Good day, and welcome to The Indian Hotels Company Limited Q1 FY 2021-2022 Earnings Call, being hosted by Mr. Puneet Chhatwal, Managing Director and CEO of The Indian Hotels Company Limited, and Mr. Giridhar Sanjeevi, EVP and CFO of Indian Hotels Company Limited. As a reminder, all participant lines will be in a listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. At this time, I would like to turn the conference over to Mr. Puneet Chhatwal. Please go ahead, sir. Good evening, ladies and gentlemen. I am here with Giridhar Sanjeevi, our CFO. Let me begin the evening with reinforcing the good news, which we got a few weeks ago. Taj was rated the world's strongest hotel brand by Brand Finance, a report scoring 89.7. That is the highest score any brand has gotten. Also by Brand Finance, we were reported as the second strongest brand across all sectors in India and the strongest hospitality brand. This is a good endorsement for a brand which is 118th year in operation and a well-deserved recognition. Moving on, I think we see some light after darkness. Of course, we saw some light between 15th of November till end of February in the last financial year. Mostly the last 19 months period, or 18 months, have been full of darkness for the sector. Possibly the worst period the sector has ever seen in the last 100 years. Now the global platform seems to be growing at and expected to grow at 5.6%. The H2 of this financial year, an acceleration is projected, especially on the global employment, which obviously leads to more disposable income and more discretionary spend. Also on the India front, very recently, the RBI Governor or the IMF projected our growth at 9.5%, and also the unemployment rate to decline from 11.9% to 9.2%. Of course, we can see some more light after a long or extended period of darkness. This slide we have taken from HVS. In the month of June, we have shown that the rates have increased at 14% to 16%. Occupancy increase is also at 12% to 14%. There is a RevPAR increase of almost 90%-95%, and that is very consistent with the results that we report. There is increase in domestic air traffic by 47% in June. Why do we talk here about June, whether it's HVS or us? Is because, again, the period of April and May was completely derailed by the second wave and the aftermath of second wave. Really June was the month when things started coming back, and thankfully, the period after getting a 4x growth in the number of cases, the period to bounce back after second wave was much shorter than what we saw at the outset of the pandemic. There is a month-on-month increase, therefore, in all parameters, and the Q1 RevPAR recovery is obviously stronger than last year Q1 because last year entire Q1 was a washout with the sector mostly shut in all the regional markets as well as the international markets. Moving further on key performance highlights. I think this graph, the line below is our consolidated revenues, and the line above is enterprise revenues. That clearly indicates if you look at the month of May, the dip took us down to as low as July, August of last year. The upswing is bringing it back to a period between November and December of last year. Actually, it would be fair to share here that because July is behind us, we have seen significant growth in July versus what we saw in April, May, June, of course hampered through the second wave, which hit us very badly. I think this trend is expected to continue. I know a lot of you would want to ask this question. As far as visibility is here, which has become shorter, I think in the first eight or 10 days of August, we are seeing a similar trend emerging, and that's what this slide also depicts. Last year Q1 versus this year Q1, the revenues have more than doubled, and the Q2 revenue of last year was also exceeded by the revenue of Q1. We believe that just July ends like half of August or 20 days of August would be good enough to get to these kind of revenue levels going forward. Further, I think it's very interesting to look at RevPAR as a percentage of last year. The RevPAR recovery in Goa was as per STR, 260%, Rajasthan over 200%. Same story in most of the cities. When we look at it from the IHCL perspective, our recovery has been much stronger, which means we've been gaining a lot of market share. Also last year, our base was not as small as one would have expected. When we show doubling, it's coming from a much larger base, and that is very well depicted in these figures that Goa and Rajasthan and also all other markets continue to perform well for us in terms of how we have gained market share vis-à-vis the industry. On growing direct to customer, that is the non-OTA business, we have improved from almost 69% to 74% on the direct channels. The same thing we see is because of some of the campaigns that we launched on cherishing togetherness, IHCL World of Privileges, our home delivery business with Qmin, our home stays with amã, our burning your loyalty points. Some of these things have helped us get directly to the customer, and which has helped us in containing our costs. One thing, as I said, containing our costs, if you look at our fixed expenses, we've been able to maintain them at INR 126 crores a month. Pre-COVID, they were at INR 150 crores. Last year, they went down to INR 123 crores. This year there is a marginal increase, and that's minimal given the kind of growth we are experiencing in not only different brands but also on a growth in terms of our hotels and the new openings that we are having. Further, when it comes to our staff-to-room ratio for Taj is down from 1.3 to 1.09. Ginger from 0.48 to 0.34. Vivanta from 1.32 to one. SeleQtions from almost two to 1.3, and for the Taj brand from 2.17 to 1.6. This has been a good reduction, and as I said in the last call I think, was that in Taj brand, we also have the palaces and safaris. To maintain a certain level of service, our ratios should not be compared with the others, because others do not have this kind of luxury that we offer in terms of a palace portfolio or a safari portfolio. That makes the Taj numbers look a bit larger, but that is really also needed because that kind of experience, those kind of rates that we charge are otherwise not possible. We were able to reduce our corporate overhead by 39%, and in this year, in the Q1, they are further down by 12% versus the Q1 of the year before. I think that has worked as the corporate overhead has continued decline, and it will decline further because we have a lot of new openings. Moving on to unlocking value in new brands and businesses. Ginger, reimagined Ginger has done very well for us. It achieved 60% of pre-COVID revenue even in Q1. You would recall last year, the full year, Ginger did 63%. That is off to a good