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Chalet Hotels Ltd
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Welcome to the call. Against a backdrop of weak economic activities, the budget was announced a few days back, with several announcements, including a new and optional income tax regime, abolition of the dividend distribution tax, an increase in bond limits for foreign investors and more importantly, an ambitious privatization plan. The tourism sector saw INR 2,500 crores being granted for tourism development and a promise to open 100 new airports under the UDAN scheme by 2024. These are promising announcements for growth in tourism, and we look forward to these initiatives. At Chalet Hotels, our quarter 3 operations have witnessed a strong performance with the reversal of trends observed in H1 of this year. I'm happy to report that the company clocked 9.9% growth in RevPAR across the portfolio for the quarter, largely driven by the portfolio's average room rates, which grew by 8.8%, which is almost 9% against the same quarter of the previous year. This performance marks the eighth consecutive quarter of superior rate growth at Chalet. We continue to adopt a cost effective -- continue to drop cost effective ways to drive efficiencies in our portfolio, which is reflected by our operating margin improvement. Quarter 3 delivered an EBITDA margin of 43% in the Hospitality division and 42% overall. The quarter marked an important milestone for Chalet Hotels as we signed definitive agreements, collaborated and acquired brands. We strengthened our partnership with Marriott by signing one of the largest ever deals in the luxury and upper-upscale hotels in India for 1,500 rooms across different cities. The agreement fortifies our 2-decade-long relationship with the global hospitality brand, which is also the world's largest. I've already shared the brands and the changes on our earlier calls, I won't bore you with them again. However, I'm happy to and pleased to share that everything has gone as per plan. In January 2020, we signed a share purchase agreement for the purchase of Novotel Pune. I'm happy to share that as of 7th February, we have concluded the transaction and today, Belaire Hotels Private Limited and Seapearl Private Limited are 100% subsidiaries of the company. With this acquisition, we have marked the beginning of a tie-up with Accor group, which is also one of the larger hospitality players globally with significant presence in India. Chalet's portfolio now stands at 6 hotel assets across 7 brands with 2,554 keys in 4 cities in the upscale and luxury space. The acquisition was at an enterprise value of INR 290 crores. Some of the details have already been shared with you in the presentation. The Novotel Pune has 223 operating keys and has an expansion potential of roughly between 84 to 88 more keys, which are today in a bare-shell stage and would require fit-outs to complete the hotels, taking the total inventory to 311 rooms. We believe that Pune is an attractive market and sizable commercial office development is likely to come, which is going to drive strong demand for hotel rooms. Novotel is located at a central location to key business hubs of Viman Nagar, Kharadi, Yerwada, Kalyani Nagar and Koregaon Park, which are all within the radius of 4 kilometers of Novotel. Additionally, the expansion of the airport and growth of the fintech and IT industries make the city a very attractive place to have a presence in. We believe the market has strong dynamics and the market dynamics combined with 40% increase in inventory and Chalet's asset management capability, the hotel should be able to deliver returns in line with our portfolio in a couple of years. This move is aligned with our growth strategy of strengthening and expanding our portfolio to new geographies with a strong demand potential. A quick update on the projects and development in the pipeline with this addition of new hotels, we will be taking up the finishing of the 2 floors, which will add the 88-odd rooms at Novotel Pune. The work is likely to be completed by Q2 of next year. We expect the total project time to be anywhere between 5 to 6 months. We expect to start work early March over there. Project work for the Western Hyderabad is on schedule, and we are likely to commission that hotel in Q2 FY '21. The proposed brand change of Renaissance to the Westin Powai Lake is on schedule for the end of Q2 FY '21. The product improvement plans there are progressing very well. The timing for all the above is aligned to capture the higher occupancy second half of the year. So I think we will stand to gain from timing it well. A quick update on the non-Hotel businesses or segments. The Sahar Office Tower at Mumbai is reaching occupancy and is on as scheduled with more than 85% of the tower already occupied. At the ORB, 17 F&B outlets are already operating. Inorbit Mall at Bangalore continues to deliver steady occupancies with improved rentals. And work is in progress -- work in progress is progressing on schedule for the Bangalore and Powai office towers. With this brief on the quarter, I now hand over to Rajeev to take you through the financial performance. Post that, we'll take questions from all of you.
