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Analyst Meet / AGM - Analyst Meet

Management expects the ARR and the Occupancy levels to improve in FY'17

Indian Hotels

20-May-2016, 02:33
The company held its analyst meet on 20^th May 2016 and was addressed by Mr. Anil Goel Executive Director and CFO

Key Highlights

Indian Tourism industry supply grew by around 4% in Jan to Dec 2015 period. Most cities witnessed an increase in supply in range of 3-6%.

Although there was healthy demand in some cities like Bengalaru, Jaipur, Kochi, Hyderabad, Chandigarh, New Delhi, Ahmedabad, Pune etc, rates were under pressure in Ahmedabad, New Delhi, Bengalaru, Kochi, Kolkotta etc due to increase in supply.

Almost all cities witnessed an increase in occupancy rates. While ARR continued to be mostly flat to lower across India.

Foreign Tourist Arrivals (FTA) in India has shown a consistent growth in every quarter for entire 2015 calendar year. On an average it has grown by around 6.2% YoY for 12 months ended Dec'15.

While there was a good demand growth of around 10% in 12 months ended Dec'15 period, supply still exceeded demand and thus impacted ARR.

Taj Group has an inventory of rooms of around 16759 spread across 136 hotels worldwide. 120 are domestic hotels with inventory of around 14127 rooms while internationally there are 16 hotels with 2632 rooms. Company opened around 7 hotels domestically and 1 hotel in Dubai, adding around 1423 rooms of inventory in FY'16.

The company plans to add another 10 hotels in India in FY'17 with inventory of around 926 rooms.

The company has undertaken lot of marketing initiatives as well to increase the occupancy levels. For the first time, gifting option is available on Taj websites. Also to cater to the discounts offered by many websites, management has taken and used digital platform in a big way.

For FY'16 at standalone level, of total sales of around Rs 2274 crore, room income stood at Rs 1002 crore, up by 10%, Food & Beverage income stood at Rs 918 crore, up by 13%, Management & Operating fees stood at Rs 149 crore, up by 8% and other operating income stood at Rs 204 crore, up by 24%.

Room income growth was lead by higher occupancies on account of higher check in and occupancy in existing room inventory and new inventory due to new hotels at Dwarka, NCR and Guwahati.

There was an income of Rs 109 crore in FY'16 which is a treasury income earned on surplus funds being carried by the company during the year.

Raw material costs were higher in line with higher Food & Beverage income but some costs push was due to higher commodity costs.

Standalone debt was lower on YoY basis in FY'16 due to deleveraging measures taken by the company thus resulting in reduced interest costs.

The company achieved Ebidta margin of 23% in FY'16. Management expects higher Ebidta margin in FY'17 on account of higher occupancy and rates in FY'17 and higher inventory.

From Jan'16 onwards, the demand has started to inch up further and has resulted in higher margins in Mar'16 quarter. More rooms were sold during this period than rooms added.

The company is concentrating more in Delhi and Mumbai markets where realizations are higher.

Capex of around Rs 300 crore planned in FY'17.

The company has a consolidated net debt of around Rs 4717 crore. Average costs of debt is around 7.3%.

At consoldiated level management has plans to reduce debt by sale of assets and other restructuring exercise including fund raising as well.