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

Ladies and gentlemen, good day, and welcome to The Indian Hotels Co. Limited Earnings Conference Call for Quarter 3 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 morning, everyone, and thank you for joining our global conference call for Q3 2023/'24. Indian Hotels delivers best ever quarter 3. We are pleased to share that our record performance has continued in Q3, making this the seventh consecutive quarter of best-ever performance for IHCL. Our stand-alone revenue grew 22% year-on-year to INR 1,323 crores. EBITDA grew 30% year-on-year to INR 601 crores, yielding EBITDA margin expansion of 290 basis points to 45.4%. Our consolidated revenue showcased a growth of 15% year-on-year to INR 2,004 crores and an EBITDA growth of 18% year-on-year to INR 772 crores. This resulted in EBITDA margin expansion of 100 basis points to 38.5%. This further translated to an 18% growth in our bottom line to INR 452 crores at a PAT margin of 22.6% in the quarter. For 9 months, 2023/'24, we achieved a milestone of INR 5,000 crores consolidated revenue. We continue to command the premium over the industry across all operating metrics and delivered robust performance across our brands with the demonstrated RevPAR growth year-on-year in the range of 12% to 15%. We expect our double-digit revenue growth to continue in the next financial year as well, driven by 3 key dimensions of growth, namely growth in our portfolio, growth in our new brands and businesses and growth in our traditional business enabled by effective asset management. Let me begin first with the portfolio growth. We continue to demonstrate industry-leading growth with 28 hotels signed and 16 hotels opened on a year-to-date basis. This takes our pipeline to 85 hotels in all. This year also marks the momentous occasion of our reaching the 200 operating hotel milestone, which we recently opened in Jaisalmer in the state of Rajasthan. Our flagship Ginger Mumbai Airport is now open and had a stellar debut with an average occupancy of 80% and an average rate of over INR 6,500. The hotel has also been PBT positive from the very first month of operation. We will maintain the space and are well placed to open at least 20 hotels in the current financial year '23/'24. We've already opened 16, so we expect to open 4 more in the months of February and March. This is in line with the guidance that we had provided. In fact, going forward, in '24/'25, with 85 hotels in pipeline, the pace of openings is only going to increase. We target to open on an average 2 hotels every month or even higher. Our growth continues to be majorly asset-light, contributing to doubling of our management fee income from pre-COVID levels to stand at INR 319 crores for the first 9 months of the fiscal year. This means mathematically, we put in very close to INR 450 crores of management fee income for the current financial year. Our strong footprint across 130-plus locations makes us very well placed to capitalize on the sustained demand upcycle that the sector is witnessing. Number two, new and reimagined businesses. We have been always communicating about new businesses that we started as well as the reimagined businesses, which were relaunched like the Ginger brand or TajSATS. With these businesses as well as our asset-light approach, we have embarked on a journey of the diversification of our top line. Our new and reimagined brands, which include Ginger, Qmin, amã Stays & Trails, The Chambers, the TajSATS together showcased a growth of 34% over the previous year in the last 9 months. This stood at twice the pace of that of our traditional business which also grew at 17% in the same period. We expect this growth to only accelerate and our new businesses as well as reimagined businesses will continue to deliver 30% year-on-year growth going forward. Ginger continues to showcase strong growth and profitability, enabled by its Lean Luxe transformation at 2/3 of its portfolio under Lean Luxe today. Ginger should achieve a milestone of over INR 600 crores in brand revenues in the next financial year. amã Stays & Trails has continued to grow also and is well poised to reach a portfolio of 150 bungalows, including 100 in operations by the end of the current financial year. And amã brand revenues are expected to also double in the next fiscal. Qmin will also achieve a milestone of INR 100 crores in its GMV in the current year, supported by its expansion to 34 Ginger hotels till date. As we had mentioned in the previous calls in the previous quarters, this is what we call the Qminization of Gingers that the all-day dining of all Ginger hotels will be supported by the Qmin brand in its dining facilities. TajSATS has continued its record performance with the industry-leading revenues, industry-leading margins and market share in this segment and is well poised to cross INR 1,000 crores in revenue in the next financial year. We are committed to investing in our new brands and businesses across product, service and digital innovations. In addition, we are working on and expect to launch 2 brands in the next 6 months. This is also in line with the guidance we have given over the years that once we achieve critical mass of at least 100 hotel portfolio in 2 of our brands, we will consider either reimagining some of our brands that we have had in the past or launching absolutely new. So with the Taj at 105 and Ginger almost heading to 90 hotels, we are getting there, and we will share that information as and when we are ready to do so. Our new brands and businesses will help to support our asset-light initiatives, will help to support our margin expansion and make us less volatile to the cyclicality of the business. Moving on to the third important factor, that is effective asset management, which has been a key pillar of our strategy and we to continue to invest in our assets, which result in not like-for-like growth. Asset management has enabled significant growth in our big machines and reinvesting smartly in our products has helped to drive premiums and to unlock value. In the past 6 years, we have invested close to INR 2,500 crores in capital expenditure on a cumulative basis. Our iconic Taj brand marked its 120 years of legacy this quarter and Taj continues to be our backbone and the key revenue and EBITDA driver for us. The hotels which we invested in to upgrade from Vivanta to Taj are contributing positively to the brand's performance. The total contribution of these 24 hotels exceeded INR 1,200 crores in this fiscal. A clear success story of effective asset management is that of the iconic Taj Mahal Hotel New Delhi, a lot of us also know it more as Taj Mansingh, where we have completed -- completely renovated the hotel and results are viable in -- are visible and the whole financial model has become viable, and it is all visible in its financial performance. Moving on to the other 3 factors besides these success factors is our strong balance sheet. Our strong balance sheet enables us further from a growth and resilience perspective. Our free cash flows continue to be healthy and gross cash reserves at over INR 1,800 crores enables us to invest in ROCE-accretive opportunities and will help us to shape our future. The second important factor there is customer loyalty and customer centricity. Our journey on the Tata new loyalty platform continues to deliver results with 24% of our enterprise revenues coming from loyalty members. Our loyalty base has continued to expand and stands at over 5.1 million members today. Till Tata Neu was launched, we had a base of 2.2 million, so we more than doubled in the last 20 months with the support of Tata Neu. This allows us not only to reach more customers and directly engage with them but also helps us to do tactical marketing campaigns in the shoulder periods. Our NPS scores have been on a continuous rise over the years, and our brands and hotels continue to be recognized at the global stage, most recently by Condé Nast and Travel + Leisure. Finally, Paathya, our ESG plus initiative, we have achieved significant milestones so far in our core ethos of doing business in the responsible way, we are on track to deliver our 2030 ESG targets. We recently inaugurated this week on Monday, our 32nd skill training center in Ekta Nagar located in close proximity to the famed Statute of Unity. The center will offer courses in food and beverage service and front office with on-the-job training. Post-course completion, learners will be provided assistance for employment in the sector. In summary and in conclusion, we continue to focus on delivering robust performance on the back of healthy fundamentals and are well on track to achieve our Ahvaan 2025 targets. Thank you so much for your attention. We now open the floor for questions.

