Ladies and gentlemen, good day, and welcome to The Indian Hotels Company Limited earnings conference call for Q1 FY 2023-2024. On the call we have with us Mr. Puneet Chhatwal, Managing Director and CEO, IHCL, and Mr. Giridhar Sanjeevi, EVP and CFO, IHCL. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the management commentary. Should you need assistance during this conference, please signal an operator by pressing star and then 0 on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Puneet Chhatwal. Thank you, and over to you, sir. Good evening, everyone, thank you for joining our global conference call for Q1 2023, 2024. To begin with, we are extremely delighted to inform you that Taj has once again been recognized as India's strongest brand across all sectors for the third time by Brand Finance in last four years. This achievement is a testament to our commitment to excellence, customer centricity, and innovation. We are grateful to all our patrons and our colleagues who have made this possible. Also, Rambagh Palace, Jaipur, has been rated by Tripadvisor as the world's number one hotel in the 2023 Travelers' Choice Awards. On this call, I would like to just present to you seven key takeaways from the quarter that has gone by. Let me start with the macro on the India story being the number one. As you all must have read, IMF has recently raised India's growth forecast from 5.9%- 6.1%, citing robust growth, driven by domestic investment. India's per capita GDP is expected to more than double in the next 10 years, leading to a surge in disposable income, driving higher discretionary spends, which will directly benefit the travel and tourism sector. Government's focus on developing infrastructure and destinations in mission mode is yet another key positive for our industry. With more than 80 new airports expected in the next five years, connectivity and thus tourism is bound to significantly improve. Hospitality upcycle continues, with hotel demand growth continuing to outpace supply. We believe that this is a trend that is going to stay with us at least for a few more years. Indian Hotels, with industry-leading growth, profitability, balance sheet strength, and brandscape, is well positioned to benefit from the macro and industry tailwinds. On the number two takeaway, Indian Hotels delivers best-ever Q1. We are very pleased to share that our record performance has continued in Q1, making this the fifth consecutive quarter of best-ever performance for IHCL. Our consolidated revenue grew 17% year-on-year to INR 1,516 crore. I mean, we always report as a listed company, our consolidated. We don't report like other global majors, system-wide or what you call enterprise revenue. If we had to say that, then the growth would be north of 20%. EBITDA grew 13% year-on-year to INR 459 crore, yielding EBITDA margin of 30.3%. More importantly, our PAT grew by 31% to INR 222 crore. We delivered robust performance across all our brands and demonstrated RevPAR growth year-on-year across our brands in 15%-16% range. The third key takeaway for us is our portfolio growth. Our growth momentum continued during the quarter. In Q1 2023, 2024, we signed 11 new hotels and opened 5 new hotels. Of the 11 hotels signed, almost seven are conversions or brownfields, so that you can expect these to open within a period of maximum of 24 months. Our endeavor to maintain this pace, as well as the guidance that we have given of opening 20+ hotels in this financial year, 2023, 2024, stays as communicated in the past during our capital market day. We continue to envelop India and are present in 125+ locations across 31 states and union territories. Our diverse brandscape enables us to be present in every geography, in every segment, and at every price point, thus giving us greater degrees of freedom as well as resilience. The fourth point that I want to take up, one of the favorites of my colleague, Giridhar Sanjeevi, CFO, is the diversification of top line. With our new brands and businesses, as well as our asset-light growth, we have embarked on a journey of diversification of top line. Our asset-light businesses have doubled in top line from pre-COVID times, and we remain focused on scaling up the new brands. TajSATS has been a great success story for us. The company has recorded its best-ever Q1 performance, with revenues of INR 205 crores and industry-leading EBITDA margin of close to 25%, which comes on the back of 10 percentage point margin expansion over the last year. With 59% market share, TajSATS continues to lead the Indian airline catering segment, which we also call Hospitality in the Skies. Our Qmin and Ama brands have established a stronger customer connect and continue to scale up. As communicated on various occasions in the past, this year we are going to put a lot of emphasis in scaling up these businesses, and we expect that trend to continue over the next year also. Ginger's enterprise revenue crossed INR 100 crores in Q1, this is also the first time, and the lean luxe journey of Ginger is yielding results. With a proven and profitable business model, Ginger is very well geared to scale up at a fast pace. We maintain our guidance of opening the flagship Ginger in Santa Cruz, in this calendar year. The expectation is anywhere between 1st October- 1st of November, depending on how long the rains and the monsoon period lasts, and we are very much looking forward to opening this property for our portfolio. Number five is our investment in our brands, assets, and capabilities. In line with our objective of long-term value creation for all stakeholders, as I just now said, we continue to invest in our brands, assets and capabilities. To aid the Lean Luxe journey of Ginger, we are investing in the renovation of seven hotels, which will take the Lean Luxe portfolio to 70% from the total portfolio by the end of this financial year. We have launched J Wellness Circle, which used to be previously called Jiva, as our holistic wellness brand. The reimagined value proposition aims to capitalize on the wellness mega trend. We have also reimagined and scaled up our food and beverage brands. Examples include House of Ming in St. James Court in London, Rick's in Taj Mahal Hotel, New Delhi. We are also reimagining our Taj Club proposition. In addition to brand building, we continue to invest in our assets, which will result in not like-for-like growth. We have multiple hotels coming back online post renovations, including Taj Mahal, New Delhi, which has been fully renovated or let's say, 95% renovated, a part of the facade and one outlet is left. This is also happened actually in early May. April, it was not the case, which we