Ladies and gentlemen, good day, and welcome to first quarter ended FY 2024 earnings conference call of Chalet Hotels Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sanjay Sethi, MD and CEO, Chalet Hotels Limited. Thank you, and over to you, Mr. Sethi. Thank you, Nirav. Good morning, ladies and gentlemen, and thank you for joining us for Chalet Hotels earnings call for the latest quarter. I trust you've had an opportunity to read through the results and the presentation, which were uploaded on our website a couple of days back. While the global hospitality industry has been resilient with strong RevPAR numbers on the domestic front as well, the ADR-led resilience has continued, continued the robust momentum. Domestic air travel continued to exhibit strength through April and May, but did see some seasonal slowdown in June, while international air traffic is now touching pre-COVID levels. The IMF has recently raised India's GDP growth forecast to 6.1% from 5.9% for the financial year, driven by strong inbound investments in Q4 of FY 2023. The consumption story for the country remains strong on favorable demographics, improved air, road, and rail connectivity, and the government's push on infrastructure projects. At the same time, the hospitality industry continues to be in a favorable demand-supply cycle, which bodes well for the industry and our company. Chalet continues to break previous records of its own performance, and I'm happy to report the best-ever quarter one in room rates as well as on top-line revenue. The average room rates for the portfolio at INR 10,317 recorded an industry-leading growth of 38% year-on-year. Our consolidated revenue for the quarter was INR 3.1 billion, representing a 21% increase, which compared when compared to the same period of last year. Consolidated adjusted EBITDA for the quarter stands at INR 1.3 billion, reflecting a 24% growth year-on-year. There is a one-time impact of INR 57 million on account of pre-opening expenses at the new Hyderabad hotel and a payout of GST charges of INR 107 million. In the hospitality segment, the revenue grew 23% on year-on-year to INR 2.8 billion. Room revenue grew 30% over Q1 of FY 2023, while cost remained well under control. The portfolio F&B revenue at INR 0.9 billion was 8% higher than the same quarter previous year. EBITDA for the hospitality division was at INR 1.1 billion, with an EBITDA margin of 40%. If we exclude the one-off expenses that I mentioned earlier, that is on the Hyderabad hotel, the EBITDA margin for the hospitality business was actually 42.5%. During our first full quarter of operating The Dukes Retreat under the Chalet umbrella, the focus has been to integrate and align the hotel team with the culture of Chalet and introduce changes aimed at enhancing guest experience. We are in advanced stages of designing for expansion and repositioning of the resort, and we expect to commence work on site in early October of this year. We now expect to add approximately 70 new rooms, seven zero, to the property, up from the earlier plan of 50 additional rooms. This will take the key count of the resort to around 150. Ladies and gentlemen, on the fourth of June, we proudly launched The Westin Hyderabad Hitec City, an all-woman run 168-room hotel. Other highlights of this property are the entire property has been exclusively booked by one client for a period of 3 years, and the entire hotel is run on green power. Leasing at the 2 office assets in Bengaluru and Mumbai has been progressing a little slower than expected. However, the pipeline of lease is strong, and we are, we are probably going to see a lag of around a quarter from our earlier leasing plans. A quick update on the project pipeline. On the commercial projects, for example, at the Cignus Whitefield Bengaluru Tower 1, the first client is expected to occupy the top 3 floors of this tower in the next few weeks. The second building, the Cignus Whitefield Bengaluru Tower 2, which is repurposed from a mall, is in final stages of completion and will be ready for handover to our tenants from September of this year. The Cignus Powai Tower 1 at Westin Complex in Powai is in final stages of completion. The second commercial tower at Powai, all the approvals have come in, and site preparation work has already commenced. On our hotel projects, the additional 88 rooms at Novotel Pune Nagar Road are ready. We are waiting the OC of the floors to open up the inventory. The work on the upcoming Taj hotel project, Taj hotel project at the Delhi airport is on schedule. Project work on site will commence sometime in the current quarter. The designs for the additional 130 rooms at Marriott Bengaluru are ready. We have, we had earlier mentioned 140 rooms, but the recommendation has come that we create some long-stay products in that, so we've converted some of these rooms into service apartments consuming more than one day. So the key— expected key count growth there is now 130 rooms, and we should be starting work on the site in the next few months. For the Raheja Vivarea, our, our residential project at Koramangala, Bengaluru, the RERA registration is now completed. We expect to commence sales for the project in the festive season towards the end of the calendar year 2023. As part of our growth strategy, we continue to explore opportunities for high quality, ready and greenfield assets in key cities and leisure locations. In conclusion, I can say with significant confidence that the combination of strong tailwinds, wins for the industry and our own strategic growth initiatives hold strong promise for the future of Chalet Hotels. On that note, I now hand over to Milind to give you a deeper flavor of the key numbers of the quarter. Thank you, Sanjay. Good morning, ladies and gentlemen. Let me start on a positive note. ICRA has upgraded the credit rating of the company to A- minus with positive outlook from triple B plus with a stable outlook. We have come a long way from turbulent to robust business environment, with strong macroeconomic tailwinds for the country and the sector. We continue to deliver strong performance. Keeping out the seasonality of the business, we delivered the best ever Q1. I would like