[Operator Instructions] The first question is from the line of Binay from Morgan Stanley.

Congratulations for a very good set of numbers. My first question is on the double-digit revenue guidance that we've given for next year in that we do see that the new brands in Ginger are going to grow ahead of the core business. So could you tell us a little bit about the core business? Like how are you looking at that in terms of ARR versus occupancy? Like how much occupancy scope do you see in the double-digit? Similarly, if you could also talk a little bit about the cost side. Ideally this business has very high leverage. Is there any major cost items where you see inflationary pressures are coming up? And lastly, if you could just give a number for investments for next year in terms of -- on the hotel side that you're looking at?

Binay, thank you for your questions. I think you're right. I think we have guided an overall revenue growth of double-digit next year. This is based on both the core business and the new businesses. I think the question that you're asking is that what is likely to be the RevPAR increase actually. I think the way we look at RevPAR increases is that, number one, I think the macro tailwinds are very strong in terms of the whole demand/supply. We have seen there is no new capacity coming in all the key markets actually. We continue to focus on micro-market leadership in all these markets. Secondly, if you look at our customer mix actually, 58% of our customer mix is from transient actually. And these are the non-negotiated customers, which is where the maximum ability to charge revenues are there. So my own view is that you should wait for a specific guidance on RevPAR in the next couple of months. But nevertheless, I think it will be strong, and we will make sure that between the two, we will kind of drive double-digit growth. And the other point to note is that when you talk of RevPAR guidance, please bear in mind that, that represents only about 45% of our business actually. The rest of the business is all coming through F&B and all the new businesses. And hence, I think when you look at all of those, I think we have every opportunity to sort of maximize. Our occupancies are strong. I think 76%, you saw in stand-alone. Even the consolidated, I mean, there's also very strong occupancy growth. So with these kind of occupancies, I think we'll continue to focus on maintaining our ARR position because that flows through to the bottom.

And then also on the cost side, if you could comment because I believe there should be a lot of operating leverage, right, in the business now at these levels.

Yes. I don't -- we don't see any significant challenges in cost actually. We had a bump up post the pandemic when some of those wage settlements and all happened. But otherwise, if you look at the cost increases, I think they are broadly in line with our expectations. We will continue to, of course, invest as part of these cost initiatives on digitization and on the new businesses actually. But other than that, I don't see any particular challenge in relation to cost, Binay. We don't see anything, so therefore, the leverage will continue actually.

And lastly, just on the CapEx for next year, any number to give?

I think CapEx for next year, I think our guidance -- guiding principle is that as far as renovation is concerned, we will be in line with our depreciation numbers. And there will be greenfields on top. Between the 2, I think it will probably be in the range of around INR 750 crores to INR 800 crores.

The next question is from the line of Sumant Kumar from Motilal Oswal.

Can you talk about the January month? How was the demand in the key cities and for The Indian Hotel? And how is the demand for Feb month and for March month?

Sumant, the demand continues to outpace supply. The January trend is very much in line with what we are seeing in Q3 in terms of top line growth. And business on the books is also strong, and the pickup that we are seeing is also equally good for the month of February, so that leaves us with March. The booking window has now increased. There was -- the booking windows had become very short, but now we have a bit more visibility. So to answer your question, till March, we are looking good. Before, we could only give guidance on like maximum a month or 6 weeks. But at the moment, all looks good. We also have IPL in end of March till May again this year. So I think all in all, the demand is very strong. Supply remains constrained. And our portfolio and the investments that Giri just now spoke about, which is approximately 4%, 5% of our top line in the existing plus, that selective investments we do like we have done for Ginger Santacruz, keeps us always very well positioned to capitalize on all possible opportunities. So as an example, we recently invested in 4 villas in amã in Goa. So on one hand, we upgraded the assets as those buildings were there. On the other hand, we strengthened the amã brand. And we'll continue to take these initiatives, and we will continue to see the reflection of those initiatives in the results that we deliver.

Okay. And in PPT, you have mentioned a launch of new hotel brands for Tier 2, Tier 3 cities. So is Ginger is not sufficient or Ginger brand is not sufficient for Tier 2, Tier 3 cities?

Ginger brand is very good for every district capital of India. So we are going to accelerate the pace of growth in Ginger. But we want to maintain our brand scape as very pure. So a Ginger hotel cannot do a lot of banqueting and weddings, et cetera. So also in Tier 2, Tier 3 cities, you need more like a full-service brand. And Taj, with the capital cost of Taj, it's not ideal for every possible market. That's why we went from Taj to a multi-brand strategy because of the heterogenous nature of Indian market. And we feel now that we need a full-service brand and also in other segments. As India's story changes, as India has embarked on such a strategic GDP growth, there will be new needs and new wants that arise. Now instead of being reactive, we will be proactive and work so that we are rightly positioned to take advantage of the changes that will happen in the marketplace over the next 3, 4, 5 years.

So this is going to be done in couple of years? What is the target or how many hotels we are focusing on Tier 2, Tier 3 cities? And what are the price points we are looking for?

So we are, Sumant, already present in a lot of Tier 2, Tier 3 tertiary markets, et cetera, depending on the brand. Our growth is almost -- we are signing -- as we've signed this year already 28 hotels in 9 months. Last year, we had 36 hotels for the full year that we added to the pipeline. We see no change in the speed of growth. It's only the quality of growth that also changed. From asset-heavy, we went to asset-light. 76% of our portfolio is totally asset-light. And if we take the heavy part and take Ginger out of it because we consciously took the decision to do operating leases for Ginger, so only 6% of our portfolio is on the company-owned side, right? So that kind of journey will continue further. And we -- when we launch any brand, we will look at getting to minimum 50 hotels in that brand in a very short period of time. Otherwise, with this 10, 15, 20 hotels in a brand, we will not launch. And whenever we launch a brand, the starting will be a minimum of a double-digit number before we launch.