start. We are more and more also doing food and beverage on our own, there is a 3x increase in the F&B revenue and a decline in EBITDA losses by almost 85%. The Tripadvisor rating for the Ginger brand is at 4.87 of five. We were able to sell the Ginger in Mysore, so we entered into sale and manage back very much in line with our strategy in becoming asset-light and going into a 50/50 managed versus owned or leased portfolio. Moving on further, as you see on this picture, this project is well underway, the flagship Ginger at Santa Cruz. The building there, which was the old flight kitchen building, has been demolished. The basement walls are on. This is something which is very exciting. We hope to finish this in an 18-month period, and we believe this will really make a big difference to the standing, the positioning, and the perception of the brand going forward. In terms of our home delivery business, Qmin, I am sure you're all intrigued to hear about it. This will be its first full fiscal year. Last year it had 8.5 months of a run. It was launched on the 25th of June. Today it is covered in 18 cities, 70 restaurants, and on 35 of our properties. Our enterprise revenue alone for Q1 on Qmin exceeded INR 30 crores. We have served 1.25 million customers till date. More than three lakh app downloads have happened. Very interesting, in seven or eight destinations outside of India, you can order through the Qmin App food for your family on various occasions, whether it's a festival or it's a birthday, or it's a wedding anniversary, et cetera, as our travel on the international level has been restricted. Going forward, I think it would also be nice to show you our first food truck, that Qmin Food Truck has already started operation. Launched on 25th of June to coincide with the launch of the home delivery the year before. What we are expecting now is around 8- 10 of these Qmin food trailers. Why trailers instead of trucks? We realized that trucks is not always easy in terms of permissions, the trailers, built and moored like the truck, are easy to park anywhere and they work in a similar fashion from inside, just like the truck would work. We are very excited. I think the first few deliveries are expected definitely before we do the next quarter call with you. Going forward, also on amã, our homestay business, which is also relatively young. We already have a portfolio of 44 bungalows, of which 30 are in operation in 11 destinations and five states. These bungalows, as and when they're allowed to operate, are always operating at almost 100% occupancy. They're in great destinations like the Chikmagalur area or the Munnar or Khandala, Lonavala. This is a picture of the latest one in Alibag, outside of Mumbai, the next one you see is our Planter's Estate in Munnar. Very excited. We are hoping to grow this brand exponentially, also over the next couple of years. I'm very excited to have this in our portfolio, especially during the times of the pandemic. In order to achieve all this, we have been still focused on our key enablers and how to keep strengthening them. One of those things which has been important for us is the employee vaccination drive. I would be happy to tell you that almost 100% of our employees have got the first dose of vaccine, those aged above 45 is more than 70% who have got both the doses. The total number of people who have got two vaccines is north of 30%, but we expect to get to 100 on that very soon, and as and when people are also eligible. We are also doing videos on responsibility, reliability, and resilience stories of our employees. We are celebrating them as our COVID warriors, and recognizing them in an appropriate way for the contribution some of them made in different hotels across the globe. Further, we have launched a four-pillar program of preventing, protecting, providing, and preserving all the help that we can give to all our stakeholders under the program of COVID Care. Our Meals to Smiles, which in the first phase we had delivered three million meals. In the second phase, we have again done 1.5 million. Until today, we were also serving meals, especially in the state of Maharashtra, which were badly impacted by flooding. All these meals in the second wave have actually been done under the Qmin branding. There is a reason for it, is that I think Qmin as a new brand, from its inception, must stand for its service and care to the community. I think that way, we are also able to get the name out and get the force behind it. Of course, we have also been still working, especially in the second wave on the quarantine facilities. You must have all read, some of our hotels were converted into temporary hospital facilities. We are still going ahead with our Taj for Family employee assistance program. These are employees of our contractors, who would have possibly lost a job. I always give an example. If a limousine company has a limousine service contract, and if they cannot afford to have drivers as the demand for limousine has dropped, then those drivers have been assisted by the Taj executives and staff by contributing their salary, which went into the Taj Public Service Welfare Trust. From there it was disbursed to almost 7,700 needy people across the country. At the same time, we have been driving the vaccination campaign. Not only it is important for the nation, not only it is important for the society, but it is definitely fundamental to the business of hospitality, travel, and tourism, and that's why we are very strongly advocating, "I am vaccinated, I am safe." At the same time, now you see the pictures of all those meals that have been delivered in the second phase of Meals to Smiles, and these are the pictures of some of the people who were recognized, some of our associates who were recognized under the COVID Warrior program, which I just alluded to. Moving forward, our financial performance. In short, before I hand over to my colleague, Giridhar Sanjeevi, our revenue increased by 111% compared to the same quarter last year. Our negative EBITDA declined by 47% from -INR 234 crores to -INR 123 crores at the consolidated level. When we look at the standalone, the revenues were up 93% and almost a similar kind of a decline at 44% on the negative EBITDA. With that, I hand over to Giridhar Sanjeevi. Thank you. Moving on. I think this is a snapshot of the financial performance. We had a turnover in standalone of INR 226 crores and INR 370 crores in consolidated, which is a doubling of the earlier quarter numbers in Q1 2017. EBITDA did come down at a consolidated level to INR 123 crores negative and a PAT of INR -277 crores. I think what is worth noting is that in the previous year, we did have an exception of INR 82 crores, which contributed to the income in