got the rooms inventory back in the month of May. We would have fully renovated Taj Usha Kiran Palace in Gwalior, which will formally open in the second half of this year. As I already mentioned, the Ginger Hotel at Mumbai, Santa Cruz, will open also in the third quarter of this financial year, and we are taking various asset management initiatives in Taj Lands End, in Taj West End, which will further augment the not like-for-like revenues. Our new spa in Lands End, with another pool, and at the roof, should open within the next one week, and the new The Chambers as a heritage block, will open in Taj West End. Our food and beverage brand, Loya, will open its second destination also in Taj West End in the next 3-4 weeks. All this should further augment the not like-for-like revenues. Simultaneously, we continue to build capabilities. I said brands, assets, and capabilities. Simultaneously, we build capabilities to drive direct-to-customer business. Tata Neu has now become a strong pillar when it comes to customer loyalty, with total member base of 4.6 million and 3x growth in active members since the program went live in April 2022. Our direct-to-customer contribution stood at a healthy 70% in Q1 2023-2024. I come to point six, or the sixth key takeaway that we have had to inform because of the LODR, is the Pamodzi and Frankfurt transactions. I would like to highlight here that we have not signed or acquired either any asset or signed a contract for a lease. Under the new obligations, which have come into force since 15th of July, a in-principle agreement with at the board level makes it mandatory on us to declare, and that's a declaration we have given. We will advise as and when we would be finalizing these deals and if they at all get finalized. Yes, it's the preliminary step towards getting this done. I would like to highlight that Pamodzi is a hotel that is managed by us for almost four decades, and we know and understand the P&L and the value proposition of this hotel quite well. Paathya, our ESG plus program, recently completed one year, and we have achieved significant milestones so far. With our core ethos of doing business the responsible way, we are on track to deliver our 2030 ESG targets. We continue to stay focused on executing our R1 2025 strategy. Thank you so much for your attention, and we now open the floor for questions. Thank you very much. We will 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. The first question is from the line of Sumanth Kumar from Motilal Oswal. Please go ahead. Yeah. Hi, sir. In Q1, occupancy is 74.7%, it seems, we are in the peak season, and we have seen in the past, pre-pandemic, 74-75% occupancy always comes in the Q3 and Q4. Can you talk about the kind of demand momentum we have in the current quarter and the coming quarter? What is the level of occupancy we can see in Q3 and Q4? Suman, good evening. Thank you. I think we are seeing very good momentum, including in the month of July till date. I would not like to make what occupancy level we will reach. All I can say is in light of the demand outpacing supply, which was one of the key takeaway I mentioned, and further demand boosting factors like G20, like B20, like Miss World Beauty contests, like Cricket World Cup, and the expectation in general of the tourism sector, that the international inbound arrivals will start slowly getting closer to the pre-COVID level. You know, it's been far behind that level. As of October and November, we do believe that occupancy should stay stable, and the rates should not only hold, actually even increase further in the months that will come. As you yourself said, that this kind of figures we were used to more in Q3, I think there is a general change in the hospitality landscape, in the thinking also of the travelers, and India slowly becoming more a 365-day destination than a destination from October to March. That was the traditional way of looking at it. Okay. Now, coming to other expense side, it has increased significantly. Can you talk about when we compare to Q4 or maybe the previous year same quarter, what are the key changes? What are the key cost component we have seen a higher increase? Is this momentum is going to be there for the coming quarter also, the other expense side and also employee cost side? Any other exceptional item also in this other expense? Suman, as we said during the capital market day, when people wanted us to, the questions that came were asked always on the guidance on the margin. I would like to go back to that and said, the management said we rather increase the top line and have a 33% under Ahvaan 2025 of a larger top line, and having increased the top line on an enterprise level, as I mentioned, to north of 20, because, you know, our management fee business is rapidly scaling up, but not all of that benefit comes when we report consolidated. At the same time, we are also on a consolidated basis, seeing a 17% increase in revenue and getting us cross INR 1,500 crores of consolidated revenue in first quarter, which never happened in the history. Already last year was the highest. This year has even beaten that by 17%. I think we are in a very good space and, with all the factors that I mentioned before, unless there is a black swan event, anything that is beyond the reasonable control of the sector of Indian hotels, we don't see any reason why this buoyancy should change. Okay. Thank you so much, sir. Thank you. We have the next question from the line of Prateek Kumar from Jefferies. Please go ahead. Yeah. Good evening, sir. The first question, pricing. As we know that the occupancy was like stable-. The line for you is not very clear. We are unable to hear you clearly, sir. Can you hear me now? Yes, this is much better. Please go ahead. Question was, occupancies during this quarter, both at domestic enterprise level as well as standalone level, as we see, are like, largely stable and very strong. The pricing, for the reasons of seasonality, probably has slipped by 20%-25%. Why? I mean, while we understand the seasonality is both in occupancy and pricing, but normally this is because the occupancies have remained stable, why should the pricing drop by such a sharp number on a Q&Q basis? I think you are looking sequential and not comparing the same quarter last year. If you were to compare the same quarter last year, there is a double-digit growth in average room rate. The stronger brands in our portfolio have up to 15%, 16%. Room revenue has definitely increased. The total room revenue has increased by 15%-16%, and it's largely driven by average room rate. If you compare Q4 with Q1, that's or Q3 with Q1, that will not work because the pricing power is the highest in Q3, second highest in Q4, and third highest in Q1. Although this year it is quite possible that Q2 would also be very buoyant because of these one-off events, which start peaking in the month of, you know, middle of August to going till into September. I think we should not compare Q3 or Q4 with the Q1 and Q2. We should only compare Q1 with Q1 of last year. If I looked at the Taj, the average rate increase versus Q1 of last year is 10%. The average rate increase in SeleQtions and Vivanta combined is 17%. The RevPAR increase in all these three major brands is or all four, is 15%-16%. 