And price points?

Price points will be somewhere close to maybe 1/3. So I think we're looking at more like INR 8,000, INR 9,000 average achieved rate positioning. So just below -- just a little below the INR 10,000. Higher than Ginger but lower than Taj, somewhere in between but a full-service price. See, Vivanta is upscale, more we want stylish, vibrant and again, not something that caters to mass market. So we need a brand alongside Vivanta, which will help us cater to the mass market of 400 million to 500 million Indians who are also not in metros but in Tier 2 and Tier 3 cities.

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

Puneet and Giri, so first of all, going back to ARRs. So I mean ARRs are already very high, and you said that demand/supply is one positive factor.

I'm sorry to interrupt, sir. I would request you to kindly use your handset. Your audio is not clear.

Okay. Is it better now?

Thank you, sir.

Yes.

So first question is around the ARR. I just want to understand about the sustainability of ARRs. Of course, demand/supply equation is favorable, but ARR is already very high. So I mean how do you see ARR going forward? Do you think these ARR levels are sustainable? Or do you see further growth in ARR? And if ARR stay at these levels, do you think the further growth will come in the occupancy levels? So how do you see the overall combination of ARR plus occupancy?

See, I think someone asked me this question yesterday, and I think what has happened is that the sector has seen a reset in terms of rates. Rates did not move a lot for last 7, 8, 10 years. So if you took where the rates were 15 years ago and where they are today, then it's a marginal increase only. And when you say that rates are already very high, I don't think that is in line with the STR reports and presentations. Yesterday, we saw one at an event at the Taj in Vikhroli. STR was presenting. Even Mumbai and Delhi are still very low compared to other cities in Asia Pacific region. So -- and not even at like anywhere close, not even at 70%, 80% of what those comparable cities would be achieving. And with the Bharat Mandapam, with the Yashobhoomi in Delhi, with the addition of Jio, with very limited supply increase in Mumbai, I do not see any reason why the ability to charge would not be even higher than what we have seen till now. So not just inflation, but rather even a premium. And we also feel that we are able to charge more because of our effective asset management initiatives that we have been putting in place for the last 5, 6 years, the INR 2,500 crore investment that I spoke about. So our ARRs in Taj Mansingh or Taj Mahal Delhi are more or less doubled, and it's not just because of G20. It's because of the comprehensive brand management initiatives that we undertook, the room sizes that we increased, the number of rooms from that we brought down, the new facilities that we added, all that also leads to the premiumization of the product. The Lean Luxe Ginger, when we say 2/3 of the portfolio has become Lean Luxe, it starts showing in the ARR. So all that investment that is going in, also the all-day dining getting streamlined with Qmin, increases your ability to charge. So I think we still have a long way to go, especially as demand will continue to outpace supply. Supply growth cannot come in suddenly. It is the reality of the marketplace. It takes time to build hotels, and all that was under construction is getting completed. But not new supply is going to get added at the speed that it got added, let's say, in 2010 to 2015 or '16.

Right, right. And then about your revenue growth guidance, you said the double-digit revenue growth. So basically, would you mind breaking this growth, please? Because I mean I can see that room inventory itself is growing about -- growing by about 10% next year -- in the next financial year. So this top line growth, is it -- would it be more mainly driven from ARRs or occupancy levels? Or how do you see -- I mean, if you could please help to understand that?

As Giri mentioned, so firstly, it's a very good observation that 10% may just come in the terms of inventory. But that cannot be consolidated on the top line because most of it is coming through management fee business. So only the management fees get consolidated, so it has to be driven by ARR, occupancy. And as Giri mentioned, 50-plus percentage is non-rooms revenue. And how we optimize the potential through asset management on those spaces also will play a very important role. So you would see in the presentation what has happened in Taj Mahal Delhi, how the top line has grown, it has been relaunched. Now we are going to relaunch in the next few weeks. We have opened but not officially launched the Usha Kiran in Gwalior. And we are also launching officially the Mumbai -- the Ginger Mumbai Santacruz on the 8th of February, which is less than a week from now. So all these activities and many other operating leases that we'll be opening will help support the growth. And towards the end of the year, we'll also be opening a airport hotel in Cochin that is our own property. So all this will add up to not like-for-like growth and -- through management contracts and the normal increase in food and beverage-driven business as well as through the rates and occupancy. So it's in all metrics, we expect growth. I don't expect any metric to slow down.

Right. Right. On the cost side, your employee costs, I mean I just want to understand, you have shown a significant efficiency gain. I mean in the last -- in the third quarter last year, your employee cost was about 25.2% of your sales and which has come down to 23.9%, so almost -- [ 1,134-point ] gain. Do we see -- as we grow, do we see further efficiency gains in your employee costs? Or was there any something one-off in this time?

There is no one-off. I think it's -- what you're saying is that as Q3 is the strongest quarter, there -- some of the percentages look more efficient than they look in Q2, for example. So sequentially, the picture would look different, but I think we are at a very good optimized level in terms of the costs, whether it's employees or it's raw material or it's other costs. And in fact, as we have guided in the last quarter, we are spending more money and also, Giri mentioned just now on our new businesses, a newly reimagined business...

I'm sorry, sir. Your audio is not audible on the management's line. Ladies and gentlemen, the management's line has been disconnected. Kindly stay connected while we try to reconnect them. [Technical Difficulty] Ladies and gentlemen, thank you for patiently holding. The management's line has been connected. Over to you, sir.

Sorry, there was some technical glitch but outside the control of Indian Hotels. No, I think the costs show an optimized level in quarter 3 being the best quarter. In quarter 2, they don't look as good. But if you take averaging through the year, I think costs at all levels have been optimized. There will always be -- depending on revenue, at what level of revenue we are, there could be a further marginal decrease. But generally speaking, we have been very focused on all our cost initiatives from pre-COVID when we had announced the Aspiration 2022. So I think we are standing at a good level, at a healthy level, given the kind of brands we have with Taj still being the real backbone in the luxury brand. It has a different kind of a cost structure.