to highlight the resilience seen in our ADR, which was at INR 10,317 for the quarter under review, and was higher than the ADR seen in the seasonally better Q2-Q3 FY 2023, at INR 10,168. In the hospitality segment, revenue grew by 23% year-on-year basis, to INR 2.8 billion for the quarter ended June 2023, led by strong ADR growth. We saw healthy growth across our portfolio. Reported hospitality EBITDA for the quarter was at INR 1,141 million, which included one-time pre-opening expenses related to Westin Hyderabad Hitec City of INR 57 million. Excluding the impact of these one-time expenses, the EBITDA was at INR 1,198 million, which translates to an adjusted EBITDA growth of 26% year-on-year basis, and margins of 42.5%. Both the Westin hotels at Hyderabad operate as a cluster, and are expected to report higher margins with the commencement of operations of new properties. I would also like to highlight that this was first full quarter of operations for the Dukes Retreat, and about a month's performance for new Westin at Hyderabad. Employee expenses were at 13% of total revenue, which included annual salary hikes and employee expenses for Dukes and the new Westin. Consolidated revenue for the quarter was INR 3.1 billion, a growth of 21% year-on-year basis. As shared by us last week through our stock exchange intimation, GST department had commenced search proceedings at our offices and some of the hotel units. Subsequent to that, they have identified certain input credits pertaining to July 17th to financial year 2023, which the authorities believes to be ineligible for such claims. Accordingly, the company has made a GST payment of INR 107 million on 27 July 2023, and the same has been taken into account in the results under discussion. Excluding the impact of this and the one-time pre-opening cost, consolidated EBITDA was at INR 1.3 billion or 41% of total revenue. The company had received NCLT approval for the amalgamation of two of its wholly-owned subsidiaries, that is, Belaire Hotels Private Limited and Seapearl Hotels Private Limited, owning company for Novotel, Pune. Subsequently, the financials for FY 2023 were restated, and we have recognized a deferred tax asset of INR 584 million in taxable losses for the two entities in the quarter under discussion. During the last quarter, the company spent around INR 800 million in CapEx on the operating projects. Post this, the net debt of the company increased by INR 300 million from March 2023. Rest of the CapEx was funded by internal accruals. Out of the total debt of INR 25 billion, around INR 12.5 billion is allocable to new investments in office building under construction, new hotel projects, and hotel expansion, leaving the company at a healthy leverage and return ratios on invested capital. The cost of finance as at June 2023 declined 19 basis points quarter-on-quarter to 8.56%. The company has CapEx plan of INR 5.6 billion for the remaining part of FY 2024. This includes CapEx of INR 2.6 billion on the commercial projects, including the second commercial tower at Powai. The balance of INR 3 billion includes the CapEx of renovation and room addition at Dukes Retreat, new hotel in Delhi, expansion at Marriott Hotel in Bengaluru, and other repair and renovation cost of our existing hotels. Business is well-funded with internal accruals. Available lines of credit and undrawn lines of credit are at INR 5.5 billion. On the residential project at Bengaluru, the construction work is in full swing. The total subscription received from promoters stands at INR 2,000 million, and the promoters have given INR 700 million as interest-free loan as of June 2023. As Sanjay mentioned, the project is on track for cash generation in the current financial year. With this, let me open the floor for questions and answers. Thank you very much. We'll now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may press star and one to ask a question. First question is from the line of Vikas Ahuja from Antique Stock Broking. Please go ahead. Yeah. Hi, am I audible? Yes, Vikas, go ahead. Yeah, yeah, sure. Thanks for the opportunity, and congrats on another good quarter. I have three questions. First one is, what is the reason of, you know, 70% occupancy, which is lower since you have, you know, reported the data in any of the Q1s, obviously excluding the COVID period? That's my first question. Should I ask other two questions also right now, or you want to answer the first one and then go ahead? If, if you can limit yourself to two questions, we'll come back to you after the second one. ask the, ask the second one also, please. Okay. Okay, so, so second one is, you know, can you please also talk about the recent weather-related impact we have witnessed in the month of July? Is it similar to what, you know, we experienced during July of last year? So yeah, I mean, these two questions, and one I had a little bit of longer term that maybe I, I, I can come back. Sure. Sure. Thank you, Vikas. Good to have you back on the call again. The 70% occupancy that you're referring to for Q1 is actually not a bad occupancy. It's a pretty decent occupancy. It's just that last year we had the IPL happening in our Mumbai hotels. If you recall, for almost 2 months, we had IPL teams in the 3 big hotels that we have in Mumbai: the JW Sahara, the Westin Powai, and even in the Four Points Sheraton, Vashi. These 3 hotels, IPL business had taken the occupancies up. As you can see, in spite of IPL not happening, in a concentrated basis in Mumbai this year, and being spread across the country, the portfolio showed very healthy occupancies at 70%. I differ from you that 70% occupancies are lower than what they were there pre-pandemic. I think pre-pandemic, we were at this or lower. All in all, a better, a good quarter. This is on the back of a very aggressive rate growth. You do tend to let go of some low-paying business when you are increasing your rates so rapidly. You've got to keep that in mind. On a RevPAR basis, which impacts the overall revenue and profitability of the company, I think we've done brilliantly well. On your question regarding the weather in July, rains have been very intense in whole of July. In fact, later