15% for Taj, 16% for SeleQtions and Vivanta, and 15% for Ginger. Right. That, I understand, sir, but, just my question was, like, because so it's being used by industry to induce demand, if that's the case? If the demand is otherwise remaining stable, why should the... I mean, again, this is a Q-on-Q comparison. Prateek, it's the channel. What kind of business you are getting? The different quality of business that comes in the month of November and December, it is much higher paying, whether it's because of Christmas, or it is because of New Year, or it is because of some special weddings. Because that's the time you have those, especially on the Hindu calendar, the dates for the weddings. That's a very different level of business, whether it's for us or it's for buying jewelry or it's for other disposable income or consumption, I would call it, in general, is a very different level. This year, some of those dates have been missing in the first quarter. All right. That makes sense. Just a follow-up question on like, as you call it, slightly higher than double digit, or double digit kind of growth- Prateek, we are losing you again. Well, I don't know. It's not coming clear, your voice. Is it better? Yeah, go ahead. I was asking in the analyst day, we talked about a double-digit kind of RevPAR growth for FY 2024, maybe a low double-digit. Would we maintain that in terms of expectation for FY 2024? Yeah. Yeah, Girish. No, I think so, because if you see what we have always guided, is that in the month of as we guided in the capital market day, the RevPAR increase in this quarter has been about 11%. If you see what happens in Q2, we have the G20 starting in September, so we expect Q2 also to show good performance. Thereafter, we have the G20, the World Cup and all of those coming through. Historically, we've always seen between Q2 to Q3, there's been about a 30% increase in terms of how the RevPAR moves. I don't see a reason why the rates should not go up. I think it is totally possible that the RevPAR growth will be about, will be a double-digit growth actually. Also important for us, Prateek, is we are a high growth company today. When hotels open, then you don't achieve the same amount of RevPAR as you have with stabilized properties. We have opened five hotels now. Last year, we opened 13. We expect to open 20. As a high growth company, it will dilute a bit. You have to look at it as a like for like, and a not like for like growth. Maybe we will also, as of next time, start giving. I think we have it on the presentation. You can see on the like for like. 12%. is 12%. Yeah. Which proves, which is slide number 54, I think. Yes. on the presentation. You can take figures from there, which is higher than the reported RevPAR growth. It serves as proof of what I just now said. All right. My last question on your other costs as a percentage of revenue. In your presentation, you have highlighted, two-third of increases is variable, and, you mentioned few items like licenses, storage, and supplies, and that number as a percentage has gone from 26.9%- 28.5% on a year-on-year basis. Anything here? I mean, just to understand this better, percentage increase, why is this inflation particularly seen here? You know, some is inflation, but some is again in line with guidance with our Capital Market Day. We are doing more marketing activities, especially with new businesses, both on the, you know, on the personnel side, we have created a new team for new businesses, and we will be aggressively marketing these businesses going forward. We have started with that already. Now, I think it's the right thing to do. That's what we said in Capital Market Day, is we have to look at these businesses in three years from now, five years from now, and maybe 10 years from now, what is the potential? As you have all seen yourself, look at the journey of Ginger, where it was and where it is now, and where it is going with the opening of just, let's say, just one set of cruises going to change a lot. Continuous investment in these new businesses is important. Then we said humanization of Ginger, which means every Ginger will slowly get all-day dining, and we're already at a score of 20 all-day dining, which is called human. That these brands, they complement each other. A lot of those costs, whether we renovate or we do, is not all capital expense, it's also other expenses, repairs and maintenance expense. Whether you are painting a wall, you cannot capitalize the paint, right? There are such examples where we think it's the right thing to do and it's the right time to do, so that we are very well positioned from a hardware, software, and people wear perspective, to take these brands, scale up these brands to the next level. Sure, sir. These are my questions. Thank you. Thank you. The next question is from the line of Achal Kumar from HSBC. Please go ahead. Yeah, hi. Thanks for taking my question, gentlemen. My first question is about the industry supply growth of 6.7%. I think as we discussed on the Capital Market Day, I'm not sure if it is possible for you to sort of break it into the greenfield, brownfield and the conversion. Also, I'm not too sure if you can please break it into the further category, why, like, you know, what was the growth in super luxury category, luxury category extra? That's my first question, please. Achal, we'll have to call some industry consulting specialists, because they track the industry-wide data. We can only give you from our own perspective on how our pipeline looks like. For example, as I just said in my opening remarks, that out of the 11 contracts signed in the first quarter, seven would definitely open within the next two years. Then I can tell you under which brands they would open. It's very difficult. We don't track the entire sector. All I can say to you is what I've heard from some of these big consulting groups, specialists specializing in hospitality, is 50% of the pipeline is not in the top 10 hotel cities for India, or top 10 metros of India, which are important