Right. Finally, my last question, I'm referring to Slide #63, which is actually very interesting, where you have shown the occupancy levels and the performance versus previous year for different brands. I think in that, I just want to understand a bit that under Taj brand, occupancy levels for the overall business and leisure was up, Palaces was flat. And I assume that Palaces will have a significant contribution from inbound international tourism. So how do you see the -- how do you see the performance of Palaces in the context of the recovery in inbound international tourism? And similarly, in Vivanta, you're showing 4% decline in your leisure occupancy level. Do you see kind of a change in the consumer behavior where people are actually moving to Taj, taking a notch up, because Taj leisure occupancy level is 5% up? So basically, I just want to understand this slide a bit, if you could please help.

It's a good observation, but don't only look at occupancy. Go a little to the right, and you'll see there is a 24% increase in rate, right? So it has gone to 55,000 is the average achieved rate in the third quarter. And occupancy levels obviously will improve further as the foreign tourist arrivals increase and go back to the pre-COVID level. But Palaces, we have to maintain. We don't take any and every kind of business in a Palace proposition because maintenance of Palaces could be very expensive, right? So in order to offer that world-class experience, which nobody else in the world has the capability to offer, we cannot just look at the occupancy level. That's number one. Number two, this chart is a proof of what I was saying that we upgraded 24 hotels from Vivanta branding to Taj. So there, some of the leisure properties have been repositioned, and that's why it is showing a marginal decline because some of the trophy assets over the years have moved back up to the Taj positioning. And we see no change. Actually, the leisure demand is on the up. It's going to rise further. And also when you see in SeleQtions, it is really the Taj Cidade de Goa, which the part was a convention center, which we have rebranded as Horizon. And the old part is rebranded as Taj Heritage. So that has moved from SeleQtions to also Taj and to better yield -- as Taj is the strongest brand that we have. And the owners were justified in asking for Taj as the property had been fully renovated. So these things will keep happening. Important is that Taj produced an average rate close to 18,000 and at a 75% occupancy. That is the key messaging as long as our focus is very clear that it has been always making Taj more pure and more significant and not just our crown but the crown of the nation.

But then, sorry, going to [ Astro ]. I mean there, you have shown SeleQtions. I can see that the...

I'm sorry to interrupt, sir. I would request you to kindly rejoin the queue for follow-up questions. The next question is from the line of Prateek from Jefferies.

Sir, my first question is on your number of hotels. So we talk about like going to 300 hotels soon. So how do you see this presence theoretically in terms of number of large cities in India where you want your presence in terms of number of hotels across brands? I mean, this 300 hotels can theoretically grow to like what number maybe 10 years down the line?

Good question, Prateek. This number will keep growing. This is not that it's 300 and it's the end of the story. That was the guidance we gave for the current business plan. When we have the next Capital Market Day, we'll give the further guidance. We should achieve the 300 number at least 1 year in advance of Ahvaan 2025-26. But especially, the growth with the Ginger brand and other brands, Vivanta, SeleQtions and whatever new we will launch, should put us on a growth mode in perpetuity. So if we say 85 hotels are in the pipeline and even if we were opening 2 hotels a month, so next 4 years, without signing any new properties or next 3.5 years, we could go on for opening 2-plus hotels every month. And there will be some conversion opportunities that will come. There will be some other inorganic growth opportunities that will come and the, obviously, new signings that will come. So I think that will keep taking this portfolio further up. And we will provide that guidance with very ambitious targets, especially with the Ginger brand and the success that we have seen with the first 2 months of the operation of Ginger Santacruz.

And given the size of India, Prateek, I think the opportunities are immense. And we have gone to Tawang as an example. These are all virgin territories we've gone to. New itineraries have been created. All these have happened because, one, the growth of India, infrastructure development and our presence everywhere. So I think given the size of India, I think the opportunities for growth cannot be constrained.

My second question is on your time line for launch in like on the recently talked about popular destinations like Lakshadweep and Ayodhya. You have 2 in Lakshadweep and 3 in Ayodhya now. So what are the time lines for launch of hotels in these locations?

Ayodhya, the first hotel should open in less than 12 months. It's a brownfield site where the third floor construction is already finished. We are also looking at home-stay opportunities, large home-stay opportunities in Ayodhya. The Vivanta and Ginger combo hotel will take another 20 months to open. That is also well underway in terms of development. Lakshadweep will take longer because of the nature of the development. It's not just building a hotel. It's developing 2 islands, the islands of Suheli and Kadmat. So that would take anything between 3 to 5 years, depending on when we get the planning permission, the access, the weather, all the things that are beyond our control. So depending on all that, our ambition and aspiration would be to do it in 3 years' time. But islands like this, which are remotely connected could easily take longer than we think.

On your Sea Rock, so you've given like INR 700 crores to INR 800 crores CapEx guidance. So do you expect any CapEx going into Sea Rock also next year, as you said, like some in...

Prateek, as we have guided, we will try to get a strategic partner and everybody is knocking at our doors. Whether we have that from within the group or outside, we will not be -- we'll keep the majority, but we have no intention of spending further INR 800 crores of our own -- from our own cash reserves. But definitely, we want to make this as the icon of India, as the second Gateway after the Gateway in Colaba.

On pricing on Ginger airport hotel, you talked about INR 6,500. It seems lower than what we anticipated, like INR 7,000 range...

Prateek, it's the first 2 months since the launch. We expect it to be INR 7,500 also. So it's -- give it 100 days. The first 100 days, we cannot have a full hotel -- fully occupied and the rate also at the full. This would be -- it's just we have to tread it carefully, get the base right, and then get to the stabilized rate that we have aspired for.

And lastly, on the manpower per room, that number seems to be creeping up every quarter like probably in like near pre-COVID levels across brands. So while the -- and because of very high revenues, the percentage basis, it is looking better, but the manpower per room seems to have like normalized now. Is that right reading?

See, I think, Prateek, Puneet had to step out for an interview. But I think the point to note is that the increase in prices has to be justified with the asset management initiatives on CapEx as well as the service quality levels actually. All of these have to come together to make sure it's a combined proposition. Yes, it is. Let's say Palaces, for instance, has come near to the [ 3.14, ] as an example. But I think we will continue to watch this. I think we will -- our overall efficiency, look at the increase in revenues, 43% increase in revenues. And yet, the manpower ratios are just about there, slightly lower than the pre-pandemic levels. So then I think that's more than fair, Prateek, actually. And we continue to invest in digitization and other initiatives, which are anyway ongoing. So I think -- so that will continue actually.

