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Chalet Hotels Ltd
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Ladies and gentlemen, good day, and welcome to Q4 FY '22 Earnings Conference Call of Chalet Hotels Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Sanjay Sethi, MD and CEO, Chalet Hotels Limited. Thank you and over to you.
Thank you. Good morning, ladies and gentlemen. Welcome back to exciting times and to the earnings call of Chalet Hotels Limited. We've closed another challenging year with the pandemic. However, we've also witnessed profound resilience of the travel industry. The recovery period post each wave has got shorter and visibility of normalcy is far higher.
Barring the impact of geopolitical tensions in Russia-Ukraine war, global travel across Europe, Middle East, Asia has had a smart pickup. India revoked the Disaster Management Act and all accompanying COVID restrictions across the country about a month ago. And COVID cases have been declining and there continue to be around the 3,000 cases per day for the past 2 months. Some states have reimposed limited restrictions based on local case levels.
As an outcome, travel confidence has improved significantly. Domestic airlines witnessed 84% recovery to pre-COVID levels in India. Hospitality sector also witnessed a sharp recovery as per HVS in the month of March. Occupancy pan India were between 60% and 62% and ADRs between INR 5,400 and INR 5,600. Amongst the key cities, Mumbai outperformed the overall recovery cycle. Chalet's portfolio also saw a similar trend with Mumbai leading the way. Pune and Bengaluru were close second, followed by Hyderabad, Recovery for the portfolio started in mid-February and picked up pace in March. This has been driven by strong resurgence of business travel, both domestic and international and assisted by the IPL games in Mumbai.
Let me highlight a few key initiatives of the year, which are likely to have significant long-term impact. In the year gone by Chalet re-strategized asset strategies through quick favors on the retail segment. We started Bengaluru residential project. We recommenced hotel projects at Powai and at Pune, and we reaffirmed our commitment to a sustainable tomorrow.
On the operational front, despite the tepid first 6 weeks of the quarter due to COVID, the company has reported a reasonably good quarter with occupancies of 55% and ADR of INR 5,429, which are higher by 7% from the preceding quarter. Portfolio occupancies for March were a healthy 68%. In the month of April, Chalet clocked occupancies of 81% against 76% in April of 2019 and RevPAR of INR 5,759, a 93% recovery from April '19. JW Marriott Sahar; Westin, Powai, Four Points, Vashi; and Novotel, Pune reported RevPAR above April 2019 in April. This indicates that the recovery to pre-COVID levels could be much earlier than the previous estimate of H2 of FY '23.
For the fourth quarter, revenues for the company were at INR 1.53 billion, a marginal drop from Q3 as the month of January and part of February was a washout for the industry. Hospitality revenues were at INR 1.26 billion with an EBITDA of INR 290 million for the quarter. In the retail and annuity segment, the earnings from the operational assets remained steady and continue to support cash flow. At the consolidated level, revenue for the year was INR 5.27 billion with an EBITDA of INR 1.14 billion.
Closing debt in March was INR 22.34 billion. Milind will share numbers with final details later. Conversion of the mall to a commercial space in Bangalore is on track for a completion in Q3 of this year. Development of the new commercial at Powai is as per plan for completion by end of the year. Bengaluru had a slight delay on account of certain supply chain challenges, but we should be done with it in the next quarter. At Powai, we finished the Phase 1 of the renovation of the hotel and the erstwhile Renaissance was rebranded at Westin Mumbai, Powai Lake on March 1st. We will be starting the Phase 2 of the renovation in June after the IPL team checkout this year and complete it by end of the financial year.
The mark approval for Novotel is ready for inspection and we are targeting to complete the additional 88 rooms by Q3 of this year. I'm happy to share that at Koramangala, demolition of the 10th level -- up to the 10th level is complete before schedule, and we have received the NOC from HAL. Process for approvals from DDA and MOEF are underway. Recent recovery in demand dynamics at Hyderabad look conducive for an additional hotel and we are likely to take a decision on restarting work on the 168-room Westin too at Mindspace soon with a potential opening of the hotel in Q4 of the current financial year.