for the hotel sector. A lot of this supply is coming from Tier 2 and Tier 3 cities. If you have the number, this statement was made today to me by Mr. Thacker of Horwath. Please feel free to contact him, and I have taken his permission to use his name, so you can call him, and he's compiling this data. There are others also, other consulting groups. They will give you similar story. There is another one who came out with a monthly newsletter on what's happening, so they come out every month on it. We, as Indian Hotels, will not keep track of the entire hotel supply in India. Sure. No, that's fine. That's totally fair. My other question was, sorry. I mean, not sure if you can disclose sort of the kind of contribution in from G20 meetings in this quarter. Have you got some kind of advanced bookings or at least the discussions with the ICC regarding the bookings for the World Cup yet? Any thoughts, any color on that, please? ICC, I would not say anything because there is a lot of things going on, in the newspaper, people writing, I don't know whatever they're writing. What I will say is that I think what is very good for the country, what is very good for our sector, and what is very good for Indian hotels, is that we are having these two major events happening, and they are definitely boosting demand, whether in Q1 or Q2. It's not just the G20, there is also a B20, then there was a tourism summit in Q1 in Goa of the B20. There is a lot of activity which is happening and not restricted to just the big G20. Under that, there are many other, you know, things that are taking place, and it is driving demand, and it is driving the positioning of India from a tourism perspective, and all these pictures are, you know, shown in the rest of the world. I think these events should help in marketing India as a destination on a longer term and not just this year. Right. No, fair enough. In terms of TajSATS, I mean, you know, you are at 59% market share. Clearly, you're a market leader there. Do you have any targets going forward? I mean, how far can you go? I mean, your EBITDA margins are 24.5%. So do you think with that kind of market share, do you think that's a kind of a cap now, or you can grow further? If yes, I mean, what is the best industry, what are the best margins in the air catering industry? In airline catering business, this is very high margin. You know, this is maybe the highest I have seen in my career. Yeah. The reason we are sharing this information is to show that TajSATS alone in Q1 performance is doing what possibly traditionally, we would have done, you know, in, in a month of a, of a quarter on EBITDA basis. As the entire IHCL, if you go back 10 years into history, I think from that perspective, it is nice to see that not just a Taj brand, but also a Ginger or a TajSATS, everyone is contributing towards the journey which we commenced in 2018, where we said we'll grow our margins by 800 basis points to 25, and then we went to Ahvaan to 33. How each of these businesses is contributing. It's the operating leverage in our iconic traditional assets and the fee-based business and our share of profitability in businesses like TajSATS. The combination of the whole is creating the sustainable, profitable growth that we have guided all of you on. Right. You mean you think that this is sustainable and it could go further, right? Yeah, absolutely. If I just build on it, Achal, I think, see, if you look at the Sats business, I think what are the drivers of profitability? Number one is if you get more international customers in the airlines, that's the driver of profitability. That's number one. Number two is that places like TajSats, there's a lot of charter businesses in places like Goa, and these charter businesses have been slow because of the pandemic, and now they're coming back. The second one. Third is there are synergies that we are trying to develop between Sats and the Taj, our hotels, in terms of supply of basics, is the third one. The fourth is the entire non-airline business, which is getting developed, actually. The fifth, I would say, is that the concept is changing internationally in terms of center kitchens, which kind of go to sort of supply, cook meal, you know, cook food like a biryani, as an example, to the different kitchens, which is just then reprocessed before supplying, actually. These are all things which are really happening in industry. Also, of course, the entire areas of synergies with Air India and Vistara and all of those coming in, to be honest, actually. There is a number of trends which look very positive for the airline sector as well, actually. For this air catering sector. Air catering. Add to it, non-aviation catering. I mean, a lot of institutional catering. Yes. is an opportunity. Yeah. Right. Right. No, fair enough. Next question is about the slide 14. That attracted, I mean, that attracted me quite, you know, it looks very interesting. What exactly, what message are you giving on slide 14? I mean, you know, I mean, for example, ARRs are up sharply in your Taj and SeleQtions brand. I mean, occupancy level are also up, while the growth was slightly lower in Ginger. I mean, does that indicates that ARR occupancy levels were low Q1 last year and hence the sharp increase in this? Or do you think there has been a shift in the passengers, in the customer space twice, and they are very pay higher for I understood your question, Achal. Sorry to interrupt you, you know, when we had this quarter last year, every quarter people said it's pent-up demand. The message we are giving is, if that was pent-up demand, it still is a little bit pent-up because it's still going up. We always said that the best is yet to come. We are still in the luxury sector. I was talking to someone yesterday. Our iconic assets' average rates are maybe 10%-20% of rates in Paris or London. Yeah. or New York or Boston. You can go that online and verify it. You know, we provide better service, we have better quality assets. We may never have one is to one, you know, we may never get to 100% of those rates, but we should have the ability to charge 30%, 40%, 50%, and we are not even at 10%, 20%. I think that is the messaging here is that it's still a way up. Ginger is a bit tweaked because I just now mentioned that we are converting almost 70% of our portfolio, will get into lean luxe. When rooms are out of order, it has an impact on both occupancy as well as rate. As and when they keep finishing, we will keep seeing this growth. There is still a strong growth on RevPAR. Right. My last, my final question is about, you know, about the Ginger. I mean, how do you compare, your Ginger brand alone versus