The next question is from the line of Karan Khanna from AMBIT Capital.

Just a couple of questions. Firstly, given the swift pickup in occupancy at Ginger Mumbai from first month itself, do you have plans of adding more rooms or coming up with another hotel nearby? And as a follow-up, your new businesses continue to do exceedingly well. So what would your expectation of revenue and EBITDA share for these businesses do you see in FY '26?

Yes. So I think as far as Ginger Mumbai is concerned, yes, the occupancies have gone up. But as -- but the full inventory is not yet up. It should open up for the next few days, actually. It goes up to 200 -- 371 rooms, I think, as opposed to, I think, about 260-or-so which is in operation at this point of time. I think it's been a great story there in terms of a fantastic proposition, great value, new-age banquets and all of those are working. And the beauty of this launch is that it has come without any cannibalization from our neighboring properties, whether it is Taj Santacruz or whether it is neighboring Gingers, actually. It just shows the power of a good launch as well as the strength of the catchment, actually. I think -- are we planning new hotels in this area? At this point of time, nothing else actually. But really speaking, I think airport property seems to be a very strong value proposition. So therefore, our plans in terms of Aero, Cochin and Bombay and other places will continue. As far as the new business is concerned, it is growing at 30% plus, so that's what we have guided actually. So Ginger, for instance, we have said next year to be INR 600 crores plus. I think amã and Qmin, what is happening with amã and Qmin is that the Qmin is getting integrated into the brand top line itself. And amãs are yet building up now. At this point of time, we only collect the fees, as you know, except for the 4 amãs, 4 or 6 amãs that we have, which are on our own balance sheet, and that is expected to go up to 15 or so. In terms of other new businesses, TajSATS will do well. I think next year, we have guided to about INR 1,000 crores plus actually, so that should do well actually. So I think it will -- if you see what has happened in terms of the revenue share contribution and the EBITDA contribution of the new businesses, that's gone up already significantly. I think it's gone up. I think the EBITDA share has gone up to some 24%, I think, from 16% in 2020. And the revenue share has gone up from 10% to 17%, actually. I think these are very significant numbers, and this will go up actually. This will 100% go up as we continue to do this and we launch new brands as well actually.

Sure. So Giri, just my second question and something that I spoke with Puneet yesterday at the Horwath HTL event as well. So given the continued record performance that we're seeing across most hoteliers, this is likely to induce more supply and competition in the industry as per typical capital cycle. So how do you see the performance of the industry 3 to 5 years out? While FY '25 is -- cannot be disputed, but say '26 to '28 when more supplies are kicking in? And just a follow-up to that, if you look at the domestic air passenger traffic data, that's already crossed pre-COVID numbers. I mean hotel occupancy are still not moving in tandem with this. And now if you look at the Horwath data that was shared yesterday, the supply is expected to grow at 8% CAGR in next 4 years. And if I look at the air passenger traffic also projected to go at, say, 10% over next 5 to 7 years, how should one think of a hotelier's ability to continue driving double-digit growth rates over, say, FY '26 to '28, '29?

Yes. I think you should look at it a little differently. I think, number one, in India, hospitality is a very underpenetrated market actually, which means that the number of branded rooms are 165,000, expected to go to some 220,000 rooms, which is nothing. Smaller than say New York or any of these bigger cities in the world actually. And where is the new supply coming also you should see. Key micro-market new supply is very minimal to be honest actually. And that you can see reports like Hotelivate report, which kind of actually analyze the key micro-market kind of growth actually. So where is the supply coming up is actually in the -- beyond the key metros, which is great because these are -- there is a certain density of branded rooms in the key metros. It's even lower in the non-metro markets actually. And that is playing to the growth of the economy, the infrastructure development, the new religious destinations, the new smart cities, and all of that is playing too actually. So from that perspective, if you look at it, the macro picture is really driving this. And hence, I think the industry will grow in line with that actually. Industry will grow in line with that. And even the government has now realized the importance of the tourism industry. Earlier, it was seen as a luxury thing. And today, they are talking about employment and GST and all of those are recognized. Even yesterday, with the budget announcement had strong statement in terms of giving interest-free loans to states to build tourism infrastructure and all of that. So I think the way you should look at it is that while supply is coming back, which is good because ultimately, I think in India, bear in mind, supply is not driven by institutional ownership. It is still run by individual ownership actually, then come the real estate players who have mixed-use development and, finally, the institutional players like Brookfield and all who are there actually. I think given it's grown by -- given the growing by individual or family ownership of properties, I think it's great that new supply is coming. And so I think there should be no problem. The whole hospitality industry should benefit as a result of this actually.

Sure. And lastly, on your international portfolio, we continue to see United Overseas that has continued to lag over last few quarters. I have seen the James' Court in London has seen significant improvement. So what are your expectations from the 2 businesses in terms of growth and margins?

No. I think as far as the U.K. is concerned, doing very, very well. First of all, I think at the total international level, I think the hotels which matter to us in terms of consolidation are U.S., U.K. and South Africa. And then beyond it, it's all asset-light growth. And of course, Frankfurt will be the least, which will open sometime in '25 or so. I think at the total international level, our portfolio is certainly profitable. That's number one. Number two is that U.K. and South Africa are all very profitable extremely. In fact, U.K. are in a exceptionally strong market actually. As far as U.S. is concerned, currently, there is a challenge. I think here, we have focused a lot in terms of controlling the costs. And I think this year, the New York market has been a challenge. And there are, of course, specific challenges with the property itself. And therefore, there is -- so what happens with the U.S. is that our efforts in terms of improving The Pierre will hopefully present an opportunity to go back to lower losses. If you see the history of Pierre itself, I think the losses were higher. We brought it down. I think because of the recovery from pandemic has not happened. The losses have increased, and there have been some specific challenges, but these are opportunities that we are working on. San Francisco, I think you see more as a temporary problem, which is driven by the city of San Francisco actually. And it's a small property as well actually. So San Francisco should come back, we feel, in the next 12 to 18 months actually. So I think -- and U.S. is a very important market. New York is a very important market for us. And you can't -- it's the biggest lodging market actually. I think in any multi-store portfolio, Karan, I think there'll always be some property, which kind of has a small drag actually. I think as long as that is manageable, I think we're fine with our presence. The presence in U.S. is giving us strong marketing and, what do you say, network benefits actually. So that's the way to look at it.