the previous year. That is not there. On a like-for-like basis, we have improved from something like INR -360 crores to INR -277 crores. That is the snapshot of the performance. As we've always been mentioning, this year's Q1 has been like last year's Q2. In fact, it's been better than last year's Q2. Now as we see the performance trending in July, I think we believe that we will probably be one quarter ahead as we have been mentioning, and that gives us a reason for hope in terms of the entire recovery actually. This is a snapshot of the enterprise revenue. This is not consolidated. Enterprise revenue. The top box is the domestic hotels including Ginger, enterprise means includes the management contracts, the bottom box is the international hotels, once again, enterprise. If I just stick to the bar on the top right, I think what we are saying is that the light blue bar is the turnover last year, which is 15% of 2019/2020, the dark blue bar is the current year Q1, which is 38% of Q1 2019/2020. Similarly, at the bottom bar, on the international hotels, we grew from 7% of FY 2019-2020 to 37% of FY 2019-2020. Qualitatively, this international growth is very significant for us because these are dollar revenues, and it goes a long way in terms of reducing costs and cash losses internationally. To that extent, it's very nice to see the uptick in performance. Going to the next slide, I think we did speak earlier in the presentation about our performance being better than industry. Now we look at our own performance across the different cities in India. You can see for each of the key cities, there has been a significant uplift in the performance, whether it is Bombay or Goa or any of those states, whether business towns or the leisure cities, all of them have significantly performed better than last year Q1 actually. Moving to the next. I think international hotels as well, you see the similar trend in terms of the jump in performance, whether it is U.S. or U.K., which are important from our own consolidation perspective. If you see Dubai as well, fantastic performance, even though these are all managed contracts. Now, if I look at the consolidated performance trend, I think we have given the numbers on a month-on-month basis, and you can see how the numbers grew. May was obviously the difficult month with the peak of the pandemic, but we did end the quarter with INR 370 crores. EBITDA was INR -123 crores, as compared to INR 234 crores. In terms of PBT, we were at INR -315 crores, and PAT was INR -277 crores as compared to INR -280 crores. As I said, there was an INR 82 crore exception in the previous year, so therefore, the recovery is much better. Moving on. On the standalone, it mirrors the consolidated trend with a top line of INR 226 crores, with EBITDA of INR -78 crores, with a PBT of INR -220 crores and a PAT of INR -190 crores. Moving on. I think, as we kind of spoke about in earlier investor meetings as well, if you look at what are the key narratives on the revenue side. The revenue side, there are really three parts of it, which is the revenue recovery, the continuation of the asset light growth, and the growth of the new and reimagined businesses. I think on the asset light growth, we continue to do it. We expect to open 10 hotels this year. Our portfolio is 221 hotels now. Management fee is about INR 30 crores in Q1, and that recovery we see a smart recovery happening this year with the revenue recovery. Out of revenue recovery, our occupancy grew by 7%, that is 28.5%, which is a seven percentage point improvement. That is, the previous year was about 21% or so. The ADR recovery was 45% with a RevPAR recovery of 101% in standalone. I think that's very important in terms of seeing those numbers go up. In the new and reimagined businesses, I think Ginger has done well. Qmin, as was described earlier, I think we are growing rapidly there, and amã also at INR 44 crores. I think on the key revenue drivers, we continue to work in terms of driving the performance as we have always outlined in our previous meetings. If I go to the next slide, I think cost management to drive operating leverage has constantly been our focus. I think on a consolidated basis, our top line grew by 111% and the cost grew by 20%, mostly variable. Fixed cost, as was pointed out, was INR 126 crore, which is just a INR 3 crore increase from the previous year. We've kind of kept the fixed cost near constant. Standalone also we grew by INR 93 crore in top line with an expense increase of 18%. Corporate overheads went down by 12%. As we said, INR 54 crore as compared to INR 62 crore. Manpower rationalization through redeployment and right-skilling is a major initiative. 254 people have been redeployed till July 2021. Lease rental waivers were there this year as well. We were able to claim about INR 15 crore of lease rentals during the quarter, excluding what we claimed in the U.S.A. Cost management continues to be a key imperative. As far as the international hotels are concerned, significant improvement. Our top line grew from INR 18 crore to INR 57 crore in the U.S., resulting in a drop of EBITDA from -INR 42 crore to -INR 14 crore. Similarly, the U.K. business has also come back post the reopening, and that resulted in a lower EBITDA loss as well. Cost rationalization at The Pierre was very significant, as we've always said, in terms of manpower rationalization, lease renegotiation, and the surrender of the lease ballroom. The resultant permanent cost savings in the U.S. is actually more than approximately $5 million per annum, actually. Moving on, I think exceptional items are reducing. In fact, I think a couple of points to highlight is that the Fed derivative contract, which we refer to here, INR 6 crore of earnings. That will now disappear because we have repaid the derivative contracts and closed them, so you will not see that happening anymore again. South Africa, there is some small exchange which will keep happening because of the external loans, which is there. We did sell the Mysore property, INR 7 crore of profit, INR 15 crore of top line. We did not sell any residential flats this quarter. Lease rental concessions were about INR 15 crore. It is good to see that the exceptional items are reducing on a consolidated basis. Moving on. Standalone as well, you will see that the U.S. losses have come down from INR 42 crores to INR 13 crores. Cape Town loss only has been about INR 4 crore. Previous June, we did not have Cape Town consolidated, we had lease rental concession of INR 13 crores. Moving on. I think performance of key subsidiaries, we have spoken about the first two. That is the U.S. and the U.K. performance. Piem Hotels also recovered. Of course, it was also impacted during the pandemic. Roots Corporation