. So let me start with the macro on the India story being the #1. As you all must have read, IMF has recently raised India's growth forecast from 5.9% to 6.1%, citing robust growth driven by domestic investment. India's per capita GDP is expected to more than double in the next 10 years, leading to a surge in disposable income, driving higher discretionary spends which will directly benefit the travel and tourism sector. Government's focus on developing infrastructure and destinations in mission mode is yet another key positive for our industry. With more than 80 new airports expected in the next 5 years, connectivity and thus tourism is bound to significantly improve. Hospitality upcycle continues with hotel demand growth continuing to outpace supply. And we believe that this is a trend that is going to stay with us at least for a few more years. Indian Hotels, with industry-leading growth, profitability, balance sheet strength and brand scale is well positioned to benefit from the macro and industry tailwinds. On the number 2 takeaway, Indian Hotels delivers best ever Q1. We are very pleased to share that our record performance has continued in Q1, making this the fifth consecutive quarter of best-ever performance for IHCL. Our consolidated revenue grew 17% year-on-year to INR 1,516 crores. I mean we always report, as a listed company, our consolidated. We don't report like other global majors system-wide or what you call enterprise revenue. If we had to say that, then the growth would be north of 20%. EBITDA grew 13% year-on-year to INR 459 crores, yielding EBITDA margin of 30.3%. More importantly, our PAT grew by 31% to INR 222 crores. We delivered robust performance across all our brands and demonstrated RevPAR growth year-on-year across our brands in 15% to 16% range. The third key takeaway for us is our portfolio growth. Our growth momentum continued during the quarter. In Q1 '23-'24, we signed 11 new hotels and opened 5 new hotels. Of the 11 hotels signed, almost 7 are conversions or brownfield, so that you can expect these to open within a period of maximum of 24 months. Our endeavor to maintain the space as well as the guidance that we have given of opening 20-plus hotels in this financial year '23-'24 stays as communicated in the past during our Capital Market Day. We continue to envelop India and are present in 125-plus locations across 31 states and union territories. Our diverse brandscape enables us to be present in every geography, in every segment and at every price point, thus giving us greater degrees of freedom as well as resilience. The fourth point that I want to take up, one of the favorites of my colleague, Giridhar Sanjeevi, CFO, is the diversification of top line. With our new brands and businesses as well as our asset-light growth, we have embarked on a journey of diversification of top line. Our asset-light businesses have doubled in top line from pre-COVID times, and we remain focused on scaling up the new brands. TajSATS has been a great success story for us. The company has recorded its best-ever Q1 performance with revenues of INR 205 crores and an industry-leading EBITDA margin of close to 25%, which comes on the back of 10 percentage point margin expansion over the last year. With 59% market share, TajSATS continues to lead the Indian airline catering segment, which we also call Hospitality in the Skies. Our Qmin and amã brands have established a stronger customer connect and continue to scale up. And as communicated on various occasions in the past, this year, we are going to put a lot of emphasis in scaling up these businesses, and we expect that trend to continue over the next year also. Ginger's enterprise revenue crossed INR 100 crores in Q1. This is also the first time, and the Lean Luxe journey of Ginger yielding results. With a proven and profitable business model, Ginger is very well geared to scale up at a fast pace, and we maintain our guidance of opening the flagship Ginger inside the crews in this calendar year. So the expectation is anywhere between first October to first of November, depending on how long the rains and the monsoon period last. And we are very much looking forward to opening this property for our portfolio. Number 5 is our investment in our brands, assets and capabilities, in line with our objective of long-term value creation for all stakeholders. As I just now said, we continue to invest in our brands, assets and capabilities. To aid the Lean Luxe journey of Ginger, we are investing in the renovation of 7 hotels which will take the Lean Luxe portfolio to 70% from the total portfolio by the end of this financial year. We have launched J Wellness Circle, which used to be previously called Jiva, as our holistic wellness brand, and the reimagined value proposition aims to capitalize on the wellness megatrend. We have also reimagined and scaled up our food and beverage brands. Examples include House of Ming in St. James' Court in London, Rick's in Taj Mahal Hotel New Delhi, and we are also reimagining our Taj Club proposition. In addition to brand building, we continue to invest in our assets, which will result in not like-for-like growth. We have multiple hotels coming back online post renovations, including Taj Mahal New Delhi, which has been fully renovated or, let's say, 95% renovated. A part of the facade and one outlet is left, and this is also happened actually in early May. So April, it was not the case, as we got the rooms inventory back in the month of May. And then we would have fully renovated Taj Usha Kiran Palace in Gwalior, which will formally open in the second half of this year. As I already mentioned, the Ginger hotel at Mumbai, Santacruz will open also in the third quarter of this financial year, and we are taking various asset management initiatives in Taj Lands End, in Taj West End, which will further augment the not like-for-like revenues. Our new spa in Lands End with another pool and at the roof should open within the next 1 week. And the New Chambers as a heritage block will open in Taj West End. Our food and beverage brand, Loya, will open its second destination, also in Taj West End, in the next 3 to 4 weeks. All this should further augment the not like-for-like revenues. Simultaneously, we continue to build capabilities, asset brands, assets and capabilities. So simultaneously, we build capabilities to drive direct-to-customer business. Tata Neu has now become a strong pillar when it comes to customer loyalty, with total member base of 4.6 million and 3x growth in active members since the program went live in April 2022. Our direct-to-customer contribution stood at a healthy 70% in Q1 '23-'24. With that, I come to point number 6, or the sixth key takeaway that we have had to inform, because of the LODR, is the Pamodzi and Frankfurt transactions. I would like to highlight here that we have not signed or acquired either any asset or signed a contract for a lease. But under the new obligations which have come into force since 15th of July, our key principle agreement at the Board level makes it mandatory on us to declare, and that's a declaration we have given. We will advise as and when we would be finalizing these deals and if they all get finalized. But yes, it's the preliminary step towards getting this done. Also, I would like to highlight that Pamodzi is a hotel that is managed by us for almost 4 decades, and we know and understand the P&L and the value proposition of this hotel quite well. Finally, Paathya, our ESG+ program, recently completed 1 year, and we have achieved significant milestones so far. With our core ethos of doing business the responsible way, we are on track to deliver our 2030 ESG targets. Finally, we continue to stay focused on executing our 2025 strategy. Thank you so much for your attention, and we now open the floor for questions.