Lemon Tree Hotels? I mean, do you think you can reach Lemon Tree, your Ginger can reach Lemon Tree? How do you compare yourself with Lemon Tree? It depends. I think Lemon Tree is positioned a bit higher than Ginger, well, it's not appropriate for me to talk about another listed company on our call. All I can say is that Ginger growth is going to be something which you should all watch and see. Last year was a good proof of it. Going forward, we are very excited with the opening of Ginger Santa Cruz, which should revolutionize this kind of positioning of the brand from budget or cheap, how it started at INR 999, to, you know, a smart property or a Lean Luxe kind of a property, and a very, you know, like, kind of a happening place with the Qmin all-day dining. That's a journey we commenced or embarked on, and we are almost hopeful by end of this year to get 70% into it in our total portfolio, and hopefully by end of next year, 100%, and then let's see what the results show. It's the perfect brand, actually, in terms of the overall growth in the economy and the consumption. Yes. The mass travel will benefit, Ginger will benefit from the mass travel, and so we are quite excited on this direction. Absolutely. I completely agree. Good. Thank you so much. I wish you good luck. Thank you, Achal. Thank you. The next question is from the line of Aishwarya Agarwal from Nippon India Mutual Fund. Please go ahead. Yeah. Thank you very much, Mr. Chhatwal, and team, for the call. Just want to understand the challenges associated with the ramp-up in the managed room. We are going to add up more than 1,000 rooms every year, rather even more than that. Where do you see the challenges? Is it an easy thing? How is the profitability on a per room basis, and how that profitability can be improved? No, I think as far as the managed property growth is concerned, they will continue to happen. I think, as we have said, we've already signed about 11 contracts in this quarter and opened 5 hotels. We will be planning to open about 20 hotels. We don't see a challenge in terms of signing new contracts. I think I would sort of say that do not look at it in terms of managed fee per room, because it's coming across different brands. I think you need to look at. We have given a detailed brand-wide split in terms of how the rooms are opening. Managed fee per room is probably not the way to look at it, because it's not in a single brand. If this is something if you want more details, we can talk offline in terms of talking about it. Sure. Sir, At a high level, we can say versus, you know, versus a couple of years ago, our management fee income total is going up by 2.5x. It used to be around 215 crores and, you know, even in Q1 FY 2020, the management fee was 47 crores. In Q1 FY 2024, it's 198, which is more than double. I think that's something which we are very pleased about. As we said, Q1 and Q2 are not the strongest quarters, it's Q3 and Q4. If you look at it that way, then, it should increase by 2.5x versus two, three years ago. In this context, sir, I mean, what potentially stops us to ramp up even faster, these kind of rooms, where you have the strong cash flows and no capital investments? Nothing stops us, right? We would have gone faster, but there was a lockdown, and there were construction stops, and there was bad weather in Delhi, where mandatory stops were there. Then obviously, people who are investing may not have been only hotel investors, they may have had other businesses which were impacted. There is some delay, but we are giving a guidance of 20 hotels a year, and opening is more than like 1.6 hotels a month. We have to also see the company never did more than one hotel a year or maximum two in its history till five years ago. That's almost a 10x increase. Sure, sir. Thank you very much for this. I'm done. Thank you. The next question is from the line of Shalini from UBS. Please go ahead. Hi, Puneet. Hi, Girish, I'm Shalini. Not so clear. Yeah. I don't know, if you're using some kind of headset or something, maybe. Yes. Is it any better? Much better. Yeah. Okay, sir. Buying hotel in Zambia and taking another one on lease in Germany, are we thinking about expanding internationally? What's the thought process? Shalin, in this Q1, we signed 2 management contracts in Dhaka, one for the Taj and one for Vivanta. Vivanta is, you know, only for Indian subcontinent, very much in line with our strategy. Having strong presence with Taj brand in Indian subcontinent has been a part of our strategy. Pamodzi is just like we acquired at that time, a 100% shareholding in Cape Town, which we were managing, which has turned very beneficial to us, we paid down the debt, you know, it was a U.S. dollar debt, we were having mark to market issues. Now it has become profitable. We feel a similar opportunity exists with Pamodzi, where we also have a management contract. We don't have a shareholding. These are in-principle approval. We know the property inside out, every wall, every bathroom, every this thing, because, as I said, almost four decades, we have been running that property. We are very well established with that. It's always a question at what terms you agree to things, and we are in principle agreement to explore that, and we are in the process of doing so. On Frankfurt, we always guided yourself and the, and everybody else that we are not going to do single asset acquisitions worth $50 million-$100 million elsewhere in the world. That is not a part of our strategy, and we want to stay true to that. The institutional capital available in Europe comes at a very different yield, you know, at 5%, 6%, 7% maximum, it makes no sense to use your own capital, especially if you are debt-free. That's why, we would enter into a lease if, as I said, if in-principle approval actually leads us that far to actually signing an agreement. We have taken in-principle approval. It's an ideal fit, the asset with our portfolio, and I think it's time that we added a hotel in U.K. or another part of Europe, and somewhere in Southeast Asia, because you cannot be one of the strongest hotel brand in the world or India's strongest brand, and miss some of these markets, where almost everyone flies through for a connection to U.S. You have Air India flying daily, and you have Vistara flying three, 4x a week. There is a lot of opportunity out there. A very strong Indian business presence, in growing presence of Indian businesses in Germany, unlike in the past. The other thing to note, Shalini, is that a hotel like in Frankfurt is just about 135 rooms. It's not a 500-room property. It's in a location where Vistara and Air India fly in any case. I mean, Indian