did INR 30 crores than year EBITDA breakeven. In July, I think the recovery has been smarter, actually. CapEx focus. As we pointed out on our capital market day, we continue to be selectively focused on CapEx with Ginger, Santa Cruz, the Taj Mahal, Mansingh, the St. James' Court, and The Pierre Ballroom. I think all this is being carefully looked at. We expect to spend, in terms of cash outflows, maybe about INR 250 crores-INR 300 crores in terms of cash outflows by the end of the year. Only time will tell in terms of how the bills are received, at this point of time, we think about INR 250 crores-INR 300 crores will be the cash outflow. Go to the next slide, please. I think in terms of management of liquidity and borrowing, we continue to have cash outlines exceeding INR 1,000 crores at all points of time. Our borrowings, as I said, we have repaid our cross-currency swaps and no more exchange fluctuations. We maximized our FCNR of INR 144 crores at attractive interest rates. We have also replaced the, in July, the NCDs of 9.95% with much lower cost. Our unsecured borrowings, including unutilized, has been about INR 1,000 crores. The net debt position in standalone is about INR 2,600 crores and consolidated is INR 3,600 crores. That is the position. I think this is broadly the financials. I have a couple of slides which you can look at, which is really the tables which we normally present. That will be part of the presentation that we will upload in any case, so you can look at it. We are open for questions. Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question. We will pause for just a moment to allow everyone opportunity to signal for question. I would also request everyone to say their name and the company they belong to before asking a question. We take our first question. Please go ahead, caller. Your line is open. Yes. Thank you so much. Good evening to the management. This is Nihal Jham from Edelweiss. Three questions from my side. First, I just wanted to understand on the Q1 performance better. The expectation in general was that the quarter was progressing more like, as I said, Q2 of last year, somewhere similar to September or October. The performance in June has obviously been much better, and I think it exceeded what we achieved in October. Just to understand what components have led to this improved revival that we see in June? Is it mainly coming from, again, leisure travel? Which are the cities also? While you highlighted that in the slide, just a little more sense on the performance in June, if you could mention that. The other two questions, Nihal? I'll just mention that. Second question was on the international part given that they have completed their vaccination program and are progressing much better on recovery, I still see that the recovery for our international operations is similar to the Indian operations. The divergence there. Third was related to the analyst meet about the recognition of Qmin revenues. If I look at the business on an overall level, how is it that Qmin incrementally adds value? If I leave apart the part that if they are servicing or giving us revenues from our standalone entity where it is a restaurant which is a part of their own business. How is it that the revenues for Qmin get accounted? That's also something I just wanted to get a better picture of. Okay. Nihal, on the growth in June, obviously, the industry is still s eeing a lot more leisure travel versus business or corporate. I have to say that business and corporate has also picked up, especially in the mid-market or at the Ginger level. We saw a lot of growth and we saw a lot of staycation in the metros. Whatever growth you've seen in, let's say, Mumbai or Delhi, is driven by that. The key destinations remain for our portfolio, I would say all the resorts, especially Goa, Rajasthan, the Palaces, Rishikesh, Shimla, Coorg. A lot of this was also not open, so a lot of places were shut, and there are still restrictions in Mumbai for dining out till 4:00 P.M. I think the good news was June picked up, but I think more important is, as I said in the presentation, July has picked up much stronger and we are seeing a similar trend in August, at least for the first eight days. It is quite strong or even stronger than July. Maybe it is because of the long weekend that is coming from 13th-16th. The trend is positive and we are seeing business travel. I've seen that also on my own travel experience to the airports, that they look much more full than they looked before. Of course, there are certain caveats which don't help us, especially on our flight kitchen business like TajSATS, because for flights up to two hours, you're not allowed to service any meals. On the second question you had the international part and how is the recovery. You know that London was also shut for a large part of Q1. It only benefited from maybe the last 10 days of Q1 and so was Cape Town. Both Cape Town and London were shut. San Francisco and New York had opened. They performed better than our expectations. They both exceeded more than 40% in occupancy, but at a very good rate. Especially in New York, we are talking about rates which are the same or higher than pre-COVID level. The demand for suites is much larger at our property in Pierre. Dubai was very strong, but it is very normal that Dubai in the summer months it gets very hot and the performance drops for those months. Same is true for Maldives, and Sri Lanka is still struggling a bit. It'll take some time. Really on the international front, the recovery is really driven more by, I would say, U.S. and U.K. and Dubai. These are the three cities that remain very strong for us. On Qmin, the revenues are accounted in the properties themselves. Each of the properties pays a fee to Qmin that is participating, and that entity is housed at our corporate level. Unless, Giri, you want to add something on that? No, that is fine. I think INR 30 crores is what we said is the total revenue. I think some part of the revenue was actually the Meals to Smiles. I would say that where the 22% income comes to Indian Hotels Company. Maybe, Nihal, it will help you that INR 30 crores includes also Qmin meals done through ANUKA, which is a brand under TajSATS, which is flight kitchen business, and some of that is also done through Ginger, through Café et cetera. That's the brand of the Ginger Café. When we say INR 30 crores for Q1, it is the enterprise level. It's not all accounted for directly and at that level. We do expect this trend to continue, even if some of the other things were to slow down given that three months was INR 30 crores. For the full year, our enterprise revenue of anything north of INR 75 crores or even INR 200 crores is quite realistic. Sure, Mr. Chhatwal. This