Thank you, Sanjay, and good evening, ladies and gentlemen. Before we start, let me offer the usual disclaimer on forward-looking statements and rounding of numbers during our conversation. And our presentation has already been uploaded on the stock exchange and has been made available on our website. I do hope that you have had a chance to go through the same. Now Sanjay mentioned the company has completed the transaction of acquiring the 2 companies, namely Belaire Hotels Private Limited and Seapearl Hotels Private Limited on Feb 7, 2020, which incidentally was the day on which the company got listed. The gross consideration for the complete transaction was INR 1,768 million, and the company -- the cumulative borrowing in the acquired companies was INR 1,170 million and therefore, the aggregate enterprise value was INR 2,938 million. Now coming to the financial performance of the company for the third quarter of FY '20, the total income was at INR 2,847 million, which was higher by 12% over the previous year. And this was notwithstanding the lower income -- lower other income of INR 66 million as compared to INR 75 million in the corresponding quarter of the previous year. The lower income was -- in the corporate income was largely because of lower interest income from ICDs because all the ICDs were called back. Further, the company continues to be focused on costs, which for the quarter went up by only 5% on a like-to-like basis before accounting for exchange gain. There was a foreign exchange gain of INR 241 million for the base quarter, which was essentially the reversal of the foreign exchange loss in the first half of the previous year on account of ECB. Resultantly, the EBITDA, which was at INR 1,189 million grew by 22% before accounting for the impact of the exchange gain or loss. The Hospitality segment, which accounts for 88% of the total income grew by 7% during the quarter, and this was a healthy mix of both rates and volumes, as you would have heard earlier, and the RevPAR grew by 9.9%. Correspondingly, the segment profit before interest, depreciation and tax, the margin thereof also improved to 43.4%, an expansion of 70 basis points from the base after adjusting for the exchange gain or loss. For your information, room revenue accounts for about 59% of our Hospitality revenue, F&B about 33% and 8% comes from other income. Interesting -- and more importantly, if you look at the Retail and Commercial segment, which accounts for 10% of our total turnover, this segment also showed a significant improvement. It clocked INR 281 million as compared to INR 130 million in the previous quarter. As far as the debts are concerned, the debt for the company continues to -- has gone down. It's now INR 14,577 million, of which almost 12% only are foreign currency and the rest is all rupee loan. More importantly, while the loan was substantially repaid over the past few quarters, we were also able to improve our interest rates. And a combination of this has resulted in the finance cost being lower at INR 339 million compared to INR 697 million in the corresponding quarter of the previous year. The promoters continue to subscribe to the 0% nonconvertible redeemable preference shares for the residential project at Koramangala, and the total value of subscription stands at INR 1,010 million as on today. Quick two lines on the year-to-date performance. The total income for the year-to-date, which is 9 months ended December 31, 2019, was INR 7,714 million as compared to INR 7,577 million, so growth of about 2%. And EBITDA has also grown for the same period. For the previous year, the EBITDA included an exchange loss of INR 148 million, which was substantially reversed in the third quarter. With this, we now open the floor to questions.
[Operator Instructions] The first question is from the line of Aditya Bagul from Axis Capital.
Congratulations to the entire team for a brilliant set of numbers. Three questions from my end. Sanjay, if you could start off with giving us some holistic idea of what is happening in three of our key micro markets, including Mumbai, MMR, Bangalore and Hyderabad? With special emphasis on Mumbai because we've not seen a sharp an improvement in ARRs in Mumbai as you've seen in the other 2 geographies. So that's question number one. If I can just follow up with 2 questions, other. Secondly, on the retail and office space, what explains the sequential decline in revenues in our retail and commercial offerings? If I'm not mistaken, the last quarter, we had INR 30.7 crores in terms of top line. Now we are at INR 28.1 crores. So if you could just help me out with both of these?