part of June and whole of July, it has affected, you know, some amount of the F&B and banquet business. You know, if you have... July, I think we had four red alerts in Mumbai alone. When a red alert gets announced, people outside the city do not have a sense of how bad or good it is. They tend to defer plans, and we've seen that happen during July a little bit. All in all, I think Mumbai's held out extremely well, in, in spite of the rains, and the city's been largely, has not been flooded. That's a good, very positive sign to give a lot more confidence to people. That's your, two questions. Vikas, have I answered them? Yes, yes. I think the only thing is, you know, when I talk about the occupancy, even if, you know, pre-COVID, when I look at Q1 2020, Q1 2019, we used to do somewhere around 75%. You are saying that we shouldn't read much into, you know, this quarter occupancy, and it's largely because of the rates and all. You've got a RevPAR growth of some 26%-28%, revenue growth of- Yeah. Revenue growth of 30%. We will apply what's available to us as best practices in revenue management and go either the occupancy or the rate route, depending on what's best for the business. Sure, sure. Thanks. I'll go back in the queue. Thanks. Thank you. Next question is from the line of Karan Khanna from Ambit Capital. Please go ahead. Yeah, hi. Thanks for the opportunity, and congratulations on another strong quarter. Thank you, Karan. Firstly, you know, talking about the newly opened Westin Hyderabad, that Hitec City, Sanjay, could you talk about the terms in terms of the ARRs annual escalation and the lock-in period at which you've sold out the rooms? As a follow-up, given such strong demand, would you look to add more rooms here to meet more such captive demand from corporates at Mindspace Park? Thank you, Karan. Yeah, to answer your Hyderabad question up front, very excited about the hotel. Given that we were opening 130 extra keys in 168 extra keys in that market, there was some concern because of the shape of the IT industry, et cetera. This turned out to be a boon, a brilliant boon, that we were able to lock in the business with 1 single client. The agreement is for 3 years with a 1-year lock-in or 14-month lock-in, which gives us an opportunity not to have a ramp-up period. We get into a 100% occupancy at market rates to begin with in day 1, day 1 itself. We opened it to guests on 4th or 5th of June, we didn't have all the inventory available because we were still completing some of the rooms and some of the public areas during that period. Over the period of the next 10, 15 days, we were able to hand over all the 168 rooms, they were occupied all rooms as and when they came by. In terms of rates, I won't want to give you detailed rates, I think our presentation has already given you an essence that they are occupied at 100% occupancy, complete use of the public areas in the F&B space. We've built in fairly strong increases year-on-year to this year's rate, which is in line with the market rate. Market rate increase annually, which is in double-digit plus growth year-on-year for the next 2 years. That's all I can share with you. The rest of it is confidential data of the client. On a RevPAR basis, this hotel is actually outperforming the Hyderabad Mindspace, which is the hotel one. Sure. That's helpful, Sanjay. Following up, if you talk about your room income versus the F&B split, this was 37:63 in 1st quarter of FY 2023, which has gone down to 33% F&B and 67% room. When you look at your other larger listed tier, for them, the rooms, the F&B to room income split has been 45%-55%. Mm-hmm. If you could help us explain the divergence in terms of the trends that are shifting more towards your room rate. Is it because of, you know, the way your room rates have gone up for your business? Or is there any other trend that you're picking up in terms of F&B to the room? I, you know, look at it from a perspective, overall perspective, Karan, here. Occupancy has gone down, right? What's driven our business is room rate. There's a disproportionate increase in room revenue in spite of lesser guests in the hotel. Despite that, we've had 8% growth in F&B revenue. Looking from that perspective, you'll find that it is, it is a pretty decent performance. It's just that we are really doing well on the room rate side. That's causing this imbalance that as you see it. From our perspective, there are 2, 3 things. 1, it is growing. Number 2, we did have 1 or 2 of our F&B outlets out for renovation. For example, the 1 restaurant in Powai and is, is under renovation. A small, the smaller ballroom in Powai was under renovation. It's being all being handed over now. In fact, has been handed back. The, the second speciality restaurant in Powai will get handed over another three months' time. All that's been out of action. But overall, whilst we could have done slightly better in F&B, if you really look at the big picture, it is not a dismal performance by any standard. Sure. Rather a decent performance. Sure. Certainly, your staff-to-room ratio has gone up to 0.96 for the quarter. I remember in the past, you spoke about a 0.9x number, is where you expect this staff-to-room ratio to settle at. We have seen the increase in employee costs across the board amid the higher attrition and talent crunch in the industry. What kind of staff cost inflation do you expect going forward, and where do you see this number settling? There are 2, 3 things that have happened and 2, 3 things that will happen going forward, Karan, on this. 1, we added Dukes Retreat, which has an employee ratio which is much higher than the rest of the portfolio, so that dragged up the rate, the employee numbers a little bit on a per room basis. I did mention earlier also that I expect it to be within 1, but it will hover around that, that area as we build in services and open new F&B outlets in our hotels. As and when you open new outlets in hotels, they will require employees, right? The number of rooms will not change. That's going to be difficult to hold to, but we are still committed to staying at 1 below. In fact, below 1 is our, our goal. The things going forward, 2 things are going to