The Airoli Hotel project that's still on wait and watch and we will continue to assess demand dynamics to take a decision on this project. For the next 2 quarters, we will be focusing on 4 key areas: one, capturing the domestic and global rebound, efficient execution of growth projects, the rollout of the ESG strategy and attracting and nurturing talent.
Ladies and gentlemen, we're excited about the current business trends and have set internal target of surpassing revenue of EBIT and EBITDA numbers of FY '20 in the current year itself. On that happy note, let me now hand over to Milind to walk you through the financials in a little more detail.
Thank you, Sanjay. Good morning, ladies and gentlemen. Reported revenue for the quarter was INR 1,497 million, which was marginally lower than Q3 FY '22 due to the resurgence in cases led by omicron. During the quarter, the company received income tax refund and we have written off few creditors of INR 38 million, which is recorded as other income. And we have accounted INR 18 million under some cost towards retail asset repurposing. Adjusted for this, EBITDA was at INR 331 million as against like-to-like performance in Q3 FY '22 of INR 419 million.
Loss after tax for the company was at INR 115 million, an improvement from loss of INR 144 million in the sequential quarter of Q3. This was after taking credit for deferred tax asset of INR 146 million for the quarter. The hospitality segment contributed 82% of the total revenue of the company in Q4 FY '22. Occupancy for the quarter averaged at 55%, lower by 5 percentage points sequentially. The ADR for the quarter was higher by 7% at INR 5,429 as against Q3 FY '22. As mentioned by Sanjay, in the month of April, the company has clocked ADR of INR 7,140 and occupancy of 81%, highest in the pandemic period.
Revenue for hospitality was INR 1,264 million in the quarter and EBITDA was at INR 290 million. On the cost front, we continue to maintain lower fixed and variable costs compared to our pre-COVID performance. Fixed cost was lower by around 33% and variable costs were lower by up 52% for financial year '22 as compared to financial year '20. Hospitality payroll cost was 19% of revenue in Q4 as compared to 15% of revenue in financial year FY '20. Utility cost as a percentage of revenue was held steady at 9% as against 7% in the financial year FY '20, clearly indicating efficiencies built over last 2 years are at play, while business catches up to pre-pandemic level.
Stated in rental income from operating commercial assets have kept revenue and EBITDA from rental and annuity segment at INR 216 million and INR 144 million for the quarter respectively. Net debt of the company from April '21 to March '22, has increased by INR 3.63 billion, which includes INR 3.49 billion of CapEx spend. So operating cash flows were supported by steady rental and annuity business and product cost management. The net debt of the company as of March '22 stands at INR 22.34 billion. The average cost of rupee loan as of March '22 stands at 7.5%, an improvement of approximately 50 basis points since March '21.
We have cash and cash equivalents of INR 1.6 billion as of March '22 and INR 6.95 billion available lines of credit for general corporate purpose and planned CapEx. There has been no new subscription from promoters on 0% nonconvertible redeemable preference share for funding the outflows relating to residential project during the quarter. The total subscription stands at INR 1,750 million as at March 31, 2022. We are ahead of schedule at this site with the receipt of NOC from HAL. The other local development approvals are being processed as we speak. Based on our market assessment, the realization per square feet for this project is expected to be higher than our earlier estimates.
With this, we'll now open the floor to questions.
[Operator Instructions] We take the first question from the line of Karan Khanna, AMBIT Capital.
Congratulations on an encouraging set of results. So Sanjay, I had 2 questions. Firstly, on your recent brand upgradation to Westin at Powai. Any initial comments in terms of the overall perception -- market perception in terms of change in preference or occupancy in ABRs? Also, has this led to an increase in corporate sales for the property?
Yes, we're seeing a really strong sort of response to the change of brand and the renovation of the hotel in Powai and it's done extremely well in the month of April. I think both corporate, as well as MICE business has picked up over there, weddings are going strong. And it seems to be renewed sort of interest in that property after the brand re-change. So, I can confirm to you that the response is very positive. I'm not at the liberty of sharing numbers because we haven't made them public, but it's been very well received.