Sure. So let me address the Mumbai market scenario or rather all the 3 cities first. So you're right, Mumbai hasn't grown at the same pace in terms of rates as the other 2 cities, but Mumbai still clocked 7% ADR -- or 6% ADR growth for the quarter, which is in a market which is slightly subdued on account of the general economic scenario, is a very good performance. So you got also keep in mind that the average room rate in Mumbai for our portfolio itself is already INR 8,900 odd. And the city continues to get the -- it has the highest RevPAR in the country today. I think one of the key challenges that Mumbai has today is airport capacity. And that's sort of caused some amount of concern. And as we build out the new airport at Navi Mumbai, we'd see some improvements in this market. Having said that, we've also got some spare capacity sitting out of the Jet Airlines slots that were there, which need to be filled up and utilized. And once that happens, we're likely to see some demand growth. And when the demand growth happens, the rates will go up. Bangalore and Hyderabad, and this is comparatively, when you compare it to them, Mumbai looks weaker, but Bangalore and Hyderabad have clocked 11.8% ADR growth in Bangalore, and Hyderabad at 17% ADR growth. Now that's phenomenal growth. This is for our hotel. But then in comparisons next -- Mumbai looks slightly weak. But overall, I think Mumbai has also performed reasonably well. On the occupancy side, Mumbai has grown at about 0.7%, Bangalore at 0.4% and 0.9% in Hyderabad. This is within our portfolio. You've got to keep in mind that at Bangalore and Hyderabad, the amount of office supply addition and absorption is significantly higher, and especially in Hyderabad, we see that growing exponentially, and that's why we believe that Hyderabad has a very strong future for the next foreseeable, maybe 5- to 10-year horizon. And the 170 rooms that we're adding in that market should get absorbed very quickly once we open them. Bangalore did have a lot of supply that came up. In fact, within our micro market of White Field, we saw 2 hotels open up, the Sheraton Grand and the Den, literally increasing supply by 120%. But the demand -- the pace of demand was so strong that it's managed to take care of those new hotels and allow us to grow a little bit and especially grow very aggressively on the rate front. So this is about these 3 markets. I do want to add Pune to this because now we have a hotel in Pune. And whilst Pune has seen a little bit of stress over the last few years, I think Pune is going to be a very strong market for the coming years. Let me tell you why. One, whilst Hyderabad is a new Bangalore, we believe Pune will be the new Hyderabad. And on the supply side of office spaces, we see almost similar trends developing in Pune now, especially in the Eastern and the Central Eastern belt of Pune, which should drive occupancies for the hotel of Novotel, which is the area that we're located in and probably create far higher demand of room nights or rooms per day in that market. So very bullish about all 4 cities. The supply and demand arbitrage continues to be favorable. Demand did see some challenges on account of various macroeconomic factors, some of them driven by the financial services, stress that is there, some because of the automobile industry seeing some stress. But this is, we believe, is an impact for a few quarters. Our strategy doesn't change. We continue to grow in the cities that we have said we'll continue to grow in, which is current cities of Mumbai, Bangalore, Hyderabad, add to that Pune, we're interested in growing in Chennai, maybe something in Goa. The Goa is seeing some amount of challenges in the last 1 year. And we'll continue to look at opportunities in Delhi, but they should be ready hotels against building a greenfield there.
Great. Sanjay, if I may just ask a question on that. With regards to our ADR growth, in any of the 3 cities, have we seen a material change in terms of our mix of customers? I mean, have we moved in a more meaningful manner towards retail and GDS versus corporate?