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

So in Q1, occupancy is 74.7%. It seems we are in the peak season. And we have seen in the past, pre-pandemic, 75% occupancy always comes in the Q3 and Q4. So can you talk about the kind of demand momentum we have in the current quarter? And the coming quarter, what is the level of occupancy we can see in Q3 and Q4?

I think we are seeing very good momentum, including in the month of July to date. I would not like to mix out what occupancy level we will reach. All I can say is in light of the demand outpacing supply, which was one of the key takeaways I mentioned, and further demand boosting factors like G20, like B20, like Miss World beauty contest, like World Cup cricket and the expectation in general of the tourism sector that the international inbound arrivals will start slowly getting closer to the pre-COVID level, it's been far behind that level, as of October and November, we do believe that occupancy should stay stable and the rates should not only hold, actually even increase further in the months that will come. And as you yourself said, that this kind of figures we were used to more in Q3, I think there is a general change in the hospitality landscape, in the thinking also of the travelers, and India slowly becoming more a 365-day destination than a destination from October to March, that was the traditional way of looking at it.

Okay. Now coming to that expense side, it has increased significantly. Can you talk about when we compare to Q4 or maybe the previous year -- previous year same quarter, what are the key changes? What are the key cost component we have seen a higher increase? And is this momentum is going to be there for the coming quarter also, the other expense side and also employee cost side? Any other exceptional item also in the other [ expenses ]?

Sumant, as we said during the Capital Market Day, when people wanted us to -- the questions that came were asked always on the guidance on the margin. I would like to go back to that and say the management said we'd rather increase the top line and have a 33% under Ahvaan 2025 of a larger top line. And having increased the top line on an enterprise level, as I mentioned, to north of 20% because our management fee business is rapidly scaling up, but not all of that benefit comes when we report consolidated. And at the same time, we're also on a consolidated basis seeing a 17% increase in revenue and getting us across INR 1,500 crores of consolidated revenue in first quarter, which never happened in the history. Already last year was the highest and this year has even beaten that by 17%. I think we are in a very good space. And with all the factors that I mentioned before, unless there is a black swan event, anything that is beyond the reasonable control of the sector of Indian Hotels, we don't see any reason why this buoyancy should change.

We have the next question from the line of Prateek Kumar from Jefferies.

