EIHOTEL - EIH Ltd Share Price

Management provided an optimistic outlook for the fiscal year 2025, emphasizing a projected growth in hotel demand driven by demographic shifts and an expected 15% increase in inbound tourism. Despite challenges posed by geopolitical tensions and Operation Sindoor, the company reported a 4.4% increase in passenger traffic year-over-year and achieved a growth of 9-11% in Average Room Rate (ARR), alongside an increase of 11-13% in Revenue Per Available Room (RevPAR), reflecting strong performance.

Key forward-looking points highlighted include:

1. RevPAR Performance: EIH's RevPAR rose from INR 9,811 in Q1 of last year to INR 11,350 this year, marking a 16% year-over-year growth. Individually, Oberoi Hotels reported a RevPAR increase of 21%.

2. Luxury Segment Focus: The management expects demand for high-end luxury accommodations to grow significantly, positioning EIH favorably to capitalize on emerging opportunities.

3. Expansion Strategy: EIH has an ambitious plan to introduce 25 new properties, primarily in India, with an operational goal set for 2030.

4. EBITDA Growth: For Q1 FY26, EIH achieved the highest revenue and EBITDA in the last 6-7 years, with a consolidated revenue growth of 9% and EBITDA margin improving to 32% from 30%.

5. Impact of Exceptional Items: Despite lower Profit After Tax (PAT) of INR 36 crores due to a one-time impact of INR 110 crores related to the Mashobra property, the overall financial health and liquidity position remain strong.

6. Optimistic Industry Trends: With demand expected to elevate during Q2, Q3, and Q4, management plans to maximize opportunities for revenue generation, leveraging the expected increase in demand.

7. Strategic Goals: Management is committed to realizing Vision 2030, focusing on doubling room counts and enhancing growth through management contracts and partnerships.

Overall, management remains optimistic despite challenges, aiming to drive ARR and leverage India's evolving hospitality landscape.

1. Question: "One is regarding the RevPAR... it should be including the F&B revenue as well, right?"

   Answer: "The RevPAR is revenue per available room. It does not include F&B and other income. I assure you that industry standards do not include food & beverage revenue, only room revenue."

2. Question: "What I understood earlier is that we were to receive a substantial sum... how do you see this going forward?"

   Answer: "The INR 110 crore impact is based on the court's judgment. This figure includes various elements, specifically lost equity value and an advance we had given. Vineet can clarify further on the breakdown."

3. Question: "What is the gap between this RevPAR and revenue growth number, essentially?"

   Answer: "The lower consolidated revenue reflects the absence of Mashobra and Oberoi Grand in this year's figures. These hotels affected our year-over-year comparison, thus impacting overall revenue relative to RevPAR."

4. Question: "Is there like a upward traction that we're seeing again in July and even August, maybe?"

   Answer: "While I won't make forward statements, traditionally, Q3 and Q4 see an uptick in demand. In Q1, we were able to drive RevPAR even amidst challenges, and we aim to sustain that momentum in the upcoming quarters."

5. Question: "So is there strategic shift that we are targeting in our owned hotels?"

   Answer: "Our focus remains on maximizing rates across all hotels. This is driven by demand dynamics. While our city hotels see consistent business travel, leisure hotels fluctuate more. Our strategy is to optimize performance based on demand."

6. Question: "What was the reason behind delays in the pipeline of hotels?"

   Answer: "Delays with managed hotels are less in our control. Partnerships determine timelines, and we work closely with them. Our pushes are focused on owned properties, where we have more influence over meeting set timelines."

7. Question: "What kind of impact was there from the closure of Oberoi Grand and Wildflower Hall?"

   Answer: "Oberoi Grand had a revenue impact of about INR 22 crores, and Oberoi Airport Services saw approximately INR 28 crores. Wildflower Hall's impact aligns similarly, as it was included in last year's consolidations."

8. Question: "Do we see any other future exceptional items... from Himachal property?"

   Answer: "I believe the current one is final. We do not expect further exceptional items related to Wildflower, based on the resolution already achieved."

9. Question: "What are the challenges current hoteliers have started seeing... which may not allow or would act as a deterrent to this particular vision?"

   Answer: "Human resource issues persist due to layoffs during COVID affecting talent availability. Additionally, regulatory approvals and high land costs remain challenges. However, the country's economic growth shows promising potential."

10. Question: "What's your view on the upper luxury segment, and how do they trend in terms of ARR and occupancy?"

    Answer: "The contribution of Indian guests is steadily increasing. International travel complements luxury demand. The recent government initiatives aim to boost tourism, benefiting our sector significantly."