happen. We haven't got the full impact of Westin, second Westin hotel, which is the Westin Hitec. When you get it this quarter, with 168 rooms operating at, I think, 0.6 or 0.65 employees per room, that will bring down the average a little bit. We've got 88 rooms in Pune, which are about to open, which will have an incremental impact, which will be very minimal in terms of number of employees. Then we're planning the 130 incremental rooms in Bangalore, which will also have a very minimal incremental impact in number of employees. Hovering around this 9, 0.9 and 1 range is the range that we want to be at. We have obviously over the last few quarters, focused very strongly on the guest experience part of it, to stay competitive in the market, and we continue to serve our guests at the optimum. Am I concerned about these numbers at INR 0.96? Not at all. It is by far an industry-leading number for our category of hotels, which is in the upper upscale and luxury space. Sure. Lastly, you've onboarded Mr. Shwetank Singh, who has been appointed as the Chief Growth and Strategy Officer. Is this in line with your strategy to focus more on the leisure segment, given his past, you know, he was involved at Golden Sands LLC in Dubai. Is this a, is this a step in that direction to increase your presence in the leisure segment? Karan, Shwetank comes in with a rich experience on growth and development. Just excuse the slight sound disturbance that we are having. I just filled a glass of water, so everyone has anything to clean it up. Just give us a second. I think we can do this later now. Shwetank comes with a set with rich experience under his belt on business development, business development, growth, asset management, all of that is his forte, and he comes with that. He will come and strengthen our, you know, top and senior management team that we have at Chalet Hotels to prepare us for the next jump and growth that we are planning to have it in our company. I hope that answers that. Sure, that's helpful. Thank you and all the best, Sanjay. Thank you. A request to all the participants. Please restrict to two questions per participant. If time permit, please come back in the question queue for a follow-up question. The next question is from the line of Archana Gude from IDBI Capital. Please go ahead. Hi, sir. Good morning. Thank you for the opportunity. I have two, three questions. Firstly, can you please help us understand the management thought process on partnering with Indian Hotels for new, our New Delhi hotel? Thank you for asking the question, Archana. We had covered this the last time around, but for your benefit, I'll just repeat this. We've always been brand agnostic in terms of our strategy of deploying brands at the locations. We look at what is the most suitable company or brand to operate that hotel or put on that hotel. We have decided that we will go with the franchise route in the Delhi one, which means we will run the hotel on our own. We needed a brand to partner us in terms of the brand on the building, the distribution and sales capabilities, and the loyalty programs. And given that the hotels that were there in Aerocity area or near the airport over there, we thought the best fit will be someone who isn't present in that area, so that all the focus on sales and marketing, distribution and loyalty program will be centered around this one hotel that they're building up. So therefore, we decided to go with, with the Taj brand on this one. The IHCL team was very welcoming. I think we've had great relationships in the past, and we look forward to strong relationships in the future. I might also add that Taj has shown that the brand has done well at other airport locations in Mumbai and Bengaluru. Sure, that helps. My second question is, on the mix of domestic and foreign guests. From current level of 33% of foreign, in the overall contribution, how we should look at this segment from, let's say, 2-3 years down the line? I think, it's difficult to predict this, Archana, but, you know, I think, we should be around an equal share in one or two years from now. In fact, I think this should start leveling out from October, November of this year. Sure. Lastly, if I can just squeeze in one more. On this CIGNUS Powai and Bengaluru, can you help us, the demand and, some color on rental rates for the commercial properties in and around our properties, and also the typical lease rates? Typical lease period ranges from 5 to 9 years, around that much. Bengaluru, the market rates over there are hovering around the INR 60 rental. Powai, the market rates are between INR 110 and INR 125, and some good buildings it is even going up slightly higher. The demand on the demand side, Bengaluru, in the latest report that was, I think, released by one of the consultants, seems to be right on top. That sort of reiterated our belief that that market will do well. Followed by Mumbai at number 2 in terms of demand absorption as a percentage of supply. On both cities, we are confident that while it's taken a little time, we took the right decision. In any case, this was built on, on land that we already had, so we're sweating the real estate assets that are in the Chalet portfolio. As and when they get occupied, we are seeing very, very strong returns coming from these assets. Sure. That helps. Thank you, and all the best, sir. Thank you, Archana. Thank you. I request to all the participants, please restrict to two questions per participant. Next question is from the line of Adhidev Chattopadhyay from ICICI Securities. Please go ahead. Yeah, good morning, everyone. The first question is The Dukes. Now that we have expanded the number of rooms, what is the revised CapEx number? Since you're starting, you said, a construction or expansion works in October. When do we see the new rooms becoming operational? That is the first question. I think if, at Dukes, if, if we had 80 rooms to begin with, that's what we acquired the asset with, with potential development of adding more. Initially, we thought we'll add about 50 odd rooms, 48-50 rooms. With the revised FSI and all that we have in hand, and the ground coverage that's available and the views that we have, we've