Sure. And secondly, Sanjay in the past, you've mentioned, you've spoken about looking to enter into the leisure segment at some point. Is the recovery now visible or any thoughts here -- any incremental thoughts in terms of how you're looking at various markets and what kind of a property will you be looking at?
Karan, 2 things on that. Number one, over the pandemic, the leisure segment has got created even within the existing hotels that we have, right? That whole staycation model that we've created has given us an opportunity to create urban resorts. And I think the Powai hotel, which is now Westin Powai Lake is a clear example of that. The location has fantastic experience opportunities for leisure travelers, it's drivable distance within the city of Mumbai, yet within the city of Mumbai. So that's one. And that's happened in couple of our hotels also. But coming back to investments in leisure assets, yes, our engagement on some of those opportunities continue. Since we are in conversation, we cannot share exact details, but our intent is to add 2 or 3 leisure assets into the portfolio.
Sure. And then finally, on the commercial side, given your portfolio is expected to increase to a 3 million square feet, what's your strategy here in terms of segment contribution in revenue and EBITDA once these assets stabilize? And what initiatives would you be taking with respect to building a separate team for leasing along with update on the leasing momentum across your near completion assets? That would be my last question.
So, Karan, we've already got a team in place that's helping us for the leasing activity. The -- as soon as the facade for the Bangalore asset is up, leasing activity will pick up pace because we're not leasing it till the facade is up. We've got more than enough interest for the whole building, as well as part of the building there. Mumbai, of course, the leasing activities start in about couple of quarters from now. At that point of time, if we need to create a team, we'll do that, but I don't see a need to that because the demand is really high.
In terms of revenue. I think you shared indicative numbers in the past on rentals for these 2 locations. We expect that we will actually end up higher than those numbers that we shared in the past and the EBITDA flow-through will be 90% plus.
We take the next question from the line of Vikas Ahuja from Antique Stockbroking.
My first question is on an occupancy level in April, which was in the presentation. It was about 80% increased from 68% in March. Is it largely led by Mumbai or others cities also witnessed similar trend? I'm talking direction wise at least. And do we think Q1 would be better than pre-COVID across markets as well? I mean, you had talked about the overall portfolio, but looking across all the markets? That's my first question.
So as I understood, there were 2 questions. But -- so you said occupancy in April we said is 81% and I think the signs are positive in all the cities. In fact, in my statement earlier, I did mention that even a couple of other hotels outside Mumbai have shown similar results. So, to give you a sense, we've seen --Mumbai, of course do extremely well on the back of the IPL business also in the city with the hotels reporting between 80% and 92% occupancies. 4 Points, Vashi had actually 98% occupancy.
Marriott, Bengaluru, which is only hovering around the 20% mark earlier has now hit 56%. I must point out here this 56% is in a total inventory of 391 rooms. If you take the 67 rooms of ALC or Accenture learning center out, the occupancy is actually 62%. So that -- there's a healthy pickup there too. Westin Hyderabad also clocked 77% occupancy. And Pune was again in the 90%. So, clearly all hotels have done well, it's not just the Mumbai phenomenon, but everyone have picked up. Bangalore is lower than the rest of them, but has had a very healthy and sharp pickup from where it was 2 or 3 months back.
Q1 in terms of numbers, I don't want to give any forward-looking numbers at this point whether it will be at pre-pandemic numbers or not is yet to be seen in our estimate. We think the financial year -- we should be able to close the whole financial year, as I said in the opening statement above FY '20 numbers, even on a like-to-like basis.
Sure. This is helpful. And the other question I have is pre-COVID, if we look at those numbers, we were doing EBITDA margin of close to 35%. Now assuming full recovery in FY '23 and '24 and considering pent-up demand as well, is it fair to assume that in next 18 to 24 months, we might see margins much better than what it used to be pre-COVID, especially considering better mix of commercial reduced employee to room ratio and other cost savings? Or do you think the current cost escalation around higher wages, power, et cetera, will keep margin subdued? So I'm not asking for a guidance on margins, just more on a qualitative, what are the puts and takes on margins maybe from 2 years perspective?