embassy, TCS, Europe offices, it's all there. You know, you have a situation where gate competencies will come from all of these factors. It's a legacy kind of a property, perfect for a charge kind of a brand, actually. I think they're not going, it's not something. It's not an acquisition, it's a lease. Hence, you know, it's kind of well thought through in terms of very low level of investment and a good size of property being manageable, so good base occupancy. That's the way to look at it, actually. Sure. No, no, I, I completely agree, and I actually do believe that you need to have a network of hotel properties if you really want, you know, customers to come back and use it. You know, that's what actually the Marriott does, right? That's like efficiency and the network game they play. That means that you will need to look at more such opportunity in Europe, right? That's a kind of a brand record, not just for the Indians, but even for the foreigners as well. You won't be able to stop just with the Frankfurt, you need to think about maybe something in Switzerland where- Absolutely. Absolutely. The, that Indian thing we said, for the base business, you know, you have to have some form of base business, and there is enough of that available in Frankfurt or like you said yourself, in Switzerland. You know, it will be one step at a time. It's not now that we, this quarter we announce Frankfurt, next quarter is Switzerland, then another quarter, three is something else. That will not be the case. We are taking this step of entering into detailed negotiations after a very long time for an asset. We said once we have our home front, our domestic front, absolutely firing on all cylinders, then we will take selective contracts as opportunity arises. Our focus was, is, and will remain pan-India definitely in the short term. Right. Right. One question, Giridhar, on the cost side, right? We did see some of the costs going up in form of employee and as well as some of the other expenses. How should we think about it? It's largely we have reached the base, or there is a component of, you know, discretionary angle to it, because we are kind of putting it for other new businesses, which may kind of taper off after some time, or you think that's going to be a sustainable cost base for next maybe two, three years, at least? I think as you saw, I think two, three points here. Number one is that, from a manpower perspective, yes, you know, there has been an increase in manpower. If you look at it between this quarter and last year, first quarter, the ramp up had not completely happened because we were recovering from overnight. To that extent, there is a base adjustment which has happened between last year, first quarter and this year quarter. Manpower increase also includes, for instance, some of the wage settlements which have come in. If you look at some of the subsequent slides where we have given staff-to-room ratios, the staff-to-room ratios is still below the pre-pandemic level, which means the focus on productivity continues, actually. I think that is point number one. On the other costs, where we have said some two-thirds of the increase is largely variable costs, which is true. A licensee in an NDMC goes up with the rise in revenue, as an example. Most of it is actually rising in line with the business, actually, and some of the discretionary spend that we will do. Some expenses we'll have to invest ahead, and some expenses we'll have to pay as we go. I think some of these will be there, but nothing sort of will skew the numbers significantly. I think it'll all be managed in a way where the overall cost increases are kind of under control. That is the way you should look at it. There's nothing which is going to be unusual to sort of throw things out of gear actually. Nothing at all. Got it. Understood. Lastly. Very important thing, Shalini. Productivity is a very important thing. You know, I think, take corporate overhead as an example. I think the same network now and the same corporate overhead level are now managing a very big network as compared to, say, four, five years ago, actually. I think productivity focus is very clearly there, actually. Understood. No, fair point. Fair point. Last bit, any color on July, August, you know, I mean, I'll leave it to you, if you want to give. Well, Shalina has said, it's not a question of July, August. It's a statement we have given in the press release, and basically it is that the outlook remains strong. As I said in my comments, which was the comment number one, both India's story with the growth in GDP, corrected of course, as well as the hospitality upcycle continuing with the demand growth, this should work well. I think domestic consumption, global events, as we have said in the press release, and revival of international arrivals should further boost demand growth in principle, because that is what it should do. Don't see any reason why it should not keep remain strong or keep getting stronger than to be the other way around. Got it. Okay, fine. Good to hear that. Thank you so much, guys. That's it from my side. Best of luck. Thank you. Thank you. We have the next question from the line of Nihal Mahesh Jham from Nuvama. Please go ahead. Thank you. Good evening, Mr. Chhatwal and Mr. Giri. My first question was on this international operation, first to clarify, this is a lease agreement and not a management contract. Just in terms of, say, future opportunity that you get, which of the two would be the preferred option to expand? Also depends on the geography, Nihal. For instance, in places like Dubai, Bangladesh and all, we have preferred to take management contracts. In Europe, as Puneet explained, there's an institutional ownership of the real estate, and there leasing works better because as an institutional holder, which could be a pension fund, they don't like to have people on their rolls, actually. Unlike, supposing you have a management contract in India, the people, everything are on the rolls of the owner. In this case, I think in Europe, with institutional ownership, the lease is a better option. That's the way. It really depends on geography, circumstances. Cost of capital is very different for these funds. Yes. Also for us, if it works out well, In management contracts, we're only consolidating management fees. Yeah. This way we get the benefit also of the top line. All we have to do is create a design and manage it so efficiently that we're also profitable. Absolutely. It's just that looking at some of the historical examples, even the P&L volatility is something that is maybe a little more than what it is, say, on domestic operations. From that