is helpful. I'll come back in the queue and maybe take on the Qmin part offline also. Thank you so much. Thank you. Thank you. We take our next question. Please go ahead, caller. Yeah, hi, sir. Suman here. With the rising COVID cases currently in U.S., do you think the business momentum is going to sustain? Yes. In which place, Suman? Your question is a little bit disturbing. Yeah. I'm talking about the U.S. that COVID cases are on the rising trend, and we have seen a significant improvement in this quarter, the Q1. Do you think in Q2 and Q3, maybe in short-term, three, four months, do you think there will be an impact of the business in U.S. market? Suman, difficult for us to say anything about the pandemic. All I can say is that we have all experienced, I'm sure everyone has seen that in the first wave, let's say India or U.S., but let's say India, we had 90,000 cases and we were shut for five months, and it took us five months to recover. In the second wave, we had 400,000 cases, and it took us five weeks to recover. Nobody knows the third wave and what's happening or not. Yes, people are getting used to living with this pandemic or COVID, and then moving on with life. With the exception of, I would say, a state in the south and one in Maharashtra where we are based, almost everything has more or less opened up. With certain restrictions here or there in the number of people in wedding or events. More or less, it has opened up, and we are still at almost 40,000 cases on an average for the last week. That's all we can say. If that is a trend, things will stay open, especially because of our presence in the U.S., because your initial question was U.S.-focused, is in New York and San Francisco. We think that cities like those will be far more resilient than the suburbs. The secondary and tertiary markets also within U.S. I think I'll just add to that, which is to say that in the U.S., the pandemic is one of the unvaccinated. If you see so far, the demand has been domestic. Countries like the U.S. will open up international travel for those who are fully vaccinated. Which means what we see is that while there is a pandemic, it's in pin codes in terms of unvaccinated. If international travel comes, that should help compensate as well, actually. I think that's where the world is moving to in terms of allowing fully vaccinated people to travel. Sir, can you talk about the business guests in key business destination hotels? How the mix is changing? Are the key big clients traveling to our hotel, staying in our hotels? Business leisure. I think if you're talking about the mix, I think leisure business directly was the big area in Q1. In the city hotels, we saw staycations happen, actually. We did see recovery in the cities based on staycations, and leisure destinations did well. I'm talking about our big clients started traveling. Overall, how is the mix in the business destination? Business destinations is still largely you have seen one chart in the slide, which talks about the city-wide performance, and that is something that we had put up a city-wide jump for all the key cities, actually. Which we have put. If you talk of the leisure, non-leisure, I think what I will say is that in Q1, our occupancy did go up by 18.9%, and in non-leisure, it went up by 29.3%, actually, on the occupancy side. On the rate side, there was a significant jump. The leisure ARR actually increased to INR 9,695 from INR 5,200. We'll give you these numbers offline. I think we can always talk offline on this. Non-leisure also improved up to INR 4,500 crores from INR 3,300 crores. There was a jump both in terms of leisure and non-leisure occupancies and the ARR. We can talk offline, Suman, in terms of specific numbers. I agree. I'm asking how is the business travel in the key cities and how is the mix of guests? Say, staycation is 6%, and our key client of, say, HP or Infosys is traveling and over the month it has increased or over the quarter it has increased. I'm talking about that. I think it's evolving. I think the fully vaccinated people, slowly business travel is beginning. I think it will take some time before the business travel goes back. I think it's gradually picking up, is what I would say. Thank you. Thank you. We take our next question. Please go ahead. My question has been answered. Thank you. Thank you. We move to our next question. Please go ahead, caller. Your line is open. This is Vikas from Antique. I have a couple of questions. First, just sorry for harping back on the data around U.S. and U.K. Clearly, our revenue this quarter is down 65% compared to pre-COVID. We used to do a run rate of INR 1,000 crores. Now this quarter, we did around INR 350 crores. Obviously for all the reasons related to lockdown and wave 2 and all. What are the learnings? Maybe the data we are getting from U.S. and U.K. especially, there things are opening up, although there has been a third wave, but the mortality there is very low. Maybe first, if you can share maybe for U.S., where do we stand in terms of revenue compared to pre-COVID? What are the learnings? Maybe if we say that in India, the third wave didn't come. How should we look about modeling the revenues going forward? I think if I talk about U.S. very clearly, there were always two parts to the U.S. recovery, Vikas. One was, of course, the banquet revenue, which always constituted around INR 30 million or so in a pre-pandemic year on a total top line of INR 80 million or so. This year, of course, the banquet opening may not happen because of the renovations which are there. That's a good decision also because banquets, without adequate level of business, we will lose money. Hence, I think more than 99% we will not open the banquet property. That INR 30 million will not be there because of a decision that we are taking and the renovations that are happening. Now that leaves, what is the non-banquet business revenue. If you take the peak pre-pandemic revenue at around INR 80 million and INR 30 million is banquet, a total of INR 50 million. I think my own sense is that given the recovery, my own sense is that the business should come back to 50%+ in terms of occupancies very quickly, actually. Hence, I won't be surprised if U.S. ends up having a top line exceeding $30 million-$35 million. I think that's the kind of range that we are thinking about on the U.S. front actually. Similarly, on the U.K. as well, the run rate is now GBP 1 million a month actually, and that should only improve. My sense is again, on the U.K., I think we did what? Before it was 19. Yeah, the Q1. We did INR 112 crore. No, INR 24 crore. Yeah. INR 24 crore so far. Yeah. So far. Yeah, that's right. I think with the 1 million GBP kind of recovery happening now, I think my sense is that