been able to fit in 70 extra rooms, without without, without diluting the product at all. In fact, the product gets enhanced significantly with this renovation and expansion, which will take the key count to 150. As far as CapEx is concerned, it's going to be in the range of about INR 100 crores, give or take a few. In terms of opening, we are expected to open maybe around 80 out of the 75 room- 150 rooms in April next year, and the balance by September, October next year. To understand, in October, all the rooms will be going under renovation, or it is you'll keep around 50 rooms operational? We'll have about 60 rooms operational still. Okay. The INR 65 crores CapEx number earlier is now INR 100 crores, right? For the entire- Something, yeah, it's now INR 100, which is on account of increase in inventory, and also we are repositioning the resort. See, earlier we thought this was a INR 8,000 hotel, which we'll reposition to maybe about INR 9,000-INR 10,000. We're looking at a far higher repositioning. Now, I don't want to give you the numbers right now. We're looking at positioning it higher than the original plan. The combination of increased inventory and repositioning the resort at a higher level has led to some increase in the CapEx cost, but the returns continue to be very healthy. In fact, better than we expected earlier. Sure, sure. Second question is on our leasing pipeline for the first Bengaluru, the two Bengaluru assets and Powai. Obviously, you said it has been deferred by a quarter, the leasing decisions, but could you just give us some color by what is the targeted leasing maybe by the end of this year for both these assets? I think we should finish leasing of Bangalore in about two or three quarters from now. Okay. A Q4 is, at the end of Q4 could be a, could be a comfortable closure for Bangalore, and Powai maybe another couple of quarters after that. One or two quarters after that. Okay. We are actively in discussions, right, to lease these properties out? Absolutely. Absolutely. Okay, fine, sir. Okay, sir, that's it from my side. Thank you and all the best. Thank you. Next question is from the line of Jinesh Joshi from Prabhudas Lilladher. Please go ahead. Yeah, thanks for the opportunity. Sir, I have a question on the opening timeline of Novotel. I believe the rooms were ready in 4Q, and we were awaiting OC back then, and in this Quarter Two, there has been a status quo, so to say. Any specific reason for delay in getting the OC? That is one. Second follow-up is with respect to the second tower in Bangalore of about 0.7 million sq ft. I think during the last communication, we were expecting the handover to begin in Q2, and now we are saying that it will happen in Q2. Again, over there too, there has been a delay. If you can highlight the reasons briefly. Jinesh, as far as the OC in Pune is concerned, yes, there's a specific reason that this got delayed. If you recall, we'd acquired this asset from a UK-based fund who owned 74%, and 26% was owned by Accor Hotels. We acquired this in February 2020. While we were applying for the OC process, the department found some comment on the file that the owners were, you know, they had to pay them some INR 3 crore for the expanded parcel of land, which included our hotel and a large plot owned by someone else. Whilst we were okay with paying the amount and the taking of the OC, we didn't want to pay for the others, which was an unfair thing to do. We've now sorted it all out, and we're expecting the OC in the next few days. As far as the second tower in Bangalore is concerned, we've said Q2 is when we'll probably hand over. We are still looking at September, so which is still end of Q2. As I said, leasing has taken slightly longer, and I'm hoping by the time we come back in the next quarter with you, with you, we'll have far more specific details of leasing and how that's progressing, and I'm sure we'll have positive news on that. Sure, sir. My second question is with respect to the Koramangala project. I understand that the four towers are ready, and we expect the OC to receive in, two weeks. Jinesh, I'm sorry, I can't hear you. Sorry, we're not able to hear you. Is this, is this better now? Yes. My question is pertaining to the Koramangala project. I understand the 4 towers are ready-. Mm-hmm. We expect the OC to be received in the next 2 weeks or so. How has been the progress on the remaining 7 towers and the commercial block? Also with OC being around the corner, what kind of cash flow cushion can we expect in the upcoming quarter? I'm going to come up as— to answer the first part of the question and request Milind to also come in with the cash flows part. progressing well, on schedule, as we had envisaged before, we should be able to complete this project in the, over a period of the next 2 years. That includes the new towers and the new residential towers and the office tower. However, you know, 7 towers were in fair amount of completion from the beginning, and 4 of them are now, you know, ready for OC. Therefore, significant amount of work is already done. We, so to, to summarize it, on target as planned earlier, OC got a little delayed, but we are on time for the festive season, commencement of sales. looking good. In the interim, the market has strengthened a lot more. As far as on a rate per sq ft goes, we do see a lot of positive upward move. Jinesh, Milind here. To give you a further update, OC for 4 wings, we are expecting in next few weeks, and for 3 more wings in next 2 or 3 months. The construction work is in full swing. Once we get OC, we can start sales. We expect around INR 80-100 crore cash, surplus cash, to be generated from this project in FY 2024. Sure, sir. That, that helps. Just one last bookkeeping question, if I can just ease in. If I look at our debt on sequential basis, it has hardly moved, and even the interest cost is down from about 8.75% to about 8.56%. Yet our interest cost on sequential basis has gone up from about INR 40 crore to INR 45 crore. If you can just highlight the reason behind it? Good question. Still it's clear, not audit on- No, no, what he said was, whilst your debt hasn't moved and interest costs has come down, why has