Let me answer the answer in this fashion. With revenues hitting pre-pandemic numbers in the current financial year, as stated earlier. And our fixed cost as well as variable costs well below pre-pandemic number. There's no reason why the margins won't improve, but I'm not going to give any guidance at this point on the actual numbers. And you're right, as and when the office business comes in, that will again add a further improvement on the margins.
And the impact of maybe higher wages and the other cost, which is the phenomenon now most of the other companies are also facing that's not going to, I mean, impact the savings which we are seeing?
As we factored in all the inflation impact in our current forecast for this year. as well as wages, the increments, et cetera, that have to be given are being given. And we see no reason why we won't be able to improve performance. Milind wants to add something on this?
Vikas, see, on power side, we have long-term power purchase agreements. So, we don't expect a major increase under that head. And in fact, one of our property, we have negotiated better rates than last year. So, on power side, I mean, the cost will be more or less same as last year, except for the variation on account of occupancy.
So what Milind is saying is that our cost per unit will be below FY '20 numbers. And similar to what it was -- in fact, slightly better than last year with the revenues going up as a percentage, we should do actual cost to revenue, we should be better off.
Sure. And finally, is it possible to get the attrition number if you have? That will be all.
So attrition in our industry has always been high. Even pre-pandemic, our attrition rates were in the 40%. We haven't seen any major change on that.
We take the next question from the line of Archana Gude, IDBI Capital.
A few questions. Firstly, on the business side. Can you just guide us some more on the business mix in terms of leisure and corporate for this quarter and full year?
Apologies for that. I put you on mute. Archana, for the quarter that's gone by, in February and March, we saw strong resurgence of business travel coming back. And the transient segment has improved significantly in the mix. And it's actually gone up to now 66% of the revenue, in the last quarter, came from the transient segment, which is primarily the business travel. And that's for the full quarter. If you were to look at second half of February and March, it will probably be in the mid- to high 70%.
So clearly, business travel is the primary driving factor for the occupancies now. And in March, where we did 68% occupancies, we see that being the largest contributor. And in April, we've also seen a strong resurgence of international business travelers coming in. And it's still nowhere near its peak number. It's, in fact, probably halfway there. And in spite of it being only halfway there, our occupancies in April were 81%.
Sure. Sanjay, when we look at the Bangalore market, maybe you can give us more detail, some explanation, why exactly the Bangalore markets are so laggard, I mean, when you compare rest of the cities, they have been pretty welcome, but -- so Bangalore is like kind of weak market for almost everybody. Is there any structural change that has happened in the last couple of years during this COVID time? What exactly is going wrong with the Bangalore market?
So, I think what went wrong was COVID. And now that the COVID impact is going out, the recovery is very sharp, as I mentioned. Bangalore probably has the highest recovery percentage in terms of occupancies and rates for the portfolio. So, let me explain Bangalore market to you and the rest of the audience here. Bangalore divided between 3 segments actually -- 3 geographical locations.
One is City Center, which has continued to do well, driven by mix of domestic business travelers for all industries. The other is the electronic city side, which is primarily the hardware side. And the third is where our hotel is looking at it, which is the IT districts of Whitefield and the outer ring road or Sarjapura area. Within the Whitefield and outer ring road, the primary business was MNC companies with their BPOs and IT business. IT ideas, financial fintech, et cetera. So, that obviously was slow till now. With the opening up of the skies for international travel and lot more travel happening within the IT industry now, we see that coming back very strongly.
See now they're going to follow the traditional cycles of weekday, weekends that were there in the past as far as business travel is concerned, weeks where we have holidays, you'll see occupancies dip and weeks which are clear, you'll see very, very high occupancy. So that phenomena we started seeing, which is now falling in line with what the pre-pandemic trend was.
Sure. That is pretty helpful. And my last question is for Milind. Can you just help us with the CapEx figures for FY '23 and '24?
Our CapEx for next 2 years will be in the range of INR 740 crores, major will be incurred in FY '23 of around INR 540 crores. Again, out of this INR 540, we'll spend around INR 400 crores on commercial office building and balance INR 130 crores, INR 140 crores on hotel.