U.S., U.K. has always been something like a 40 million GBP market. The question for us is that will we achieve something like 20 million GBP this year? I think we will see how it goes. We will see how it goes, actually. Vikas, I will add, I think we are beginning to see a lot of pickup in London. Now, pickup doesn't mean you cannot get cancellations if things were to go bad. If I look at just the trend of the last one week, the pickup for us in Buckingham Gate and St. James' Court as well as at The Pierre It stands out because we don't go through every hotel. When we get our reports on a daily basis, we get the top five, the top ten on cancellations on this. London is beginning to feature constantly on it. Yeah. This whole amber, the color code change to countries also will help in terms of travel happening. Does that answer your question, Vikas? Yes. It does. Secondly, the question is to Girish, sir. This quarter, the employee cost increased by INR 41 crores. Sequentially, obviously, the revenues are down maybe around 45% Q on Q, but employee costs went up by around 4%, 5%. If you can explain that. That's about it. Thanks a lot. Yeah. No, the employee cost went up because I think last year we had the benefit of the salary reduction which happened, the payroll cuts which happened. This year we have not implemented a payroll cut in India. I think that's been the one fundamental reason, actually. Of course, the subsidies. Of course, the subsidies actually, because the subsidies are now reducing in places like the U.K. Therefore, taken both together, I think gives us the 4% or 5% increase in employee cost actually. Thank you. Did you get that, Vikas? Yes, sir. Thank you. Bye. There was a significant contribution last year from the subsidies for under the furlough scheme of the government in the Western Hemisphere, which is gone. Actually, we have become more efficient as we showed, both on the corporate overhead as well as on the properties, because these figures are not diluted through any subsidies anymore. Largely it's on the employee front, they have taken out subsidies or because they have given you other subsidies as well during the lockdowns and all? No other subsidies. Subsidies was mainly on the employee front. You get those in that part of the world because you have your unemployment insurance. It's better to give subsidy than to have so many people unemployed. That's the kind of practice Europe has followed and also U.S. was very generous, I think, in terms of distributing checks to the employees directly, but also to businesses. Right. Those have fallen away. Property tax also. Thank you. We move to our next question. Please go ahead, caller. Your line is open. Please go ahead, caller. Your line is now open. Can you hear me? This is Amit Agarwal from Edelweiss. My first question is if you can give some idea on the cash flow from operations less interest and tax for the quarter, and how was it compared to last year and last quarter? Secondly, just a question on the fact that most of the growth which I've seen in June, July, including the sharp increase in ARRs, including the business cities like Bombay, et cetera, the ARRs seem to be somewhere near January, February levels. In the longer term, given the fact, of course, if COVID goes away, then of course we're back on track, but if it doesn't, do you expect this to be sustainable? One thing, is revenge tourism sustainable in a bit of a longer term? Cash flows and revenge tourism, these are the two questions. Thank you. Let me answer the second part and then we gather the figures on the cash flow. I think you've rightly pointed out we are seeing a significant increase in the metros in terms of average rates. They've actually almost doubled coming from a very low base. That is positive. We expect this trend to continue. I see no reason, unless there is another complete lockdown where you cannot move, that the rates should go back. This is a pattern of behavior in the industry for several decades, that first the occupancy comes back and then the rate follows. When you get into a downturn, first also the occupancy drops and then the rates drop in panic. I think the industry has done quite well. Actually, it would be fair to say that almost all our leisure destinations are outperforming their pre-COVID level numbers. Almost all of those that were there, they are doing better than they did in pre-COVID on the RevPAR level. F&B still is subdued in most of the places. Wherever we are open, for example, as we said, Goa is doing better than it did in pre-COVID at the same date and the same month in the period before COVID. That also showed in the slide that I showed that we saw a 1,000% increase versus what the market saw. We think this trend is there to stay and there will be no change on this in the short term. In the mid and long term, things will change. Girish, you want to answer on cash flow? Yeah. I will answer on cash flow. I think what has happened is that between CapEx, dividend, and interest, it is approximately INR 150 crores. On the operating cash losses, it has been about INR 185 crores or so. Net between the two, it is about INR 330 crores, and that would reconcile with your increase in net debt as well. INR 3,100 crores was the net debt in the month of March. That went up to INR 3,600 crores. INR 350 crores, the difference of INR 150 crores is the derivative payment actually. That is broadly it in terms of the way the cash flows are moving. Sure. This last question. This quarter I presume that you would be at least cash flow positive looking at the way things are right now, July, August. What do you think? That's what we believe. I think this quarter should be good in terms of cash flows. The cash burn should effectively disappear, is what we believe actually. Yes. We don't have any major repayments also coming. Yeah. Thanks. That's all from my side. Thank you. Thank you. We take our next question. Please go ahead caller, your line is open. Thanks for the opportunity. This is Amandeep Singh from Ambit Capital. I have two questions. Firstly, sir you mentioned about reducing staff to room ratio now to around 1.09 versus say 1.53x in March 2020 on overall IHCL level. Why do you believe that a part of this cost control initiative would be sustainable? Can you help us understand what could be the stable ratio once the business reaches normalized levels given the type of service and experience that IHCL provides? Secondly, my second question is on the supply side. We have seen large hotel chains and even industry reports talking about permanent reduction in supply over and above near-term deferment in supply. In that context, can you help us understand your thoughts on the same? Also if any of your managed hotel partners are temporary