interest value gone up? That's because of capitalizing. Okay. Jinesh, last quarter, we have capitalized our Tower 1 at Bangalore. Finance cost, which we are capitalizing, now hitting our P&L. That is accounting standard requirement. From that perspective, our cost has gone, I mean, finance cost debit has gone up. Understood. Thank you so much, sir. Thank you. Thank you. Requesting participants to restrict to two questions per participant. Next question is on the line of Kaustubh Pawaskar from Sharekhan by BNP Paribas. Please go ahead. Yeah, good morning, sir. Thanks for giving me the opportunity. So my question is again on the room rentals. This quarter, we have seen strong growth in average room rental for our properties. Second half, there is a lot of optimism building up around World Cup, G20 Summit, and there are other reasons, and also foreign tourist travel is expected to come back. Considering that, you know, what kind of, you know, room rental hike you are expecting for our properties in second half of the year? The occupancy level, I can understand, this quarter, last quarter, there was a big effect. Overall, occupancy should remain stable in the second half of the year for us? Kaustubh, look, number 1, we don't give forward-looking statements. I need to say, say that upfront. However, for the industry as a whole, I've stated in the past, including in public forum, that we expect a comfortable double-digit growth on rates for the next 2 years. Please consider that as as the industry indicator for you. Second half is typically be better than first half. This, again, is something that we've shared several times. You can keep that as as a reference point. Rates and occupancies both improve in the second half. That should help the RevPAR to grow fairly comfortably. F&B comes back with a bang during this period, and our Mumbai hotels, and even some of them in Hyderabad and Bangalore, have fairly large banqueting facilities, which get assisted during the wedding season, which typically happens in the second half. Right. Right. As for our humble request, it would be great if you could share the region-wise occupancies and, you know, ARR for your hotels, which you used to do earlier. Kaustubh, I know that this has been taken off from the presentation this time. It has come through advice from a well-wisher who said, "Look, by giving data on cities where you have only one hotel at a time, you are actually giving away confidential data on average room rates for that particular hotel and the occupancy, which can be used by competitors for pricing strategies and decisions." Therefore, from this quarter onwards, we stopped doing it. Since we stopped doing it on the presentation, I can't share with you also. Apologies for that. It's a little bit of a, I know, a limitation from your analysis perspective, but I think we're doing the right thing. Okay. Very well, sir. Thank you. Thank you. Next question is from the line of Vikas Ahuja from Antique Stock Broking. Please go ahead. Yeah, yeah. Hi, thank you for having me again. My third question was, you know, if we look at two of the largest Indian players, including one which is about to get listed, that they see, both have pretty aggressive expansion plans, and we can always debate on management fee contributing to total revenues being low. However, in absence of any, you know, strong brand- How do we think that double-digit growth, is it doable for us, once rates stabilize in next 2-3 years? Don't we think, you know, debt in the books will hamper our ability to acquire good assets? Also at any point in time in future, do you think it makes sense to launch your own brand as well? That's about it. Thank you. Thank you, Vikas, for asking that. I've said this before, that we've, we've continuously looked at having our own brand. We've studied the pros and cons. Now, especially during the pandemic period, we did look at blue sky strategies, and we considered that. Given our strength on asset development and asset management, at that point of time, we've taken the decision not to go with the brand, but that doesn't mean the de- decision is closed. We will closely monitor the landscape of the hospitality, hospitality industry for the country and do what we think is in the best interest. As for your comment about double-digit growth, I don't see that as a problem at all. Next couple of years, even on a same-store basis, double-digit growth, driven by average room rates and occupancy, is fairly comfortable. Add to that the supply pipeline that we have. You've got to remember, if you open a 200, 300 room hotel, we're talking about $60, $70 EBITDA contribution straightaway. So there are, you know, step-ups and jumps that happen with every hotel that we open. So I don't think you should be concerned about capability of growth for Chalet. As far as the debt is concerned, the question is concerned, debt does taper down very sharply in 1 year, 2 years from now. And our internal accruals will continue to build up very sharply. All of that will give us an opportunity to, for, for growth opportunities that may be available in the market. Yeah. Sanjay, so, so the question regarding, you know, the double-digit growth was not related to next two, three years, because I understand you have a lot of expansions which are going to come, and rates are going to be pretty elevated. My question was, once maybe in, you know, next two, three years, once you have exhausted all of your pipeline, and also, you know, the rates also stabilize, because, you know, in the next two, three years, it's, it's, it's going to stabilize, right? After that, you know, I was this is from more of a medium term, you know. Post that, do you think we can still do, we... Because our, our strategy is more about, about, you know, growth over anything else. Do you, do you think we can still do double, double-digit growth, maybe FY 2027, 2028 onwards, is, is what my question was? Yeah, Vikas, two things. Number one, I didn't say that the asset light thing is off the table. I said, we looked at it about 12 years back, and that time, point of time, we didn't think it's right to pursue that. We'll continue reviewing it as and when required. Second