It's a great question. Yes, great question. Actually, in fact, that's what's happened. So as occupancy strengthened, the hotel operators tend to close out other channels and give more room nights to the retail channel. Retail channel having a higher room rate tends to bring the average rate up. And that's what's happened. So if we were to look at -- and we recently Marriott was presenting to us, it was about a month or 2 back, that their retail business, which was at roughly around 21%, 22%, about 1 year, 1.5 years back is now in the mid- to high which clearly is reflecting on the average rates that we are seeing across the market. And I think similar strategies you will see in our Pune hotels as we go forward.
Okay. That's great to hear. If you can just help me with the retail piece, retail and commercial?
Yes. So Aditya basically, in the case of retail and commercial, we have been accounting both based on the building as well as SLM but we had to reassess our estimates because there were a couple of stores which were -- which are scheduled to open on a certain date. However, since they were taking it little longer, we have gone little conservative in our estimates, and we have reset our obviously, the top line accordingly on a conservative basis.
Okay. So if I may ask, we've got about INR 58 crores to INR 60 crores of revenue from the retail and commercial in the first half -- in Q2 and Q3 put together. If I annualize this number, is INR 120 crores a sustainable number to look at for an annualized FY '21?
So the full year number would be -- so what's your number, Aditya?
INR 120 crores, he said.
You're only talking about the ORB?
Yes. So I'm looking at Q2 and Q3 together because Q1 did not include the ORB. So Q2 and Q3 put together is a run rate of INR 60 crores. Is it fair to annualize that? That is the only question I had.
Reasonably fair to annualize that. There are a couple of stores, obviously, which have already committed to us that they're opening and they're in advanced stage. So I see no reasons why we should not be in a position to analyze it. More or less, it's in line. But that's only...
Aditya, that's only for the retail areas. The office is far higher.
[Operator Instructions] The next question is from the line of Abhinav Nadipally from IndiaFirst Life Insurance.
Sir, my question is specific to the Hyderabad market. Can you just share some numbers? I mean, what would be the specific inventory, which is, I mean, going to be added in that particular market over the next 3 years or so?
So there is no spec -- there isn't any major inventory being added. I think we are adding 170 rooms. And there is an unfinished Oberoi Hotel that is in that market. So as and when that -- the NCLD process that gets concluded and someone buys it out and starts working on it, that will take anywhere between 2 to 2.5 years to finish after that. There is a Meridian that opened a little while back, a few months back. Besides that, there is no serious inventory that we are aware of that's going to come up in the near future.
Okay. Sir, can we expect, I mean, a 10% RevPAR kind of thing or an ADR kind of thing over the next 2, 3 -- 2 to 3 years going forward, I mean, in the Hyderabad market?
So look, we don't want to give -- we don't want to give aggressive forward-looking numbers. I think you will have to take the run rate of the last few quarters and decide what the numbers are going to look like. Market continues to be very strong. In fact, it's been stated as the best performing market in the country in terms of rate of growth. So we continue to be bullish about it.
Okay. No, I'm asking these questions specifically because I've seen some -- a few of your rates. I mean, I think currently, the rates are very -- I mean higher than the current ADR, which you are showing in your presentation?
I hope you're paying them.
Okay. And sir, my second question, I mean, can you throw some light on the demand-supply situation in the Pune market? I mean, how is it?
So in Pune, there is some amount -- so there's a new hotel that opened the recently called the Ritz Carlton, not very high on inventory. I think it was in the 180, 190-odd rooms that they opened with. There's a Grand Hyatt, which is lying unfinished for several years in the more or less the same vicinity that we are at. Besides that, there are -- there's one Crown Plaza and there is one Holiday Inn Express or something like that was planned. But a lot of them are announced hotels, some of them work had started but there seems to be very less activity on site. And that's probably the challenge in assessing how much is going to come up. But having covered all of this, I think the rate of growth of supply is going to be significantly lower than rate of growth of demand.
The next question is from the line of Satyam Thakur from Morgan Stanley.