or a permanent closure amid liquidity issues. Thank you. Okay. Let me start with the last one first. We at this point in the call today, we are not aware of any partner where we have a temporary or a permanent closure. We have one closure in Bhutan, but that is more mandatory as by that government and the law. Sometimes such certain things are seasonal, but it is not because of any kind of financial distress or any such thing. The second question is on staff to room ratio. We are very confident of maintaining these as business comes back. You are aware, and we have also communicated that we have not taken out any permanent staff in our hotels. We have carried everyone with us, and that is in line with the philosophy of our founder. We don't take such short-term decisions, and that too during a pandemic. On the contrary, as we presented, we have supported with north of INR 20 crores collected from our executives and our staff in a fund which we call Taj for Family, by providing people a financial help, those who were indirectly associated with us or had some kind of a contractual relationship and were not able to make money. On the supply side, yes, when the market goes through what it has gone through, the likelihood that some form of balance comes in demand and supply is a very normal consequence or outcome of the situation. A lot of projects might get delayed and may not get built as fast as we thought they would. This I am talking about the industry part of it and not specifically to us. This would be very normal that projects would get delayed, fundings would get delayed with the banks. There will be construction delays when your migrant workers go away, your site is empty. If you have lockdowns, there is anyway a delay built in because you're not allowed to work on site. We had that delay also in our hotel that we are building ourselves, the flagship Ginger in Santa Cruz. Certain hotels, as you have read, would also have a permanent closure. They don't have to be necessarily big names or big brands. There will be a kind of an erosion in supply. To what extent? We will get to know in another six to eight months' time, after your ECLGS, Emergency Credit Line Guarantee Scheme, and the moratoriums which were offered. Once they are gone, then we have to see how many of those businesses can still stand on their own feet. A rebalance of demand and supply will happen, whether the demand increases more or the supply decreases, and that's why demand increases, that some rebalance in some form will happen. In fact, it is happening as we speak. Thank you, and all the very best. That's all from me. Thank you. We take our next question. Please go ahead, caller. Yeah. Hi. Am I audible? Yes, you are. Hi Giri. Hi Puneet. This is Achal from HSBC. I have three questions, if I may. First of all, on the expense side, you explained about the rise in employee cost quarter on quarter sequentially, there was a INR 62 crore decline in other costs, quarter on quarter. What is going there? On the same line, how should we expect the employee cost and the other cost going into the next quarter? That is my first question. Secondly, you just talked about the closures and on all those sort of things. What is your expectation in terms of capacity? Do you think more and more hotels going down, that will create an opportunity for you to grab more assets on the right price? That also means that you might not succeed in asset monetization with your plans. That is my second question. My third question is that, what sort of booking trend are you seeing at the moment? Recently, I actually did my channel check, and I found that many of the leisure passengers, leisure traffic, are actually booking for the longer duration now. If somebody is going, previously they used to go for two nights and three nights, and all. Now they are taking sort of packages which are probably more and more comfortable, probably six nights, seven nights, and all. Are you seeing any changes in the leisure stay in terms of the kind of duration of stay and the booking trend? Thank you. I think the reduction in cost, Achal, was more variable cost actually which is stores and some of the other variable costs actually. That really depends on the level of activity in the hotels, Achal, actually. That is number one. The other question you had was on asset monetization. I think we should now see asset monetizations getting kickstarted again because the pricing has definitely improved. While we are not talking about those numbers, and now I think we will kickstart that to sort of help actually. Absolutely. To add to what Giri just mentioned is also the price correction is happening because of the fear of inflation. Now it would make sense to monetize on assets. We don't want to monetize on 30%, 40%, 50% of replacement value. Yes. I think it gets more interesting now. On the third one, which is the booking trend. The booking trend in the month of July has been positive, and also the first eight days of August is very positive. We are trending at the moment ahead of July for the month of August. The booking window has become shorter, so it is difficult to say what will happen in September, October, whether this trend continues. On your second part of the question was people are staying longer. That is absolutely right. Especially also because the mode of travel might have changed to by road. Nobody's going to go and stay for two nights and keep driving for two days, one day to go, one day to come back. Obviously that has become longer. People are combining business and leisure, whether you call it leisure or bizcation. That's just a kind of a vocabulary thing. Yes, this trend is because of digital meetings is happening more than it happened in the pre-COVID level. The length of stay has increased, and also some of the demand in the domestic leisure, especially in the high-paying segment, is being driven by the 25 million people who used to travel outside of India, have recently started traveling again as some countries like Switzerland, et cetera, opened up. It's still complicated. Still you have to have had two vaccines. That is an important source of business on the leisure front definitely in the current year. Perfect. Thank you. Sir, sorry, last question. On the Capital Markets Day, you mentioned that you will update on the capital restructuring plan during the Q1 results. Is there any update to share at the moment or is it slightly still early? I think I can say that we were waiting for the second wave of pandemic to sort of kind of end. Today we did discuss at the board. I think the board has now asked us to proceed in terms of discussions. Now I think in the next two, three weeks, hopefully we should have a proper board meeting. You wait for us to