The next question is from the line of Nihal Mahesh Jham from Nuvama.

Congratulations on the strong performance. My first question was while we compare our RevPAR performance versus industry, if I look at the stand-alone RevPAR performance versus the domestic network, and I know domestic network would have some element of mix change, there is still a significant difference that we are seeing over the last few quarters. So is it that the marquee properties that we own in our stand-alone is managing to experience much higher pricing power? And what is the reasons according to you beyond, say, the renovations that we have taken over the last 12 to 18 months?

No, I think that's a great question, Nihal, because I think one of the points that we always emphasize is that the RevPAR performance of properties is also driven by the way we manage our properties actually. Asset management initiatives in a place that Lands End is a great story actually. There have been days when, say, the occupancy in Lands End have been 95%. And the comparable micro-market occupancies maybe have been 65% actually. And that is fundamentally a factor of the -- what we are doing at the hotel level actually. So hence, I think especially in stand-alone, since you refer to stand-alone, which are where the big boxes are, the amount of effort that we are putting in terms of making sure they're continuously updated, make sure that we do the investment is very, very strong actually. So hence, I think from that perspective, the stand-alone will continue to do well. And enterprise, of course, it's a bunch of new properties also, actually. And I think to the earlier question also, Ginger INR 6,500, what happens. I think these all will build up, to be honest, actually. But the important point to note is that our asset management initiatives are exceptionally strong, actually, and that plays. You do better banquets, you get room revenue. And I think as an example, you add other propositions like the club floor, the club lounges, the revamped chambers. The offering just improves dramatically. Weekend occupancies in Lands End have dramatically improved after all the efforts that the hotel has taken in terms of creating like an urban resort actually. So I think these are great ways in which the attractiveness of the property goes up actually, and that's a big differentiating factor actually.

Sure. That was clear. Second was just a clarification that if I look at the F&B revenue growth, again slightly lower than room revenue while this was a robust wedding season. So just any specific aspect there?

No. I think overall, we do see F&B at an aggregate level is still very strong. F&B for us is in 2 parts, as you can see. Number one is the restaurant revenues and the second is, of course, the banquet revenues actually. I think banquet revenues are in 2 parts. One is the weddings, which are specific to these [ higher ] dates, which are there. And beyond the weddings, it's all the corporate [ mics ] and all of that actually. I think we are doing well. I think we manage it well across the different properties actually. But overall, you're right that when we look at our overall portfolio and say that the room revenue growth is 27% and -- 22%, I think, in the quarter, if I'm not mistaken, 22%, 23%, and the F&B growth is less than that, I think we do see longer-term opportunities in driving F&B even further actually. So we see F&B as a increasing opportunity going forward actually. And we're doing some very interesting things. Example, we cater to the IPL, the Cricket World Cup, we have catered to the -- there was a big event that the Prime Minister did, and there was around 11,000 people we are catering. So some of these very, very interesting outdoor catering opportunities are emerging, and we are demonstrating increasing ability. So you will find that F&B is an area where significant growth cam come actually.

The next question is from the line of Rajiv Bharati from DAM Capital.

So with regard to TajSATS, I mean you reported close to 40-plus percent Y-o-Y growth in this. Is this largely due to Air India or some capacity which is getting utilized because next year, you're shooting for something like 14%, 15% growth?

Yes. No, I think -- see, TajSATS has been evolving very strongly. I think number one is the effort that we've taken within TajSATS itself in terms of, what do you say, the growth opportunities. Actually, one is that from a noninstitutional catering perspective, whether it is Starbucks and others, we are growing very strongly. Air India is still not yet a very big factor. In them, we have added international airlines to our catering actually, so that helps as well actually. So I think it's a combination of international catering, domestic airline capacities and the domestic airline servicing and the third, of course, is institutional catering. And the beauty of this growth in TajSATS is that we're doing it without any significant CapEx. Just remodeling, reengineering the capacities. Delhi, as an example, capacities have gone up 3x with practically nil CapEx actually. So I think it's very efficiently we're managing that business. And as longer-term opportunities are very significant, with the doubling in the number of airports from 75 to 150 and the overall growth in terms of airline passenger traffic, I think all that augurs well actually. All that augurs well. In fact, I think the supply of planes to India is still kind of muted. In fact, people are saying that the supply of planes to India will take time to grow. So hence, I think TajSATS is on very strong roots at this point in time.

Sure. And then, sir, with regard to Goa specifically, do you have any asset which is under renovation this quarter because of which, the ARR growth number is muted?

No, I think there is no particular property, which is under renovation. We have -- we continue to do the renovations, actually. I think there's nothing which was specific in this quarter. Leisure market, I think what we saw was -- you saw the performance where -- yes, exactly. I think one is the very high base. Goa is already on a very high base. And it's now becoming a round-the-year market actually, not necessarily seasonal actually. And we have continued to kind of balance between occupancy and ARR in any case, actually. So I think that's what you see. That's what you see actually.

So -- why I'm asking is if you look at -- I mean, last year's presentation, same quarter, the number which you have reported is starting 29,000 plus, which you have revised it to 18,000 now. So it's one thing because it's a like-for-like comparison. Something is missing here, and that's why the number has come down.

No. I think -- Goa, yes. No, I think he's saying, what is -- is the ARRs coming down in Goa? No, it's not coming down in Goa.

Nothing is coming down. Everything is only going up, and expect it to go up further. I think we need to get used to seeing strong average rate numbers because we are coming from such a low base. We understand that there is a feeling that way, but given our engagement with other fellow hoteliers and companies, et cetera, we expect that as long as demand continues to outpace supply, as long as there is more and more travel happening as -- 50 new airports, so many new aircraft ordered by India is going to propel a kind of a growth in travel that we have not seen. So -- and government's focus, this is second year in a row that tourism got a mention in the budget presentation of the honorable FM. And also, we have got industry status in several states in India now. So that makes it a little bit more cost efficient. But all this drive in using or leveraging tourism as an opportunity to contribute to GDP growth as well as create direct and indirect jobs is ultimately going to make the base or the foundation of occupancy and rates pretty solid in the short and medium term.