thing is, we are not talking about the current pipeline only, right? As I said, our debt does come down significantly in a year, two years from now. I'll let Milind jump in for this, so that he can clarify and give you, share some numbers with you. When the debt comes down and internal accruals grow as sharply as, as we are experiencing now on account of very strong EBITDA performance, it will give us headroom for new projects after the announced ones. In fact, I don't expect Chalet to sit, you know, quietly and not do any growth. Expect us to come up, come up with new projects in the future. Milind? Vikas, see, I mean, if we put our debt in two different buckets, I mean, under construction properties and operating hotels, more than 50% of our debt, sorry, excuse me, will be converted into lease rental discounting, and it goes into sort of self-financing mode. We expect to generate more than INR 600 crore from residential project in next 30 months, right? The EBITDA generated from hospitality is available for growth. I mean, once our announced projects are over, I mean, which are funded through internal accruals, we have sufficient internal accruals, which can fund our expansion. Vikas, please pay attention to the opening statement that I made, that we continue to look for opportunities in cities, both, and leisure locations, both greenfield and ready operating assets. Okay, sure, sure. Thanks a lot, and wish you good luck for Q2. Thank you, Vikas. Thank you. A request to all the participants, please restrict to one question per participant, so we can accommodate all the participants in the question queue. Requesting to join the queue again for a follow-up or a second question. The next question is from the line of Suman Kumar from Motilal Oswal. Please go ahead. Yeah, hi, sir. Can you talk about the foreign guests, is still 30% lower than pre-pandemic? Considering all other hotels' performance, our occupancy is even QoQ and even compared to pre-pandemic, is still significantly lower. What is the outlook for this, your segment, foreign guests segment? Suman, thank you for your question. As I said earlier, we take decisions based on what ultimately affects our P&L. We decided that we want to reposition our portfolio at the higher end of the rate spectrum. With that in mind, we've had 38% rate growth for the portfolio. When you have that aggressive a rate growth, you sometimes let go of low-paying business, and I think that's what's happened. The other thing that's happened is that the foreign business has still not come back to full peak, and is really likely to come back only October, November. That will fill up the occupancies. Number 3, as I mentioned, last year, we had a concentration from Mumbai for IPL, when you look at last year's quarter 1 to this year, you might see a gap, which is in occupancies. The occupancies are building up. Remember, Q1, Q2 are low occupancy quarters, this is the annual occupancy cycle that is panning out. If you look at across the country, as per the reports that I have with me right now, May and June, we did see occupancy drop in, in all cities, almost all cities across the country. Please refer to the report released for May and June by HVS, which is a city-wide report. When I spoke about lower paying segments, for example, at the JW Sahar, where we used to have almost about 90-100 rooms per day from the crew segment, is down to about a third now, maybe a little over a third, because we decided not to take the that, that, that business. What you are seeing is a blended occupancy of hotels, including The Dukes Retreat, which is still building up and will largely build up only post-renovation. That drives it down a little bit. Bangalore was affected by a one-off event in the month of May and June with the elections. That was a long process in Bangalore, where elections were announced, and then there was literally a slowdown in the city for almost a month. If you take all of that, this is the combining reasons for the occupancy situation. If you have 30% room revenue growth, I don't think anyone should be concerned. Thank you so much, sir. Thank you. Next question is from line of Hrishikesh Bhagat from Kotak Mutual Fund. Please go ahead. Hi, thank you for the opportunity. First, related to on your presentation, your pipeline does speak about Airoli, but clearly in ongoing project list, it's not there. Where are we on the Airoli project? Airoli is being reconfigured for more optimal use, so that we can get similar sort of rooms at a less cost. That rework is in process, therefore, I've not spoken about it. We should have clarity on the reconfigured project in about couple of months from now. We're looking at 260 rooms, 280 rooms, as we had discussed earlier. We had discussed that we'll probably start work on that site end of this year or end of this calendar year or early next calendar year. We are still largely on target with that. Okay. Okay, but, in the sense from it should be part of FY 2026 pipeline? Yeah, FY 2026, FY 2027, I mean, in that range. Okay. Because we are reconfiguring, as I said. Sure, sure. We're trying to spread the asset better. Sure. Okay, the second question is from the bandwidth perspective. See, I understand over the next three years, means obviously there's, there's a ramp-up of the existing pipeline as well, in the sense projects where you had initiated CapEx during COVID. Then if I look at it, there's additional now, we are talking about fair bit of addition, or including the Delhi project by FY 2026. From bandwidth perspective, obviously, there's no limited financial constraint, as rightly highlighted by CFO. From management bandwidth perspective, can we add more projects from the growth front? Oh, yes, please bring them on. If you have some opportunities, let us know. Not me, but just from the management bandwidth perspective, because it's fairly scalable. We are more than happy enough to take on more. We have enough bandwidth right now to, for, for future growth for the company. Sure, sure. Thank you. Thank you. Thank you. I request all the participants, please restrict to one question per participant. Next question is from the line of Saurabh Jain from HDFC Life