Release Date: July 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Indian Hotels Co Ltd (BOM:500850, Financial) achieved its ninth consecutive quarter of record performance, with Q1 enterprise revenue crossing INR 3,000 crores, growing 7% year-on-year.
- The company reported a consolidated revenue growth of 5% year-on-year to INR 1,596 crores, with EBITDA growth of 8% year-on-year to INR 496 crores.
- EBITDA margin expanded by 70 basis points to 31%, and PAT grew by 12% to INR 248 crores.
- The company outperformed the industry despite temporary headwinds, maintaining strong brand equity and customer trust.
- Indian Hotels Co Ltd (BOM:500850) continues to focus on digital initiatives and brand enhancement, launching a new website and benefiting from a loyalty program with 5.5 million members.
Negative Points
- The hospitality sector faced multiple headwinds in Q1, including an election period, extreme heat waves, and fewer wedding dates.
- Occupancy rates in certain markets were impacted, with some regions experiencing lower than expected performance.
- The company faced challenges in the international market, particularly in San Francisco, which is still lagging behind in performance.
- There were temporary disruptions in some new properties due to external factors like landslides, affecting occupancy and revenue.
- The company anticipates potential cost increases in payroll and raw materials as business activity resumes, which could impact margins.
Q & A Highlights
Q: Can you provide more details on the Dodge branded residences?
A: Puneet Chhatwal, CEO: The Dodge branded residences include 123 residences with another 225 plus hotels, totaling over 235 rooms. We provide services such as gym access, restaurant use, and housekeeping to the apartment owners. This is our first venture into branded residences, and we plan to expand this concept slowly across the Indian subcontinent.
Q: How do you see the market demand for July and the rest of the year?
A: Puneet Chhatwal, CEO: We expect double-digit growth for this financial year. Despite some disturbances, we anticipate strong performance in July and beyond. Our discussions and research indicate no reason why we shouldn't achieve this growth.
Q: How do you plan to manage occupancy and rates in a slow environment?
A: Puneet Chhatwal, CEO: We have maintained an average occupancy of around 76% domestically, with key markets like Mumbai and Delhi performing well. Our ability to charge higher rates increases with higher occupancy levels. We expect both occupancy and rates to improve significantly in July.
Q: What are your expectations for new capacity additions in the market?
A: Ankur Dalwani, CFO: While there have been many announcements, actual additions on the ground remain muted. We expect supply to catch up with demand over the next two to three years. The focus is on new markets and airports, which will drive hotel supply.
Q: Can you provide more details on the expected growth in revenue and EBITDA?
A: Puneet Chhatwal, CEO: We expect new businesses and reimagined businesses to grow north of 30-35% and 15-20%, respectively. Management fee income will also grow at a normal cadence of almost 15%. Overall, we anticipate double-digit growth in revenue and EBITDA.
Q: How do you see the trend of work-from-home impacting your business?
A: Puneet Chhatwal, CEO: Work-from-home is not a significant issue for us. Key markets like Mumbai and Delhi are performing at high occupancy levels, allowing us to charge higher rates. We expect foreign tourist arrivals to normalize by October or November, which will benefit our iconic assets.
Q: What is your outlook for the international markets, particularly the US and UK?
A: Puneet Chhatwal, CEO: We have seen better performance in New York, while San Francisco is still lagging. London remains cautiously optimistic with a 32% EBITDA margin in Q1. We expect recovery in these markets post-elections and other events.
Q: Can you provide more details on your loyalty program and customer profiling?
A: Puneet Chhatwal, CEO: Our loyalty program has grown significantly, with around 32% of revenue coming from repeat customers. We continue to invest in digital initiatives to improve this further. We can provide detailed profiling information offline.
Q: What are your expectations for the upcoming budget and its impact on the industry?
A: Puneet Chhatwal, CEO: We prefer not to speculate on the budget. We will take whatever comes and hope for the best.
Q: Can you comment on the recent announcement of 200,000 new hotel rooms in UP?
A: Puneet Chhatwal, CEO: The total branded room supply in India is equal to that of Dubai and Singapore combined. Achieving 200,000 rooms in one state seems unrealistic in the short term, but it would be beneficial if it happens over a longer period.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