So my first question was just on the -- like the RevPAR performance that you reported, it seems quite stellar at 10%, right? However, the hotel segment revenues are up only 7% Y-o-Y. So does that mean that some inventory was out of circulation? Is that what is the driver and the number? Yes. And to complete the question on hotel side, the EBIT that you have reported, the segment profit, right, so that even after I make the adjustments for the previous year same quarter having the exchange loss, then also it seems that your EBIT margin is kind of flattish. Is that correct?
Let me address...
On a Y-o-Y. So what I'm saying is that even with 7% revenue growth and 10% RevPAR growth, why is the EBIT margin flat Y-o-Y? Why did we not see operating leverage there?
Okay. So let me address the first question, which was on the growth -- sorry, what was the first question? Can you just remind me?
Revenue growth being 7% and RevPAR being 10%.
Yes. So RevPAR is 9.9% or 10% are without any decrease in inventory. So the rooms that have been taken out for renovation are not decreased when we calculate the RevPAR. So in fact, it is -- if you were to decrease the RevPAR growth will be even higher. So that's one. So it is not on account of any...
So how many rooms were out of circulation in this quarter?
I think we took away some 25 rooms in December or something like that at Renaissance, and we had some rooms for renovation in Four Points, which have completed earlier part of the quarter 3. So in spite of that, this RevPAR is 9.9%, and this is on full inventory, not reducing the room count.
So Satyam, basically, the RevPAR reflects the growth in the room revenue, but then there are other revenues also.
Yes. Can I -- so let me take the second part of the question that why has the revenue grown only by 7%. I think one area that we -- I think we spoke about this last quarter also that the banquet demand seems to be lower than expected. And we've seen F&B show some amount of stress largely on the banquet side of the business. So if we were to look at Q3 F&B growth, it's grown only 2%. This is driven by 2, 3 factors. The 2 big hotels, Renaissance and JW Marriott Sahar, which were very heavily dependent on large events that happen subsidy-wide events, so those events not happening in this quarter. And therefore, Bombay as a whole saw some drop in the banquet business. And these hotels, because they had a large share of banquets, the overall impact on that and the total F&B revenue is quite large. So Sahar was actually flattish. Renaissance at least saw some degrowth. Westin grew at 12%, but that comes off a low base. Marriott Whitefield grew at 14%, but that again comes off a low base. So the 2 big base hotels did not grow on the F&B side.
Okay. Okay. Okay. And so that explains the revenue being lower. And the second part of this hotel question was that the EBIT margin seems flat Y-o-Y despite 7% growth in revenue. Did we not see any operating leverage play out here?
Satya, we're talking about 31st -- basically 9 months ended December, correct?
No, only the quarter. The quarter -- third quarter to third quarter Y-o-Y.
Okay. So basically, I think the way we will possibly have to look at is that -- possibly, if you look at is the exchange loss. See, what has happened, if you recall in the last year first half, the -- there was an exchange loss because -- which is also because on account of ECB. But in the third quarter of last year, there was a reversal because the rupee strengthened, as a result of which there was INR 24 million with INR 241 million which was accounted as income -- foreign exchange gain above EBITDA. Now if you were to exclude the INR 241 million on a like-to-like basis, then the EBITDA has grown by 22%, Satyam, from INR 972 crores to INR 1,189 crores.
Okay. We don't have the EBITDA numbers. What you have in the PPT is only EBIT segment profit, right? So which is why it's -- we don't have that number. So it will be great if you can share EBITDA as well for hotel business?
It's there in the presentation, but we can take it offline and we can show you where it is.
Okay. Okay. Maybe I missed that. Okay. That's good to know. And then third part...
Since you're online, request you to go to Slide 14.
That segment profit is EBIT, right?
No. That's EBITDA.
Okay. Okay. So that's what I thought, INR 1,221 million, if I subtract the exchange gain of INR 228 million from there, then the EBIT -- or EBITDA margin here seems flat, right, Y-o-Y?
So 23 minus the same.
But these have gone up from 43.4% to 52.5%.
[Foreign Language], you are looking at the wrong. Yes, you're right. So you are right, Satya. You are right, Satya. Let us break it up for you in a detailed conversation.