Insurance. Please go ahead. Yeah, hi. Am I audible? Yes, Saurabh, you're audible. Thank you. Thanks for the opportunity. My question was on the expenses side. If you see the, all the line items of the expenses, employee expenses, student supplies, power and fuel, other expenses all have gone up. I understand that this will have some bearing of The Dukes Retreat coming in this quarter, and then opening of the Westin, too, also. Can you just give a flavor in terms of if we compare like for like, what is the increase? If the occupancies have dropped by 8%, year-on-year, I believe that the expenses, apart from employee benefit expenses and sales and marketing, because FPAR has gone up, should not increase. Saurabh, maybe here. If you look at total expenses of hospitality, and if I all Q4 FY 2023, and compare it with Q1 FY 2024, and exclude these exceptional expenses of Hitech City and incremental expenses of 2 properties, the expenses are at same level. If we go into detail, employee expenses are higher on account of salaries, employee expense of these 2 properties, and annual ex-gratia, which gets accounted in Q1. Same is the case with power and fuel. Incremental expenses of 2 properties and electricity rates have gone up, and discoms have increased electricity rates in Maharashtra. That has impacted. Going forward, again, we are revisiting our arrangements with open access power, and it will be controlled. We feel this is a one-off increase in the current quarter. I think the big ticket item of INR 5.7 crore that came from Hyderabad, Hitec City. As well as GST. Then there were these, as Milind mentioned, two new hotels, one in the part of the quarter, the other full quarter impact. The increments and bonuses given to employees, which typically happens in Q1 of the succeeding year. That's the combination. Some of our employees have also gone up a little bit. As I understand, you are saying that if we remove the Dukes, inclusion this quarter, the Westin 2 and the GST part, the expenses are broadly flat. Yes. Q o Q? Yes. Broadly, except for the points that Milind mentioned on salary escalation. Okay. -and increments or bonuses, sorry, and electricity rate increase at, in Mumbai. Okay. My second question, if I may. May I request you to come back in the queue, please? Sure, I will. Okay. Thank you. Next question is from the line of Rajiv from DAM Capital Advisors. Please go ahead. Yeah, thanks for the opportunity. With regard to DIAL, since you have finalized the flag now, can you, can you specify what is the sharing with the, let's say, with DIAL here? Also, I mean, if not that, is it, is it safe to assume that as and when it gets launched, you will have, you know, 40%+ kind of a better margin from that asset after giving out, you know, the payment for to DIAL? Rajiv, I can't give you details of this. It's basically a shell lease. What happens in a shell lease is the CapEx upfront goes down, but you will have slight increase in the rate in the in operating costs as well as the lease, because the rent is concerned. It's a percentage of revenue, which is the arrangement. You'll get that slight impact, but typically, revenue share or rent come below the EBITDA line. Milind, correct me if I'm wrong on that. Absolutely. EBITDA will continue to be as strong as it's as as you can expect the rest of our portfolio to be. Sure. Yeah, thanks a lot. Thank you. Next follow-up question is from the line of Saurabh Jain from HDFC Life. Please go ahead. Yeah, thanks for taking my question again. I had a question on the occupancy for the Mumbai region. If we compare the occupancies of the other listed there, right? They also had a high base in Q1 FY 2023, but even on that high base, they were able to increase the occupancy further. I'm just trying to understand the dynamics here, that why Chalet is not able to increase the occupancy, at least on a QoQ basis, when the other district player is able to do so? Okay, a couple of things over here to note. One is that, as I mentioned, we have three hotels in Mumbai. All three had large occupancy from the IPL last year. That's something that is material, please note that. The second thing is that we have 29 rooms under renovation at the Mumbai hotel, which are counted in inventory, and therefore, the occupancy shows a little lower than it should be. That's the second. The third is, as I mentioned earlier, we've let go of crew business because it had two, three dynamics to it, especially the Indian domestic crew business. The rates are typically lower than others. The payment cycles are stretched and not necessarily favorable. Very often there are a lot of inclusives that go with crew business, and therefore, we decided that wherever hotels are anyway, doing high occupancies, we don't want to go in this, that business. For example, JW Sahar is not a hotel I want to have crew business in. It's a high-rate hotel. It's high-occupancy hotel. There's no reason for us to dilute our occupancy. What is driving Mumbai down is, was actually Powai, with the reduction in 29 rooms for renovation, and these 29 rooms are our suites, so they're the most premium rooms in the hotel also. And we've also seen weekend occupancies sort of, bit lower than the, weekday ones. I think people are back to, you know, traveling for work, so probably at weekends, they're spending more time at home than traveling for holidays. A similar phenomenon has actually been seen at all cities, as I mentioned earlier. In fact, I would urge you again to read the STR report, which is a month-on-month report for April, May, and June. Okay, thank you. Thank you. As there are no further questions, I would now like to hand the conference over to Mr. Sanjay Sethi for closing comments. Thank you so much, ladies and gentlemen. Thank you for joining us for the call today. As I said in my closing remark, extremely confident of the future of Chalet Hotels, because we've got a, a really strong management team that leads it to the next steps of growth in the future. We look forward to engaging with you on a regular basis. Thank you, Nirav, for organizing this. Thank you very much, sir. On behalf of Chalet Hotels, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.