Sure. Just one, I missed out the CapEx number. Did you call out? Because you've already done INR 470 crores this year. For this year remaining and for the, let's say, for the next year, what is the number we're shooting for?

For INR 600 crores.

About INR 600 crores, but it is also quite possible that this is only showing the spend. We decided to invest in certain properties, but it is not yet showing any exit. At some point, we will go for a sale and leaseback, if needed. So let's say we are building the 2 hotels in Ekta Nagar, the Vivanta and the Ginger, near the Statue of Unity. It's not a big expense. But definitely, we don't plan to own it for perpetuity. So at some point, this CapEx will get adjusted. Today, we are using it because we are generating enough internal cash flows to be able to support this growth without taking on any debt, so we are doing that. But at some point of time, we will not want to keep owning assets.

Sure. And does this...

In non-metro in markets where the pricing of the asset is not expected to go through the roof.

Sure. This Ginger Santacruz INR 100 crore target is for FY '26, is it reasonable?

Ginger Santacruz, FY '25?

Yes.

FY '25.

The next question is from the line of Kaustubh Pawaskar from Sharekhan by PNB Paribas.

Congrats for a good set of numbers. Sir, I just have one question. In the initial comment, you mentioned that more than 50% of your revenue is coming from non-room part of the business. And this particular business is expected to grow because your emerging business or new businesses are growing -- will grow in the upwards of 30%. You have strong focus on F&B. So in that context, where can we see margin accretion in the coming years? Which part of business will add substantially to the margins going?

We have always said that the new businesses will do margins about 35% plus. So that's what we've been saying, and I think we are on track with that actually. And I know this question keeps coming in terms of will our 33% margin guidance grow up. I think the way we have to look at it is that the 33% margin percentage now is an outcome rather than necessarily a target, actually, and I think the way we have much -- we will continue to grow, as Puneet said. And if we can grow double-digit top line with a strong leverage, maybe 17%, 18% growth on EBITDA and maybe 20% plus in terms of PAT, I think that's the way to look at it rather than get fixated on whether the margin percentage itself will be 33% or 34%. I think look at it in terms of the overall growth in business actually.

Also, I would add because this is very important, what Giri said. We have -- our base is becoming every year larger, so to keep growing 15%, 18%, 20%, 25% on different metrics is a strong hurdle. But we feel confident of continuing that kind of pace that we have had because of what we have in the pipeline and because of the investments in our new and reimagined businesses, without losing sight of our backbone that is Taj.

The next question is from the line of Jayesh Shah from Ohm Portfolio Equi Research.

Congratulations for the great results. I have some broad questions. Number one is international business still seems to be a blip when you look at overall consolidated profit. I understand the importance of the international business. When do you think it will have a meaningful contribution that it deserve? I'm not asking for any target guidance. But let's say within 3 years, 5 years, will this part of say Ahvaan '30, where at least international business, one can expect to be at say around 15%, 20% of overall profits?

It should. Actually, it's the way accounting is done. The international business, the management fees are accounted in IHCL directly. So I think what we can do is offline, we can share with you the expectation. If we were to add those fees back, then the international business looks very different. That's one. Second, you very rightly said, it's not looking as good as it should look for two reasons. One is U.S. U.S. market is underperforming. And what has happened in San Francisco, nobody knows it better than the investor community. But San Francisco is now beginning to stabilize, and we think that by the end of this calendar year, it will start going back to where it used to be. But the last 2 years have been very tough for that city, and a lot of hotels even shut down there. And also, New York is still not come back to pre-COVID levels, so that's an opportunity. At some point, both these cities will come back. And both of them are very important for us as we either have a leasehold interest or we own fully the San Francisco property. The other opportunity is U.K. U.K., we are doing very well. We make profits. It's not -- but we can make much more. But London also, for a lot of reasons as you all know and I've been reading, has not been as strong, let's say, as Paris is. The 3 top lodging markets of the world is New York, London, Paris. See where Paris stands today versus where London is. Now that will also change in some time, and we have been continuously investing in our London asset. We opened The Chambers there. We opened the Chinese restaurant, the House of Ming, there. We renovated the spa there. We are doing another 70 rooms. So I think that will drive further premiums. But the management fee income from most of the other destinations like Dubai, et cetera, they don't reflect in the way we present the financials based on the accounting policy.

Right. That's helpful. My second question is as an investor, I'm very surprised because the ARR, room rates and all have exceeded our expectation and so has occupancy. But as a consumer, I do realize that travel and hotels are getting costly, and it is having an impact on the overall travel budget. Now even if you consider capital market segment as kind of price insensitive and we can continue to travel, but at some stage, there will be an affordability issue, which becomes the cap for the average hotel stay. Like the hotel -- or even the restaurant kit size is getting bigger for most of the consumers. In this context, where do you see this as a [ strength ], whilst I know you keep comparing with the APAC countries and the other cities?

As we mentioned at the start of the call, actually, we are still operating at 60% of the foreign tourist arrivals. And if you convert the Taj brand achieving in Q3, which is the best quarter, INR 17,700 is less than $200. I think there is still some room to grow. This is the way the rate structures have changed globally. It's not something only in India that has changed. The way the rates are today in all important lodging markets of the world, we are still at a very, very low end. And if India keeps growing the way it is, the GDP, the per capita income, we do believe that the rates and the rate increase is sustainable.

And just building on it, Jayesh, I think the business continues to be about 70%, 75% of the business total top line actually. So that is number one. So I think around the business side, I think the right comparison is what is the cost in India versus cost in Asia Pac. There is still opportunity because as a business traveler who comes to India, people will still say the rates are far cheaper than what is there in Singapore or other places. And people don't say, I go to Singapore because costs in India. I come to India for business actually. On the leisure side, I think it is the -- leisure is growing. I think people are taking shorter holidays. Shorter holidays, which means people take 2-, 3-day holidays, more frequent holidays. And if we look at shorter holidays of 2, 3 days, which is going up, then I think the absolute cost of the travel is not significant, actually. Thirdly, if you look at the Goldman Sachs affluence report, the base of affluence is also going up actually, which means that -- when you combine all that, I think -- I don't think the current rate should cause any huge concern actually. Of course, there'll be people who kind of go out. Like for instance, the outbound Indian traffic -- ask is what happens if people go back outside, which was not happening. Now outbound travel from India has reached the pre-pandemic level, 99%. And yet, you see very strong performance in India actually. Like the inbound foreign tourist has not come but yet, you see Palaces, the rates going up actually. Hence I think the domestic ability to spend is still very, very strong is what I would say. I don't think the rate itself should be a dampener at any critical level, actually.