Yes. But my point is that it remains 43%. The adjusted margin remains 43% year-on-year in both the quarters. So that's what I found little -- I'm just trying to get that was there any one-off costs that we booked in this quarter? Is that what has kept the operating leverage from playing out? Or should we expect that with 7% revenue growth we just about kind of maintain the margins.
Maybe I can just come in here. Just to give you a couple of numbers, which will help to understand this better. See, the Hospitality revenue, as you rightly said, has gone up by 7%, okay? The Hospitality segment profit, which is an EBITDA equivalent before exchange loss has gone up by 9% from INR 994 million in the previous year for the quarter to INR 1,084 million, okay. And therefore, while the revenue has gone up by 7%, the EBITDA for the segment has gone up by 9%.
Okay. Okay. Okay. Makes sense. And then now moving on. The second part on hotels thing was that in this coming quarter, are you seeing any impact from this whole scare on the virus side? Are you seeing any cancellations happen in your expertise in Jan and Feb? What's the outlook looking there?
So Satyam, unfortunately, we don't have too much exposure to Chinese tourists and we are not in the leisure segment. So we don't have too much of an impact. But it is a serious virus. And we've got to not ignore it. We continue to stay on top of it. We've had continuous engagements for the last couple of weeks with the operating teams of the hotels. And we've had some cancellations. In fact, the Marriott guidelines that we've sort of seen recently that whilst the booking pace has not grown dramatically, it's still grown at 1% above the pace that was there for the same time last year. However, week-on-week booking activity has seen some drop. We'll have to wait and watch on how it sort of culminates. We're concerned on the way things are going. Obviously, it's a global pandemic. We need to be careful. I must say that Marriott has -- I must commend the Marriott team for having responded extremely proactively on this. So they have actually set up an action plan, which is very robust right from revenue to cost management side on the revenue side, on the retail business side, on the group side, they have put in action plans, which are -- and I've gone through some of those details, very well thought out. And I think they are just solid action plans. Cost side also, they have taken precautions to freeze hiring, nonessential travel and other procurements, et cetera. But more than that, I'm really very confident that the way they have charted out a plan for the next few weeks, and they are actually sending updates every week on action plans. They have it well under control. It's not as if we've not had cancellations. Right now, the cancellations that have come in for these weeks. We were fortunate enough to fill them up almost immediately because there was enough demand on account of the sold out dates. But if it continues down this line, we will obviously have some impact on the business. We'll continue to watch it very closely.
Okay. And my last question is on the rental side. So there on the Sahar mall, there are a number of outlets that the growth there seems to be stagnating a bit. I mean, what's happening on the ground? Are we facing a challenge in terms of filling the -- leasing out the remaining space? Or is the challenge more in terms of those guys opening and reaching the commercial launch of their outlets?
So I think it's a mix of both. I think there are 3, 4 outlets which are left, which have not been leased out as yet. There are 4 outlets which are ready, but are awaiting the licenses. Now I'm going to keep ourselves in their shoes also. If they've got to pay up an annual excise license in February, and they're going to have to pay the full year exercise is the rather open for 1st April. So that's -- I understand there's a reason for delaying it a bit. But in the overall larger scheme of things, it's small revenue. The big ticket item was the office side of the revenue. That's going as per plan and on schedule.
The next question is from the line of Karan Khanna from AMBIT Capital.
I have 3 or 4 specific questions. First on Novotel Pune, if you can help us understand more specifics in terms of what the occupancy and ADR is for the property vis-à-vis comparable properties nearby? Second, if I look at your segment results, your margins in the Retail and Commercial segment has reduced from 54% to 44% on a sequential basis, like the Hospitality division, the extent of seasonality in retail and commercial segment should be lower. And hence, if you can explain why the operating margins have reduced? Finally, the third question. In terms of the early trends for fourth quarter, if you can throw some light on how the RevPAR trends and the outlook is for the ahead?