Question was, so occupancies during this quarter, both at domestic enterprise level as well as [ Taj brand ] level as we see like are very stable and very strong. But the pricing, for the reasons of seasonality probably, has slipped by 20%, 25%. But why -- I mean while we understand the seasonality is both in occupancy and pricing, but normally, this is because the occupancies have remained stable, why should the pricing drop by such a sharp number on a Q-on-Q basis?

I think you're looking sequential and not comparing the same quarter last year because if you were to compare the same quarter last year, there is a double-digit growth in average room rate. And the stronger brands in our portfolio have up to 15%, 16%. So room revenue has definitely increased. The total room revenue has increased by 15% to 16%, and it's largely driven by average room rate. But if you compare Q4 with Q1, that's -- or Q3 with Q1, that will not work because the pricing power is the highest in Q3, second highest in Q4 and third highest in Q1. Although this year, it is quite possible that Q2 would also be very buoyant because of these one-off events which start peaking in the month of -- middle of August to going into September. So I think we should not compare Q3 or Q4 with the Q1 and Q2, we should only compare Q1 with Q1 of last year. So if I looked at the Taj brand, the average rate increase versus Q1 of last year is 10%. The average rate increase in SeleQtions and Vivanta combined is 17%. And the RevPAR increase in all these 3 major brands is -- or all 4 is 15%, 16%, so 15% for Taj, 16% for SeleQtions and Vivanta and 15% for Ginger.

Right. That I understand, sir. But just my question was like because [Audio Gap] has been used by industry to induce demand. That's the case because the demand is otherwise remaining stable, why should the -- I mean again, this a Q-on-Q comparison?

I think it's the channel, what kind of business you are getting, the different quality of business that comes in the month of November and December. It is much higher paying, whether it's because of Christmas or it is because of New Year or it is because of some special weddings, because that's the time you have those, especially on the Hindu calendar, the dates for the wedding. That's a very different level of business. Whether it's for us or it's for buying jewelry or it's for other disposable income or consumption, I would call it, in general, is a very different level. And this year, some of those rates have been missing in the first quarter.

All right. And just a follow-up question on -- like I call it slightly higher than double-digit [indiscernible].

Prateek, we are losing you again. I don't know, it's not coming clear, your voice.

So I was asking in the Analyst Day, we talked about double-digit kind of RevPAR growth for FY '24, maybe a low double digit. Would we maintain that in terms of expectation for FY '24?

No, I think so. Because if you see what we've always guided is that in the month of -- as we guided in the Capital Market Day, the RevPAR increase in this quarter has been [ about 100% ], and if you see what happens in Q2, we have the G20 starting in September. So we expect Q2 also to show good performance. And thereafter, we have the G20, the World Cup and all of those coming through. And historically, we have always seen between Q2 to Q3, there has been about a 30% increase in terms of how the RevPAR goes. So I don't see a reason why the rates should not go up. And so I think it is totally possible that the RevPAR growth will be about -- will be at double-digit growth actually.

Also important for us, Prateek, is we are a high-growth company today. When hotels open, then you don't achieve the same amount of RevPAR as you have with stabilized properties. So we have opened 5 hotels now. Last year, we opened 13. We expect to open 20. So as a high-growth company, it will dilute a bit. So you have to look at it as a like-for-like and a not like-for-like growth. So maybe we will also, as of next time, start giving -- we have -- I think we have it on the presentation. You can see on the like-for-like is 12%. So which proves, which is Slide #54, I think on the presentation. So you can take figures from there, which is higher than the reported RevPAR loss. So this is a proof of what I just now said.

Right. And one last question, on your other cost as percentage of revenue. In your presentation, you have highlighted 2/3 of increases is variable. And you mentioned you [ licensed ] like license fees, [ coverage ] and supplies, and that number as a percentage has gone from 26.9% to 28.5% on a year-on-year basis. So anything here? I mean just to understand it better, so percentage increase [ bias in ] inflation particularly seen here?