Sure. Milind, this -- the amount which we have mentioned in the presentation, INR 425 crores for the Koramangala project, have you also considered the cost inflation, which has happened in the last 6 months or that number is yet to reflect in this number?
We have considered that inflation. And we think it may cool down in next year or so, but we have considered impact of commodity price increase.
We take the next question from the line of Jeetu Panjabi from EM Capital Advisors.
Good to see things are coming back. And when you talked about the April occupancies kind of makes you feel good. So, one question just on the demand side. Obviously, you can see that there are bookings for the next few months or whatever as you go ahead. And also, you can see there's a lot of weddings and other stuff that had got pushed out and lot of those bookings also must be coming in. So can you kind of just say that this year is going to be a really good year driven by all those pent-up weddings or other stuff besides just business coming back?
Yes, indeed, I can confirm that this year should be better on 2 or 3 counts. One corporate travel is back with a vengeance. I don't know whether corporate travel has too much a pent-up demand. I think it's more steady demand that's going to happen and we see that already happening. On the wedding and other events or MICE events, including meetings, dealer meats, et cetera. there's clearly been a long period of no activity. And I think that's going to come up as pent-up demand that's going to sort of reflect in the hotels.
We are not in the wedding season. In spite of that, we're seeing a lot of wedding queries even during this period. so, whilst typically, the wedding season would start now after Navaratri in October, November, we are seeing the first half itself getting very, very busy with weddings at least in Mumbai. So, that's a very, very good trend for us that the weaker months of the year will also get the support of weddings now.
Okay. So now, second question is just more strategically, as you kind of say that we probably have some really good times over the next year or 2. What are you doing from a management standpoint differently? Are you thinking of picking up more properties on a license basis or on a brand basis or whatever. I just love to hear how you're thinking as management of how you want to take the business forward for the next year or 2 in this period?
So, our strategy for the next couple of years is focused around growth and the growth is coming in 2 forms -- through growth assets. One is our diversification strategy of getting a healthy mix of non-hotel assets in addition to hotel assets, we are an asset owning company. And we have sort of diversified our risk -- mitigated our risk by getting into annuity business. We were already there for some time. We are expanding that portfolio from around -- little over INR 0.5 million to INR 3 million over the next 2, 2.5 years. So that's one. And there is 2 projects underway, the third yet to start.
The 2 projects are the 750,000 square foot of office building in Powai within the Westin Powai complex. And the second one, Bengaluru, which is roughly around 650,000 square foot of a new building, plus 300,000 of the mall that's got converted into office. So between these 2, we have almost about 1,600 -- 1.6 million square foot. And we've got another 750,000 square foot in Powai, which has not yet started. We'd like to see the traction on leasing of the first office building in Powai before we commit to the second building.
So far, it looks very, very good. Our leasing team is extremely bullish and confident of us doing the second building, but I'd like to see traction on it. On the hospitality side, we've got 2 things happening. Of course, the rebranding of Powai is a big win for us. Second is the 168-room hotel in Hyderabad, which will be the second Westin, which is half completed. We are now starting to work in the next -- hoping to start work in the very near future and have that up and above operational by January of 2023.
The third one is the addition of 88 rooms at Pune. The fourth one is the 260-room hotel that we had in Airoli Navi Mumbai, which is put on hold. We didn't have shovels in the ground on that one. So, we'd like to wait and watch on that market before we commit to it. But in addition to that, we do still see a lot of stress assets on the market and we continue to evaluate them. There are also a couple of new hotel deals that have come in the market. Some of them are bids in various cities, put in by various semi government organizations, and we are looking at them very closely. But we do see us growing and adding maybe about 1,000 to 1,500 rooms over the next 4 to 5 years to our current portfolio of 2500.
Okay. Super. And one final question. If you take total net debt as of December -- as of March '22, what's that number? And what would you ballpark say the same numbers going to look like March '23, how is that direction going to move?
Yes. So, Milind, is going to come on that, as you said, the CapEx plan for this year. That will get added to the current debt. So Milind, maybe you can share the peak debt end of the year.