Thank you, Karan, for those questions. Let me address the Pune question first. So in Pune, the hotel, and I think we've shed some numbers of the last financial year on the presentation because we can't disclose numbers that are not out in public space right now. Let's see, sort of share with you 2, 3 macro level thought processes at our end. Number one, we strongly believe in Pune, like I mentioned earlier. That's a market that's going to have a strong increase in room night demand. And we've done this time and over again over the last 20 years to foresee market dynamics and go and put hotels or build hotels or acquire hotels in those locations and take advantage of growth markets. Hyderabad is case to example; Bangalore, the same thing happened. Mumbai, similar scenario happened for us. Having said that, Pune, the hotel that we've bought, the reason we've been able to buy it at a price, that is a compelling price was because it wasn't performing well. So I don't really -- don't really want you to assess previous numbers to assess what the hotel's future is going to be about. The macro strategy over there is the following: one, complete the 88 rooms that we have, which are unbuilt quickly because the flow-through from those 88 rooms will be very strong. The fixed costs have already been covered. And typically, room business throws up, in any case, 80%, 85% margins, this should throw up slightly higher margins than that. Second, there are opportunities on the properties to sweat the asset a lot more efficiently. On that front, we've seen that there's a pool deck area, which is completely underutilized right now, though they've got a bar and a bar license in F&B area. It's an area that we can monetize very quickly by turning it around. The action plan is already under beyond that. The hotel doesn't have a spa. So we're adding a small spa there to add a facility which we believe will turn around the guest experience offering at the hotel and largely, the ability to sweat the asset more. On the cost side, we see a couple of big opportunities: one, planned room will optimization bring in electricity costs under control; and secondly, we want to introduce B&G, which replaces LPG as a gas, which brings down the cost significantly for us. In addition to that, we've got operational opportunities on the F&B outlet timings, laundry timings and outsourcing laundry and bakery operations. All in all, we're extremely bullish about this hotel. The asset management capabilities that sits in the Chalet hotels team, the distribution capability of Accor at a global level and a very young and aggressive and dynamic team at the hotel itself is a great combination to take it to the next level. Currently, it's underperforming to its comp set. We see it performing well over the comp set in the near future. So the key, as I said, is to get the 88 rooms going. And on that front, not only have we -- are we going to be quick off the ground, we've already designed those rooms whilst we were closing the acquisition. So we're going to be on site as early as first week of March to start work on the rooms.
Sure. And then, sir, the second question on the segmental results as far as your margins in the Retail and Commercial segment are concerned. So if I look your segmental results, your EBIT in the Retail and Commercial segment was INR 12 crores this quarter versus 16 -- last quarter INR 16.7 crores, while the revenue has broadly been on similar line at INR 30.7 crores last quarter and [ INR 20 crores ] this quarter.
That's right. Karan, the reason is because if you look at overall Retail and Commercial revenues for the quarter, the overall revenues have gone up and the overall profits have also gone up. The overall segment profits have gone up, as you would have noticed. So from a INR 52 million of EBIT segment profits last year, it has gone up to almost INR 178 million in the current quarter. And this increase is essentially because the Sahar commercial is getting progressively occupied by the tenant, the lessee, the revenue is also being accrued accordingly. Your question is comparison to the previous quarter. As I mentioned initially that there were -- so if you look at quarter-by-quarter, the issue what has happened is that in the current quarter, we have taken a conservative view on certain recoverables that were there from certain stores in the ORB. So we have taken -- based on that, we have revisited our revenue recognition on those on a conservative basis.
Fair enough. Fair enough. And finally, in terms of the fourth quarter, as far as the early trends are considered, if you can throw some light on how the RevPAR trends and the outlook is for the quarter ahead?
