Release Date: August 20, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Royal Orchid Hotels Ltd (BOM:532699, Financial) reported a consolidated income growth of 5.34% for Q1 FY 25, reaching INR 77.66 crores.
- The company added five new hotels with 469 rooms in the first quarter, indicating expansion and growth.
- The company's EPS remains strong at INR 3.21 per share for the quarter.
- Royal Orchid Hotels Ltd is on track to complete a new 300-room hotel in Mumbai by the end of the year.
- The management has adopted a strategy to diversify its product offerings and provide unique customer experiences, which is expected to strengthen the company's market position.
Negative Points
- Consolidated EBITDA decreased by 7% in Q1 FY 25 compared to the previous year.
- Consolidated PAT for the first quarter decreased by 19%, indicating a decline in profitability.
- The company faced business disruptions due to elections and heat waves, which adversely affected performance.
- Occupancy rates in certain markets, such as Chennai, were low due to extreme weather conditions.
- Increased costs related to refurbishing assets and additional hiring impacted profitability, with repair and maintenance costs rising significantly.
Q & A Highlights
Highlights of Royal Orchid Hotels Ltd (BOM:532699) Q1 FY 25 Earnings Call
Q: Can you provide more details on the Mumbai hotel with 300 keys, including the expected opening date and ADR price band?
A: The hotel is currently under construction and is expected to be completed by the end of this year or early next year. The ADR price band is projected to be between INR 9,000 and INR 11,000. The brand name and identity will be announced in the next couple of months. - Arjun Baljee, President
Q: What are the dynamics of the Chennai market, and why was the occupancy rate low in Q1?
A: The Chennai market did not perform well in Q1, primarily due to the extreme heatwave. Last year's occupancy was around 45%, and this year it was 36%. The market generally does not perform well in Q1. - Amit Jaiswal, CFO
Q: Can you provide an update on the July and August growth compared to last year and the outlook for Q2?
A: July saw a pickup with a growth of 6% to 8%. Resort occupancy and corporate market activities are also showing healthy signs of recovery post-election. - Philip Logan, COO
Q: What is the plan for opening 31 hotels this year, including the number of keys and the split between managed, leased, and revenue-sharing models?
A: The total number of keys will be around 1,900. Most of the hotels will be managed, except for two hotels in Gurgaon and Mumbai, which will be under the revenue-sharing model. - Chander Baljee, Executive Chairman & Managing Director
Q: What is the revenue potential of the Gurgaon hotel, and what is the plan for growing the share of banqueting revenues?
A: The Gurgaon hotel has 124 rooms and is under the upscale category. Banqueting and event management are key focus areas, and larger banqueting spaces are being planned in new developments to capture more business. - Philip Logan, COO
Q: Can you provide guidance on the top-line impact for this year and next year?
A: We are targeting a top-line growth of around 10%, aiming for INR 370 to INR 380 crores this year and crossing 500 crores next year. - Amit Jaiswal, CFO
Q: What are the immediate implications of the Mumbai hotel prior to and after its opening?
A: The Mumbai hotel will have a significant impact on revenue, with an expected contribution of around INR 10 to 11 crores in the first year. The lease rent is high, which will also affect the service growth. - Amit Jaiswal, CFO
Q: Can you provide an update on the international hotels and the plan to exit one of the ventures?
A: Discussions are ongoing regarding the Tanzania land, but nothing conclusive has been finalized yet. The market has softened, and negotiations have been deferred. - Arjun Baljee, President
Q: What is the development stage of the Mumbai hotel and the expected revenue contribution from its first full year of operation?
A: The hotel is well along in the development cycle, with rooms expected to be ready by October and public areas by December. The expected revenue for the first year is between INR 100 to 110 crores. - Arjun Baljee, President
Q: What is the broader vision for the company in the next five years?
A: The target is to reach 200 hotels by February 2026, with a mix of managed and revenue-sharing models. The goal is to achieve a top-line revenue of around INR 550 crores and a PAT of 100 crores by then. - Arjun Baljee, President
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