So, our net debt as of March '22 is INR 2,234 crores, that is INR 2,234 crores. And we expect it will be peak to INR 2,600 crores in FY '23 and it will start deferring out.
Within that INR 2,600-odd crores, most of it is capital work in progress that is yet to yield EBITDA numbers and the EBITDA potential from these CapEx in progress is extremely high.
Let me give you one more number, in FY '20 -- sorry, in FY '19, post IPO, we were at INR 1,500 crores, today, we are at INR 2,300 crores. We have spent around INR 450 crores CapEx in the last 2 years, and we did acquisition of INR 300 crores in FY '20. So, if we add all these, our CapEx is around INR 750 crores, which is represented by incremental debt.
Okay. Super. And Sanjay, if I can ask you one last question with your permission, is what's not working well? What's disappointing at this point out of the whole whatever you do?
Well, the answer to that question would have been pretty clear in our mind about a quarter back. Last 2 months, everything seems to be working in the right direction. So, we are very pretty bullish now.
[Operator Instructions] We take the next question from the line of Amandeep Singh from AMBIT Capital.
Whilst most of my questions have been answered. Can you give us some sense on change in ADR for corporate travel versus pre-COVID given business travel is now coming back in a big way?
Sure. Amandeep, happy to reconnect with you again. So, look, let me explain this in a little -- slightly longer explanation. One is, we got to break down the corporate segment into 2: domestic and international. So, domestic ADRs are same as they were pre-pandemic. International ADRs are almost same as pre-pandemic.
However, the mix right now is different than pre-pandemic, weighing more heavily towards domestic as in one that starts sort of correcting itself into a 50/50 ratio for domestic and international, we expect to be back on ADRs on the corporate side to pre-pandemic. So, we think this will happen over the next quarter or 2. I think the positive here, Amandeep, is that we expected to hit pre-pandemic overall revenue numbers and cross EBITDA numbers in H2 of this year. I think we are getting very close to it in Q1 itself.
That was really helpful. And secondly, one bookkeeping question. Can you just help us with revenue breakup between rooms, F&B and others for the hospitality segment in 4Q?
Certainly. In fact, we have it on the presentation. I can share that with you in a minute, give me a second, please. Yes. So in -- firstly, on a consolidated performance basis in FY '22, hospitality contributed 77% of the revenue. In Q4, it contributed 82% of the revenue. Then if you would have come to the hospitality sector or rather the breakup of the business. You have to give me a minute to get in there. So quarter 4 FY '22, room revenue was INR 683 million, F&B was INR 488 million. Other services, INR 88 million, total INR 260 million. And for the year, room revenue was INR 2,195 million. F&B revenue was INR 1,565 million, other services was at INR 337 million, total INR 4100 million. So all in all, I think we're back to the ratios that we were there pre-pandemic.
We take the next question from the line of Prateek Poddar from Nippon India.
Sir, just 2 questions. Sanjay, you talked a bit about staycation, but just wanted to check whether the trends are still sustaining given the sharp increase we have seen in ADRs for your properties? Or the mix is changing more towards corporate travel? That's question number one.
Sorry, Prateek, could you just repeat that?
So on staycation, right, which was a segment, which was doing very well for us in FY '20 -- '21, '22, whether the trends are sustaining in the month of April because the ADRs [ are being diverted ]. So, I just wanted to check, is there still appetite at these ADRs for staycation or that has gone down?
So, look, it's changing towards corporate for sure. Staycation -- I think the staycation now is in the 2 primary hotels that we used to see a lot of staycations, there is no availability of rooms. So, whilst the demand continues to be consistent, the corporate travel has taken up a lot more rooms within our hotels. And the second thing is with the exam season and school season on, as well as people back to offices, we do see the weekday trend going down a little bit, weekends continues to be very strong.
Got it. And versus pre-COVID, if you were to compare the percentage of staycation, I'm assuming that during the weekend, you will be running at over occupancy versus on the weekdays. What's the trend like? Have you seen a higher percentage of staycations versus pre-COVID?