Some is inflation, but some is again in line with guidance with our Capital Market Day. We are doing more marketing activities, especially with new businesses, both on the -- on the personnel side, we have created a new team for new businesses, and we will be aggressively marketing these businesses going forward. We have started with that already now. And I think it's the right thing to do. That's what we said in our Capital Market Day. We have to look at these businesses in 3 years from now, 5 years from now and maybe 10 years from now, what is the potential. And as you have all seen yourself, look at the journey of Ginger, where it was and where it is now, and where it is going with the opening of just, let's say, just one type of cruise is going to change a lot. So continuous investment in these new businesses is important. And then we set Qminization of Ginger, which means every Ginger will slowly get all-day dining, and we're already at a score of 20, all-day dining, which is called Qmin, so that these brands complement each other. And a lot of those costs, whether we renovate or we do is not all capital expense. It's also other expenses, repairs and maintenance expense. Whether you are painting a wall, you do not capitalize the paint, right? So there are such examples where we think it's the right thing to do, and it's the right time to do so that we are very well positioned from a hardware, software and people-ware perspective to take these brands, scale up these brands to the next level.

The next question is from the line of Achal Kumar from HSBC.

My first question is about the industry supply growth of 6.7%. I think as we discussed in the Capital Market Day, I'm not sure if it is possible for you to sort of break it into the greenfield, brownfield and the conversion. Also, I'm not too sure if you can please break it into the further category-wise, like what was the growth in super luxury category, luxury category, et cetera. That's the first question, please.

We'll have to call some industry consulting specialists because they track the industry-wide data. We can only give you from our own perspective on how our pipeline looks like. For example, as I just said in my opening remarks, that out of the 11 contracts signed in the first quarter, 7 would definitely open within the next 2 years. And then I can tell you under which brands they would open. But it's very difficult. We don't track the entire sector. All I can say to you is what I've heard from some of these big consulting groups specializing in hospitality is 50% of the pipeline is not in the top 10 hotel cities for India, top 10 metros of India, which are important for the hotel sector. A lot of this supply is coming from Tier 2 and Tier 3 cities. And if you have the number, this statement was made today to me by [ Mr. Tata ] of Horwath. Please feel free to contact him and I have taken his permission to use his name. So you can call him and he's compiling this data. But there are others also other consulting groups. They will give you a similar story. There is another one who came out with a monthly newsletter on what's happening. So they come out every month on it. But we, as Indian Hotels, would not keep track of the entire hotel supply in India.

Sure. That's fine. Absolutely fair. My other question was what kind of -- I mean not sure if you can disclose sort of the kind of contribution in -- from G20 meetings in this quarter, and have you got some kind of advanced bookings or at least the discussions with the ICC regarding the bookings for the World Cup yet? Any thoughts, any color on that, please?

ICC, I would not say anything because there is a lot of things going on in the newspaper, people's writing, I don't know whatever they're writing. What I will say is that I think what is very good for the country, what is very good for our sector and what is very good for Indian hotels is that we are having these 2 major events happening and they are definitely boosting demand, whether in Q1 or Q2 because it's not just the G20, there is also a B20 and there was a tourism summit in Q1 in Goa of the B20. So there is a lot of activity which is happening and not restricted to just G20 under that. There are many other things that are taking place, and it is driving demand, and it is driving the positioning of India from a tourism perspective, and all these pictures are shown in the rest of the world. So I think these events should help in marketing India as a destination on a longer term and not just this year.

Right. Fair enough. In terms of TajSATS , I mean you're at 59% market share. Clearly, you're a market leader there. Do you have any targets going forward? I mean how far can you go? I mean your EBITDA margin's at 24.5% so do you think with that kind of market share, do you think that's kind of a gap now or you can grow further? And if yes, I mean what is the best in the field -- what are the best margins in the airline catering industry?

See in airline catering business, this is very high margin. This is maybe the highest I have seen in my career. The reason we are sharing this information is to show that TajSATS alone in Q1 performance is doing what possibly traditionally we would have done in a month of a quarter on an EBITDA basis, so as the entire IHCL, if you go back 10 years into history. So I think from that perspective, it is nice to see that not just a Taj brand but also a Ginger or TajSATS, everyone is contributing towards the journey which we commenced in 2018 where we said we'll grow our margins by 800 basis points to 25%, and then we went [ to a 1 to 33 ], how each of these businesses is contributing. So it's the operating leverage in our iconic traditional assets and the fee-based business and our share of profitability in businesses like TajSATS, the combination of the whole is creating the sustainable, profitable growth that we have guided all of you on.

Right. So you mean you think that this is sustainable and it will grow further, right?

Yes, absolutely.