announce. Fundamentally today, there was a full alignment in terms of doing that capital raise. I think now the next few weeks we'll just work through the quantums and ask for a separate board meeting. That's what we will do. Perfect. Thank you so much and good luck. Yeah. Thank you. We take our next question. Please go ahead, caller. Hi. Puneet, Giri. Shalin this side from UBS. Hi, Shalin. Hi. Most of my questions are already answered. Just maybe a bit on recovery. How would you compare this July versus a normal July? Any color? Green. It's not amber, it's green. See, Shalin, we are not having certain things like events are not happening, weddings are restricted in numbers. There is no international travel at all. If you look at it that way, it is definitely even dark green. Okay. If your potential is only to do 70% of the possible business, the question is how much are you doing out of it? Yeah. You're doing most of it. Yes. Giri, again, many participants have asked this question, but just to help us model this. Your employee cost was INR 250 crore ballpark this quarter. Let's say you hit a full quarter of INR 1,200 crore revenue, then how should we build this employee cost going forward? Obviously, there's some variable in it. Should it go to INR 300, INR 350, INR 400? Like any ballpark range can you help us with? Can we take this offline in terms of talking about the specific model-related questions? Can we do that, Shalin? Sure. Is that okay with you? Yeah. Absolutely. Yeah. Thank you so much. That's it from my side. Thank you. We take our next question. Please go ahead, caller. Hi, sir. This is Deepika from J.P. Morgan. Thanks for the opportunity. Just a couple of things from my side. At what kind of occupancy, given the current environment, do you see rates going back to pre-COVID levels? I think, Deepika, it's a function of location and the market that you are in. It's not any more a function of occupancy levels. If you can travel easy. Say I'm going to Bangalore tomorrow. I have double vaccine, but I still have to get a RTPCR test done, which I got done because I have to go. If somebody has a choice, they'll say, "Okay, let me avoid this and let's go somewhere else." There are a lot of implications, and then comes the whole issue of leisure versus business. Now, if the family wants to go to the hills or they want to go to a beach, then you are going there. It's going to happen. Whereas if I have to do certain travels to certain metros, I can put them in a different list of priority depending on the ease of travel and the urgency of it. During this pandemic, the benchmark is not at what level of occupancy the rates come. As I said, there are certain markets and a significant number of hotels that we have, almost more than 40 hotels in our system did in July better than they did in July pre-COVID. In terms of ARRs? In terms of both ARR and occupancy. ARR only comes if occupancy level goes higher than 65%, 70%. Otherwise, the ARR recovery is not as fast as it should be. Right? Got you. Your benchmark would be higher in most of the like for like assets, which are specially driven by leisure. Okay. Secondly, given the fact that you're expecting large events, et cetera, to take longer to recover, is there a more change in strategy in terms of utilizing the assets in a different way to be able to capture some of that lost revenue? For sure. Some of these initiatives like Qmin are born out of that. That revenue, that how you sweat your assets, how you utilize the kitchens that were empty, how you utilize the staff which is there, so the chefs, the cooks, et cetera. This is how Qmin was born. This is how the homestay has been working with the same staffing. So the homestays are usually close to another property that we are running. So it's the same people. It's not additional or incremental staffing on it. Of course, you cannot suddenly convert large banquet halls into warehouses or something like that. That part is missing, but to the extent possible and to the extent practical and to the extent it's a fit with the brand and the location and is a sound financial decision, such decisions we take every day. Got it. Just the last thing, given that you're expecting to turn cash flow positive pretty soon, should we expect debt to start reducing from these levels by year-end? I think as Giri mentioned, there are other discussions which we have in terms of restructuring that are going on. Yes, I would say it is a fair expectation to have that we will need to do something. We were unsure, and that's why we could not give any guidance because the magnitude of second wave was such that got us all a bit on the defensive. The recovery post second wave has come faster. We are concerned about the third wave, whether it comes or it doesn't come. I think the good thing is that experience is showing that even if there was a third wave, the rebound will not take as long as it took when the pandemic started. We are considering various options and will be in a position to communicate something very soon. Okay, sir. Thank you so much, and all the best. Thank you. Once again, ladies and gentlemen, that's star one to ask a question. We take our next question. Please go ahead, caller. Hello. Hi, this is Gaurav. I'm an individual investor. Yes, Gaurav. I just had one observation to make in terms of customer experience at the Taj properties. The Taj Experiences card apparently can't be burned or redeemed for a lot of new features that you have, like Qmin or amã Stay. I'm not sure if this can be used at Ginger. Is there any idea behind introducing the Taj Experiences card for all these other, like Khazana? I don't think we can burn this at Khazana. Is there any plan for that? I think you make a good suggestion, whether we use experience card or something else, maybe we should consider doing one card across all verticals so you can use it anywhere. I think we've been discussing that, but on a different platform, on the loyalty platform. Thank you, Gaurav, for the suggestion, and we will very seriously consider and execute without delay. Thank you. Thank you. Can we have the last couple of questions? Thank you. Can we have the last couple of questions, please? Thank you. It appears there are no further questions at this time, but as a final reminder, ladies and gentlemen, that's star one to ask a question. There are no additional questions at this time. I would like to turn the call back to our host for any additional or closing remarks. Well, thank you everyone for joining the call. We appreciate your engagement and support and also the questions that you raised. We look forward to our next interaction after the Q2. Thank you very much and have a very good evening. Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.