So I'm afraid we are not giving any forward-looking statements or numbers on this front. Typically, Q4 is always a strong quarter. And I don't see any reason why it will not continue to be a strong quarter, both on occupancies and rates. But having said that, we still need to see how the virus -- coronavirus plays out. As of now, there is nothing material that we are worried about. But it was a great quarter even last year. In fact, it was the best quarter in over a decade last year when those results came out for the quarter 1 calendar year or Q4 financial year that we reported. So it's difficult for me to right now share the numbers because I'm not allowed to do that. But let me assure you that the performance will continue to be robust.
[Operator Instructions] The next question is from the line of Sumant Kumar from Motilal Oswal Securities Limited.
My question is regarding the overall -- how the performance -- how is the performance of corporate and for free individual travelers the segment and MICE segment overall Y-o-Y?
So thank you, Sumant, for the question. A very quick breakup of how things are going. So we've actually categorized them into 3 categories, transient, groups and contracts. That's the segments, which are the macro segments that we have. So we've seen the overall contribution from transient grow from 67% to 69%. The groups continue to grow from 12% to 16%. However, the contract, which is only the crew segment has gone down from 21% to 15%. But that doesn't mean the absolute room nights have fallen by that person. It's just that this, combined with the growth that we've had, this is the share of the total buy. The other way you can look at it is source of bookings. So from a source of bookings, we've got 4 sources that we look at, e-channel, which is largely the OTA business, the global distribution system or the GDS, what comes from grand.com, which is marriott.com for us and what comes on property through voice or other means. So on the e-channel side, which is the OTA business has grown from 8% to 10% in this quarter. The GDS business has actually come down marginally from 37% to 35%. marriott.com, which is the cheapest form of acquisition of business has grown from 12% to 16%. And property or voice and other means of getting the business have gone down from 43% to 39%. The primary reason for property and voice business to go down is because the group business, which was combined with the MICE segment, has seen a slightly slow performance. What we are excited about is the growth in the marriott.com, the continued strength of the GDS, which also covers retail to some extent. And finally, the e-channel, which is largely the retail business.
Okay. So overall, the higher ARR, can we say that the transient -- overall the free individual traveler post the GST cut, the growth is higher and so your ARR is higher?
That's true. The segment mix has changed, and that's been thought out sort of strategy. It's a strategic call that the Marriott had taken to grow the retail business through various means, whether it's coming from the OTA channel or through from their own marriott.com channel.
So when we see the overall performance of the other peers, overall, the ARR growth is comparatively lower, what you are showing the 9% average ARR, you are showing, overall the industry growth is in the range of 3% to 5%, you can say that, on the luxury segment also. So that's why -- I'm trying to understand what are the -- these are the key reasons? And any other reason is there to outperform the overall peer?
So Sumant, we -- I can't speak for others because I don't know what their strategy or what their internal numbers are. I can only share what we are doing. And on that front, I think about for the last 3, 4 months, we've been engaging with the Marriott team. And every month, the strategy that they have spelt out to us indicates that they will release more rooms in favor of the retail segment because the occupancies are high, you want to drive your rates up. So you continue to increase the retail contribution to the total mix, and that's helped us.
So overall, we have seen a few companies' numbers and their occupancy, they have compromised -- they have grown through the volume, right? The occupancy is 4% to 5% higher, and they have compromised on ARR. So your strategy is focusing on more on ARR rather than occupancy?
I think it will vary from quarter to quarter. In quarters where, in any case, the occupancies are high, we will continue to focus on rate-led growth. On quarters where the occupancies are typically lower, which is typically the monsoon and the summer months, we will continue to take on a large volume business like groups, conferences, et cetera, which typically come at a slightly lower rate.
Sumant, we are basically going to be driven by RevPARs. I mean if you look at our overall annual -- sorry, year-to-date ADR also, it's 5%, of course, helped by this quarter growth of 9%. Also, Sumant, you will also appreciate that occupancy levels are also at a healthy level, so we are also able to leverage.
[Operator Instructions] As there are no further questions, I now hand the conference over to Mr. Sanjay Sethi for closing comments.
Well, thank you so much, everyone, for your time. We look forward to your continued support over the coming quarters. Thank you.
Thank you.