perspective, essentially, lease is the better option. Yes and no. It depends which countries you talk about. There's, you know, historical examples maybe of countries where volatility levels are very high. You have to see countries which are constantly low inflation, low interest rate, you know, there, the volatility levels are not that dramatic. It might have happened, like, once in 50 years because of a Russia-Ukraine war for some time. Generally speaking, this is not, you know, these are not countries where you have huge ups and downs. Point taken. Sure. The second question was, you mentioned about the potential. Sorry, if they have high volatility, they would not be a lease. Okay. Lease markets are the ones which have low volatility. That is helpful. Mr. Chatwal, the second question was, you mentioned about the events that are lined up. Specific interest in just understanding about the World Cup. Why I'm asking that is that this time it obviously comes in part of a peak season. Is it something that is beneficial if we lock up a lot of the rooms, assuming, you know, a lot of the traveling teams coming there? Or how to look at this event? Because not certain of how it would play out. Because unlike the last time round, it was of the off-season, this time it's coming in the peak season for us. Should help the rates. Generally speaking, it should help both rates and occupancies. Not only the players have to stay, all the people who will travel to watch certain preferred matches, and a lot of that is being written about already in the press. I think it should normally assist. It's not a derailer, it's an enabler. I think we all get unique visitors from different segments, so I think all good. I mean, all of this is good, actually. Sure. The contracted rooms wouldn't be at any kind of a rate, which was in a way be at a significant discount, I think? No. I mean, why would... No, Nihal. No, we don't do these kind of things. It's a- Why would it be at a significantly discounted rate? You know. I mean, why you ask this? I'm just trying to understand, so I can give you a more, you know, qualified and a correct or accurate answer. Absolutely. Where I was coming from was the fact that ideally there are certain associations that you would have had signed contracts, that if rooms are let out, say, to players, that they would be at a certain discount to what the rates are in the peak season, irrespective of the season. That is where I was coming from. That, say, given we are the largest brand and if, say, most of the stay happens during the event in most of our properties, it is that it may take away a lot of the lucrative rooms which will be available at that time of the year. No, no, Nihal, I think don't make those assumptions. You know what's happening in Ahmedabad, newspaper reports in terms of Indo-Pak match. Rooms are going at INR 1 lakh, actually. Which means you don't look at it when the demand in general for a match, people are traveling, actually. Hence, I think, I don't think this will be. Overall, it will not be negative at all. It will be very positive, actually. Point taken. Sure. That was it from my side. I wish you all the best. Thank you. Thank you. The next question is from the line of Karan Khanna from Ambit Capital. Please go ahead. Thanks for the opportunity. Firstly, earlier this week, the parent company of one of your nearest peers announced their plans to demerge the hotel business. In light of this development and with increased focus by the management team of this entity, how should one think about the competition increasing in the management contract business? As a result, how should we think about take rates for the management contract business? Is it safe to assume that rates could see some compression? Rates, you see, I think remember that management contract business is a 20-year relationship. I think when we talk of these long-term relationships, people don't enter into a relationship with a brand because somebody is offering a 1% cheaper, kind of take rate, actually. I think, remember that. We don't anticipate any take rate-related challenges at all. That's number one. Number two, I think, if you look at the way management contract growth is happening, we have 125 cities and towns, and I think, there is growth all over, actually. It is not a winner-take-all market, which kind of leads to the rate compressions that you talk about, actually. I think there is enough opportunity for all players to be there. We have been leading, of course, in terms of our agility and in the way we are dealing with owners, and we expect to continue leading with, 35% market share in terms of what we have. That will continue, actually. Sure. Thanks for the clarification, Girish. Second, talking about the international business, where United Overseas continues to lag while St. James Court, London, has seen a significant improvement. What are your expectations from these two businesses in terms of growth and margins? As a follow-up, Marriott has given a RevPAR growth guidance of around 6%-11% for CY 2023. Would you expect the same for your international portfolio as well? I think if you look at international portfolio, I think two, three things. London obviously has done extremely well. London historically has done well. It will continue to do well, especially with the product changes, like housemaking, the renovations. We continue to do all of that. Places like London will do very well. As far as U.S is concerned, we are currently in two markets, which is New York and San Francisco. San Francisco as a city has kind of struggled, as you know from public reports, in terms of what's happening there. Our property is, at this point of time, being impacted because of this. It's one of those key cities in the US. We do expect that the bottoming out has probably taken place. That city should improve. In any case, that's a smallish property. You know, historically, it's been about $25 million odd in terms of top line. If you look at New York, New York is a very good market. We have seen rate increases anyway happen there, we continue to. I mean, it's a lease. Overall, I think the U.S. market should do well, both from a domestic tourism perspective within US. Banquets is very strong in The Pierre, in our property, and the international tourists also going, international business and tourists going to The Pierre also benefits. The Indian diaspora also going to the U.S. will stay with us. Longer term, I think we are quite happy in terms of longer-term recovery, actually. Sure. Last two questions from my side. On the FTA recovery, in your FY 2023 annual report, you spoke about FTA reaching 80%-95% of pre-COVID