See, there was no staycation business pre-COVID. This is a new platform. So anything comes in is incremental from our perspective. And since the demand seems to be healthy, except for this whole period of schools and exams and all that, we think it will continue to support the weakened occupancies going forward. So, 2 things are happening. I think on the weekend side, we see staycations and social functions helping us support occupancies during weekends as well as holiday seasons.
So versus pre-COVID, your RevPAR has structurally gone up, right? Because now you have certain occupancies on the weekend versus earlier not being there?
Not yet, Prateek, but it will because if you look at our -- my opening statement also, I said, we had 93% recovery on RevPAR for the month of April because the rates were still not at par with April 2019, however, the occupancies were very high. So, we'll -- we haven't seen RevPAR go above April '19, but it will at some point of time during this year, in fact, very close from now onwards. Let's see how it stand out. We still need to see ADR really hitting pre-pandemic levels, numbers in big city hotels across...
And last question, sir, how much was IPL a function of pulling down your ADRs at the same time assuming that you would have given certain discounts and this uptick in ADRs have caught everyone by surprise. Is there a pull down because of IPL wherein your RevPAR could have been higher had you not sold a certain part of your inventory for IPL?
So, if we had thought that IPL will drag down the RevPAR a bit, we probably wouldn't have taken the IPL. I think IPL has worked well for us. Whilst at Powai, the rate for the IPL team is lower than the blended ADR at JW Sahar, it's actually at par with the blended ADR. So, it's not hurting us.
We take the next question from the line of Rajiv Bharati from DAM Capital.
With regard to the CapEx, you mentioned INR 140 crores on the hotel side and of which, I think, INR 25 crores -- INR 20 crores to INR 25 crores towards Novotel and if I'm not wrong INR 750 million was a total, which is required for the second Westin? So the balance INR 40 crores is towards -- can you reconcile that number?
Rajiv, Milind here. RHI rebranding, 150 rooms are pending and some banquet renovation. So we'll spend around INR 45 crores on RHI -- Westin Powai. New Westin, Hyderabad, we'll be spending around INR 60 crores and Novotel and normal hotels represent renovation CapEx.
And on this RHI, the rebranding thing, has the take rate of Marriott gone up because of this rebranding?
It's yet to be seen. I mean, this rebranding in March and then we have the IPL team come in. But the corporate segment is paying us much higher rates than they were prior to the pre-pandemic.
No, what I wanted was, in terms of the increase in the management contract agreement with Marriott now. Has the percentage...
It has actually come down with a new contract. When we did the renewal of the contract after the 20 years were over, we were able to negotiate a slightly marginally better deal than before. So, our outflow to Marriott will actually be marginally lower than the past. Actually, the percentage of revenue -- if the revenue is higher, then obviously, the absolute amount may be higher.
And sir, the debt repayment this time around would be close to INR 180 odd crores this year?
No. Debt repayment will be in the range of INR 300 crores for the year FY '23.
So you said your peak debt would be INR 2,600 crores and your CapEx will be INR 550 this time around. Current debt is INR 2,234 crores, and then there is interest of close to INR 200 million, right?
Yes.
And with regard to the Sahar, you said 50% is off the INR 0.1 million, so there is a rent-free period in this case, which is operational right now?
So this 50% is already yielding rent.
We take the next question from the line of Nihal Jham from Edelweiss.
Couple of questions from my side. So, you mentioned that recovery currently is at around 95%. And how to just break up the demand that you've been highlighting that foreign travel still to come back? And correct me if I'm wrong, my understanding was that Chalet used to get approximately 50% of its business coming from FTAs pre-COVID. So, assuming that number is significantly lower, is it that domestic corporate travel say in the month of April was significantly higher, which is leading to this kind of occupancy recovery?
Your assessment is right. Domestic corporate travel is higher. And as far as international travel is back, as I mentioned earlier, 50% of the international travel is back. Another 50% is yet to pick up because the opening of the sky has happened very recently for international travel and there's still some challenges of long-haul flights from U.S. because of the Ukraine/Russia war. So the direct flights are still not coming in.