We might just build on it a touch. I think if you look at the TajSATS business, I think what are the drivers of profitability, so number 1 is we get more international customers in the airlines, that's a level of profitability. That's number one. Number 2 is that places like TajSATS, there's a lot of charter businesses in places like Goa. And these charter businesses have been slow because of the pandemic and now they're coming back. That's the second one. Third is the synergies that we are trying to develop with [ SATS and with Taj, our hotels ], in terms of supply basis is the third one. The fourth is the intense non-airline business, which is getting developed actually. And the fifth, I would say, is that the concept is changing internationally in terms of central kitchens, which kind of go to sort of supply, cooked food like a Biryani as an example, to the different kitchens, which has just been reprocessed before supply industry. So these are all things which are already happening in industry. And also, of course, the entire areas of synergies with Air India and Vistara and all of those coming, to be honest, actually. And so there is a number of trends which look very positive for the airline sector, actually.

[indiscernible] accurate non-aviation catering. I mean a lot of institutional catering is an opportunity.

Right. Fair enough. Next question is about the Slide 14. So that attracted my -- that attractively put looks very interesting. What exactly -- what message are you giving on Slide 14? I mean for example, ARRs are up sharply in your Taj and SeleQtions brand. I mean the occupancy level also up. While the growth was slightly lower in Ginger, I mean does that indicate that ARR occupancy levels were low Q1 last year and hence, a sharp increase in this? Or do you think there has been a shift in the passengers in the customer space and they are very space higher for even though...

I understood your question, Achal, sorry to interrupt you. But when we had this quarter last year, every quarter, people said it's pent-up demand. The message we are giving is if that was pent-up demand, it still is a little bit pent-up because it's still going up. And we always said that the best is yet to come. We are still in the luxury sector. I was talking to someone yesterday, our iconic assets average rates are maybe 10% to 20% of rates in Paris or London or New York or Boston. You can go that online and verify it. So we provide better service. We have better quality assets. We may never have 1:1. We may never get to 100% of those rates. But we should have the ability to charge 30%, 40%, 50%, and we are not even at 10%, 20%. So I think that is the messaging here is that there is still a way up. And Ginger is a bit weak because I just now mentioned that we are converting almost 70% of our portfolio will get into Lean Luxe. So when rooms are out of order, it has an impact on both occupancy as well as rate. But as and when they keep finishing, we will keep seeing this growth, although there is still a strong growth on RevPAR.

Right. My last final question is about the Ginger. I mean how do you compare your Ginger brand alone versus Lemon Tree Hotels? I mean do you think you can reach Lemon Tree, your Ginger can reach Lemon Tree? So how do you compare yourself to -- with Lemon Tree?

It depends. I think Lemon Tree is positioned a bit higher than Ginger and it's not appropriate for me to talk about another listed company on our call. All I can say is that Ginger growth is going to be something which you should all watch and see. And last year was a good proof of it. And going forward, we are very excited with the opening of Ginger Santacruz, which should revolutionize this kind of positioning of the brand from budget or see how it started at INR 999 to a smart property or a lean luxury kind of a property and a very like kind of a happening place with the Qmin all-day dining. So that's the journey we commenced or embarked on, and we are almost hopeful by end of this year to get 70% into it in our total portfolio. And hopefully, by end of next year, 100%, and then let's see what the results show.

And it's a perfect brand, Achal, in terms of the overall growth in the economy and the consumption because the mass travel will benefit the -- Ginger will benefit from the mass travel. And so we are quite excited about Ginger.

The next question is from the line of Aishwarya Agarwal from Nippon India Mutual Fund.

Yes. Just want to understand the challenges associated with the ramp-up in the managed room. So we are going to add up more than 1,000 rooms every year, rather even more than that. So where do you see the challenges? Is it an easy thing? And how is the profitability on a per room basis and how that profitability can be improved?

No. I think -- no, I think as far as the managed property growth is concerned that they will continue to happen. And I think as we have said, we've already signed about 11 contracts in this quarter and opened 5 hotels. So we will be planning to put about 20 hotels. So we have -- we don't see a challenge in terms of signing new contracts. I think I would sort of say that do not look at it in terms of managed fee per room because it's coming across different brands. I think you need to look at -- we have given a detailed brand-wise split in terms of how the rooms are opening. So managed fee per room is probably not the way to look at it because it's not in a single brand. If this is something if you want more details, we can talk offline in terms of talking about it.

At a high level, we can say versus a couple of years ago, management fee income total is going up by 2.5x. It used to be around INR 215 crores. And even in Q1 FY '20, the management fee was INR 47, INR 47 crores. And in Q1 FY '24, it's gone to INR 98 crores, which is more than double. I think that's something which we are very pleased about. And as we said, Q1 and Q2 are not the strongest quarters, it's Q3 and Q4. So if you look at it that way, then it should increase by 2.5x versus 2, 3 years ago.