Hypothetically a 10% to 15% upside in ARR next year will not surprise you? I'm just thinking of the thought process. I'm not asking you to comment on the ARR growth. That's it.

No, it should not surprise us. I do believe that India remains a very strong destination with all the events that are planned and the change in infrastructure. When you have 50 new airports coming, you have centers like Bharat Mandapam, Yashobhoomi, you have the Jio in Mumbai, it's just beginning to change. The ability to have an event for 2,000, 3,000 people never existed. So if you get only one event every quarter, entire city of Delhi is sold out. You get one event every month in Jio, a 5-kilometer radius around Jio is all sold out. So when the area is sold out, you can also charge more. So I think there is a massive change in infrastructure in the kind of roads and highways. I was on -- on Monday evening or Tuesday morning, I was in Delhi on the new highway, which is connecting Gurugram and Mumbai. People have stopped using the other one to go to Jaipur and are using this one because it's like 2-hour journey. So somehow, all these places have also become more accessible. And that makes it what Giri was saying, going for a little longer weekend, driving yourself, things like this was there, but with a very limited percentage of population. Of that base is increasing every day, and that is helping. So if there is only like 10 million more people traveling on an extended weekend for 5 nights a year, then it is 50 million room nights. But the number of rooms are not increasing at the same pace, so I think there is a fundamental shift out there.

And the other point is also the -- our own way, our portfolios. Our portfolio is across every price point, actually. When you look at us, you should -- that also helps, actually. That also helps because when you are present at every price point, you have an opportunity to service the customer at whatever price point he wants actually. So that also helps.

Yes. So Ginger, Vivanta ARRs can actually [ expert ] -- perhaps, not so much at the top level. But maybe that's where I'm coming from.

We watch the space, Jayesh.

Thanks. I would love to be wrong.

Are you happily satisfied? Or as investors -- you said, as a consumer, you're not? Or you're worried? No, you didn't say dissatisfied. You're concerned, right?

Correct. Correct. The way I would put it is, we are definitely very surprised as an investor. Very happily surprised, not at all anxious at all. But as [ few more ] years, I'm looking at a share of wallet. That's it. There is an X amount that was spent on a travel budget and a higher proportion goes for international travel. And then the domestic travel keeps getting expensive plus the airlines and everything keep getting expensive. So at some stage, does it really an affordability issue? Basically, Indians are value for money.

Yes. But equally, Jayesh, you look at the demographics. And this we have discussed, Jayesh, before, it's not just the youngsters who are spending, who are taking the shorter holiday. It's also the baby boomers are spending. I think what is not fully recognized is the spend of the baby boomers actually. I think people are recognizing more their spend in health care and all that, but baby boomers' ability to spend is very significant actually. And midweek, they can spend midweek because they're retired actually.

The last question is how many iconic hotels one could expect over the next 5 years? Or is this something that you would reveal at, say, Ahvaan '30? I'm saying you have a Taj Mansingh, you have Bombay, you have Lands End and maybe Goa. But would you have more iconic hotels besides Sea Rock coming up in your 5-year plans?

Anything between 7 to 10 is realistic. We have very nice hotels in pipeline. So even the latest renovation of Usha Kiran Palace in Gwalior is world class and really worth visiting because we are used to only going to Rambagh and Lake Palace and Falaknuma. We are building a very iconic hotel with a partner in Chennai. We have just opened a very iconic hotel in Gangtok, the Taj Guras Kutir, following the success of Chia Kutir in Darjeeling, which has been a runaway success. So there are lots of such properties that are coming, the Taj Puri will be -- in Jagannath Puri will be a very nice property also. So I think all in all, you can expect every year, let's say, 1.5 to 2 real iconic Taj assets getting added as have been in the past. Taj Rishikesh, as an example, is also very iconic and same was when we did the whole development of 500-plus rooms with the convention center in Goa. So unfortunately, it opened at the time of COVID. But the largest convention center of Goa and the largest capacity of 500-plus rooms is with the Taj brand. So I think this will keep happening.

Ladies and gentlemen, this will be the last question for today, which is from the line of Saurabh Patwa from Quest Investment Advisors Private Limited.

I think the question is related to F&B and Taj, so it's combined, and also linked with the new brand which you are trying to open in the -- which you plan to open in Tier 2, Tier 3 cities. I think in past, you answered this question but just wanted more clarity on when -- you also highlighted that like one of the reasons why you would prefer a mass kind of a hotel in a smaller city is also the banqueting opportunity there. So what's your thought process, sir, that -- how much you expect -- what kind of strategy you would operate around a F&B opportunity in the newer brand, which you are planning? And would TajSATS be a key pillar for that?

Not TajSATS. TajSATS obviously has a different strategy on non-aviation business. We try to get to 15% of total TajSATS revenue to come from non-aviation driven businesses. Having said that, the new brand will be a full-service upscale brand, and we are in the process of finalizing all the details. But it will be something that serves the needs of mass market but higher than a Ginger positioning. So Ginger is a 20- to 22-square-meter room. This will have 26-, 27-, 28-square-meter room. It will have a couple of restaurants that will have large banqueting spaces, which can accommodate weddings of 300 to 500 people easily, so -- and at a affordable price. It will not be in the same pricing segment as a Taj brand would be. So somewhere in between, between Ginger and Taj. I would say upper mid-scale, upscale, that is the positioning we are aiming at because the target market size, as I mentioned earlier, is around 500 million.

Understood, sir. And so F&B, how important F&B is in these kind of hotels?

F&B, the second and Tier 3 market is going up because of the weddings, a lot of weddings in fact. I think that is why we're saying that the format of some of these properties will be a little different with maybe increased F&B food spaces and all of that.

Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Puneet Chhatwal for closing comments. Over to you, sir.

Thank you, everyone. Thank you for joining the call, and thank you for all your questions. We really look forward to the full year results in April with you and hope to deliver -- continue to deliver on our promise. Thank you very much. Have a wonderful day and a great weekend ahead.

Thank you, members of the management. Ladies and gentlemen, on behalf of The Indian Hotels Company Limited, that concludes this conference. We thank you for joining us. And you may now disconnect your lines. Thank you.