So, they have to take connecting flights via Europe or Middle East. So that's not happened. But once that sort of stabilizes. And on a weekly basis, we're seeing growth in foreign travel. So we will come back to pre-COVID numbers on foreign travel in the very near future. When that happens, that combined with the increase in domestic travel, which has come out as very strong. That wasn't our strongest point free pandemic. But over the last 2 years, we worked very strong with domestic account in India and we've been able to now get a very large share of that business into our hotels, and that's helping us.
Just a follow-up -- in your discussions with the accounts, is it sense that...
Disturbance at your end?
Is it better now?
Go ahead. We'll try and catch most of your questions.
Yes. Just following up on the discussion with your account, is the sense that there is a lot of pent-up element in domestic corporate travel because the assumption obviously was that as things normalize, there will be some amount of room nights either being lost given some of the meetings just maybe happening virtually. But the trend currently is very different in terms of at least how your numbers are? So what is your sense that going forward in the next 3, 4 months, would these kind of room nights from domestic corporate sustain? Or there could be some cooling of that you expect to happen?
My belief is that the corporate business, individual travel will sustain. The reason being that I don't think this pent-up demand has created there because it's been 2 year of hiatus as far as travel was concerned. So, this is sustainable demand. I think where the pent-up impact will come in is on the MICE segment. and wedding segment, where there could be a search for some months and then it will stabilize. So that's my assessment.
That's helpful. Just one last question. You gave a number of housings [indiscernible] you're looking at. We have the visibility of obviously the Hyderabad and Pune. Any sense of which are the cities are being focused that you may look out for expanding into?
So our growth strategy remains consistent as what we have shared in the last few years. We are currently present in Mumbai, Pune, Hyderabad and Bangalore. In Hyderabad, of course, we're adding one hotel that will be there. In Mumbai, at Navi Mumbai, there could potentially be another hotel of Hyatt Regency at Airoli. But we'd like to spread our geographical spread, as well as portfolio, as well as the -- getting to the leisure segment. So, the leisure destinations of Goa, maybe the Northern Hills in India and the intent to be in the NCR region is very strong.
[Operator Instructions] We take the next question from the line of Sumant Kumar from Motilal Oswal.
My question is regarding the MICE. So can you talk about the pre-pandemic level MICE activity, percentage of our business and the current MICE business? And how is the -- what is the quantum of pent-up demand you can see in the coming quarter? And in -- after a couple of quarters, do you see some normalization in the MICE segment?
Sumant, I don't have that number handy right now, but we'd be happy to share that number. But my -- and I'm giving a very rough guestimate here. I think our MICE business in Powai was very high when it was Renaissance. Now with Westin, I see that also remaining high going forward. JW Sahar also because of the nature of it and size of its banqueting facilities has always been very strong in MICE business. We think that will remain -- continue to be very strong. Overall, I think the ratio of MICE to non-MICE segments will remain consistent with where we were in the pre-pandemic era.
You got to remember that MICE does compromise the ADRs a little bit. So, we'll always play the revenue management game to balance out the split between these 2 segments as we go forward, depending on the time of the year, the up and the down cycles within the travel business and all of that and make sure that we get optimal results on both of -- the best of the world. I can add also that the MICE business may increase largely at JW Sahar because we now have an access to a very large loan over there, which is available for use.
As there are no further questions, I would now like to hand the conference over to Mr. Sanjay Sethi for closing comments.
Thank you, Richa, and thank you, everyone. As I said earlier, we're excited about where we are today and the future from here on looks strong. We'll obviously put in everything that is available as resources to back the business to ensure that we remain very, very healthy on margins. We will continue to stay focused on the cost side and whatever advantage that we've been able to bring into the business through cost rationalization over the last couple of years, will continue to benefit the business as we go forward. Our focus, as I had mentioned even in my opening statement will be to basically ensure that we capture the domestic and global rebound, make sure that we execute our projects, the growth projects very efficiently, attract and nurture talent, roll out the ESG strategy. And as I mentioned before, the cost as a strong focus area for us going forward. Thank you all. Stay well.
Thank you. On behalf of Chalet Hotels Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.