So in this context, sir, I mean what can -- what potentially stops us to ramp up even faster these kind of rooms? You have the strong cash flows and low capital investments.

Well, nothing stops us. I -- we would have gone faster, but there was a lockdown and there were construction stops and there was bad weather in Delhi. The mandatory stops were there. And then obviously, people who are investing may not have been only hotel investors, they may have had other businesses which were impacted. So there is some delay, but we have given a guidance of 20 hotels a year opening. It's more than like 1.6 hotels a month. So we have to also see the company never did more than 1 hotel a year or maximum 2 in its history till 5 years ago. So that's almost a 10x increase.

The next question is from the line of Shaleen from UBS.

Okay, sir. So buying [ spot ] in Zambia and taking the other one on [ these in ] Germany, are you thinking about expanding internationally? What's the thought process?

Yes. So Shaleen, in this Q1, we signed 2 management contracts in [ Tata ], one for the Taj and one for Vivanta. Vivanta is only for Indian subcontinent. So very much in line with our strategy. Having strong presence with Taj brand in Indian subcontinent has been a part of our strategy. Pamodzi is just like we acquired at that time, 100% shareholding in Cape Town, which we were managing, which has turned very beneficial to us, and we paid down the debt and it was a U.S. dollar debt and we were having mark-to-market issues. So now it has become profitable. We feel a similar opportunity exists with Pamodzi, where we also have a management contract. We don't have a shareholding. And these are in principle approval. We know the property inside out, every wall, every bathroom, every this thing because, as I said, almost 4 decades we have been running that property. We are very well established with that. And it's always a question at what terms you agreed to things. And we have in principle agreement to explore that, and we are in the process of doing so. On Frankfurt, we always guided yourself and everybody else that we are not going to do single-asset acquisitions worth $50 million, $100 million elsewhere in the world. That is not a part of our strategy, and we want to straight through to that. The institutional capital available in Europe comes at a very different yield, at 5%, 6%, 7% maximum, and it makes no sense to use your own capital, especially if you're debt-free. And that's why we would enter into a lease if, as I said, if in principle approval actually leads us that far to actually signing an agreement. So we've taken in principle approval. It's an ideal fit, the asset, with our portfolio. And I think it's time that we added a hotel in U.K. or another part of Europe. And somewhere in Southeast Asia because you cannot be one of the strongest hotel brand in the world or India's strongest brand and miss some of these markets where almost everyone flies through for a connection to U.S., so you have Air India flying daily and you have Vistara flying 3, 4 times a week. So there is a lot of opportunity out there. We have a very strong Indian business presence and growing presence of Indian businesses in Germany, unlike in the past.

And the other thing to note, Shaleen, is that our hotel like in Frankfurt is just about 135 rooms. It's not a 500-room property. It's in a location where Vistara and Air India fly, in any case. An Indian embassy, [indiscernible], it's all there. So you have a situation where base occupancies will come from all of these factors and it's a legacy kind of a property, perfect for a Taj kind of a brand, actually. So I think there's a lot going. It's not something and it's not an acquisition, it's a lease. So hence, we -- it's kind of well thought through in terms of very low level of investment and a good size of property being manageable with good base occupancy. So that's the way to look at it, actually.

No, I completely agree, and I actually do believe that you need to have a network of hotel properties if you really want customers to come back and use it. That's what actually the Marriott does, right? That like efficiency and the network gain in this play ]. But that means that you will need to look at more such opportunity in Europe, right, because that's a kind of a brand recall, not just for the Indian but even for the partners as well. You won't be able to stop just with the Frankfurt, you need to think about getting maybe something in Switzerland.

Absolutely. Absolutely, that Indian thing we said for the base business. You have to have some form of base business, and there is enough of that available in Frankfurt or, like you said yourself, in Switzerland, but it will be one step at a time. It is not now that we -- this quarter, we announced Frankfurt, next quarter Switzerland, another quarter, 3 something else. That will not be the case. We are taking this step of entering into detailed negotiations after a very long time for an asset. And we said once we have our home front, our domestic front absolutely firing on all cylinders, then we will take selective contracts as opportunity arises. But our focus was, is and will remain pan-India definitely in the short term.