levels in FY 2023. In that context, the feedback that we are receiving is that the FTA recovery has been sluggish in June and July. What are the month-on-month trends you are seeing in terms of the actual bookings by international travelers and the travel agents? I think if you look at the overall mix of international travelers in India, I think it is still under 20%, actually. That is what is currently happening, at least from our hotel's perspective. I think the medium and long-term trends are very positive. Let's be very clear that the number of international passengers, FTAs, in India are about 10 million or something like that, which is nothing. In fact, there was a recent CBRE report which said that by 2030, it will more than double, and by 2040, more than double from that level, actually. With all the focus in terms of the number of airports, the tourism infrastructure, the government's own thrust on tourism, I think all of these augur very positively, actually. The numbers, as I said, are abysmally low. 10 million is absolutely nothing, actually. The FTA thing should come back, and second half should see that. Second half should see that, actually. Sure. Finally, if you talk about slide number 54, where you've highlighted that, Goa and Rajasthan are among cities or rather states which have seen the lowest ADR growth Y by Y. Are these indications of any softness that you're seeing in the leisure demand? Because that's also a feedback we are receiving from our checks. No, I think we have always indicated, you know, when people have asked us in terms of growth in ADRs, we've always indicated that the scope for increase in business ADRs is much higher. In leisure, it will go up, but less than proportionately, and that is what you're seeing, actually. Also bear in mind, there are other factors you should look at it, like Rajasthan will now benefit from the FTAs who are coming in the second half, and FTA should improve. That's number one. Number two, places like Goa are also becoming 365-day destinations, actually. There are some fundamental differences in terms of how these markets are panning out. I think, what you see as softness in ADRs is pretty much in line with our expectations, actually. Sure. That's it from my side. Thank you, and all the best. Thank you. Thank you. We have the next question from the line of Nikhil Agarwal from VT Capital. Please go ahead. Good evening, sir, and thank you for the opportunity. My question was regarding the G20 and the Cricket World Cup again. Like, any ballpark numbers, like, for the full year, what kind of revenue it would generate, any percentage of the top line? I think that's not the way to look at it. I think the way to look at it is that G20 is a platform where there is business which comes in during the conference period, and there is business which follows actually. That's the way to look at it. Sir, till now, what has been the response has been really good, I believe. It's been generating quite a good portion of the revenue, right? See the, as Giri said, we cannot look at it just like that. It creates extraordinary demand than in normal circumstances. That means the occupancies rise. When the occupancies rise, your ability to charge increases. Does not necessarily have to be every event, although we have been doing the majority of the events, for G20, and we'll be doing so going forward for B20 also. Even if we were not doing an event for some reason, because we were sold out and we didn't have the hall availability and the business went elsewhere, that creates high occupancy in another property. That means the other competitors or the other peers in the similar market will have the ability to sell the rooms that they have to other people who need the rooms at the same time, or who need the hall at the same time. That's how it creates, in general, buoyancy, through such events, or it's a cricket or it's whatever else is happening. You know, we did, last year, this event, the Christian Dior Collection launch at Gateway of India. The way the Taj Mahal Palace got showcased with all that coverage of that event across the globe, cannot just calculate only on the value of that event. Of course, after event, party was with us, most of the models and the entire team was staying with us, but also it helped our other hotel, which is the President in Mumbai, right? It also helped other hotels, which are not ours, from other companies, because we were sold out. I think these events, whether they are happening with us or with any of our competitors or peers or whoever it is, generally create very high level of occupancy, and the high level of occupancy then starts driving the rates, and everybody tends to benefit from it. One other comment I will make is that you saw yesterday the Prime Minister inaugurating the Pragati Maidan. With Pragati Maidan coming, Dwarka coming, the Jio World Convention Centre in BKC, I think India is now getting some really world-class, large convention capacity, which will help in terms of driving demand. As we have always said, if you've got 2,000 additional rooms on top of your regular city demand, you don't have the hotels in terms of absorbing capacity, actually. I think those factors also play a big role in terms of driving, actually. Got your point, sir. Sir, and just one more question, like, I wanted to know, what is the average room rate difference between the normal Ginger Hotels and the renovated Lean Luxe Ginger Hotels and the Ginger Hotel of the Santa Cruz that is coming up? It's around 30%. The renovated and the Lean Luxe is 30% higher than the old Ginger that you know of. Okay. What about Ginger Santa Cruz? Certain markets, like you said, in Mumbai, it could even be 40%. That's a one-off, because Mumbai is very, very strong, as a market in terms of occupancy, and also that property will be absolute flagship. Mm-hmm. Okay. Any roundabout, ARR number for that? You look at the Ibis Mumbai Airport as possibly an indicator, that's it. Okay, got it. That's it for me. Thank you so much. Any last questions? We've overshot the time, so. No further questions, sir. You may go ahead with any closing comments. Well, thank you very much everyone for joining. Thank you for your support and patience and also the questions that you've been asked, and we look forward to sharing information with you at the end of next quarter. In between, of course, post this call, if you have any further questions, don't hesitate to reach out to our investor relations team. We'll be more than happy to clarify anything else that you may want. Thank you. Thank you. On behalf of The Indian Hotels Company Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.