EIH Ltd

NSE:EIHOTEL

Earnings Call Transcript 2023-Q2

[Navin B. Agrawal;SKP Securities]

Good afternoon, ladies and gentlemen. On behalf of EIH Limited and SKP Securities, it's my pleasure to welcome you to EIH Limited's Q2 FY '23 earnings webinar. We have with us Mr. Vikramjit Oberoi, Managing Director and CEO; and Mr. Kallol Kundu, CFO. All participants have been placed on mute, and this webinar is being recorded for compliance reasons. We'll have the opening remarks and a presentation by the management, followed by a Q&A session. Thank you, and over to you, Vikramjit.

[Vikramjit Oberoi, executive]

Thank you so much, Navin. It's nice to be on a call with everybody again. I'm sure many people who were on the call earlier are on the call today as well. So a very good afternoon to everybody. I'm always asked to make opening remarks, and I wish I didn't have to do that. But in this case, there's at least it's nice to share positive news. I think the most important thing for our industry is that the industry is doing well. People are traveling on work and on leisure, -- we're seeing that in Q1, and we've seen that in Q2, and I'm sure it's an industry-wide phenomena. From an IH perspective, our hotels, in fact, all our 6 hotels are STRI. And many of our leisure hotels, Oberoi Hotels are either SDR1 or SDRI 2, whether we have a concept, there's some locations where actually we unfortunately don't have a concept, for example, Vanyavilas in Ranthambhore, but that hotel has had unprecedented levels of performance, strong demand, good rates as well [indiscernible]. We also see our foreign travel returning to our hotels, and that is also a very encouraging sign.

So I think as we look to the future, we're certainly optimistic that this trend will -- or this will continue. This isn't a trend, but it will continue into the future. And just our colleagues, I must recognize them as well, although this is an investor call. They are really the true heroes who every day go out and try and make experiences for our guest special services, something which is so close to our hearts. Our value system is something which is so close to heart. And they live by those principles, those values of our founder, Riad Quorta, and are so committed to delighting our guests. And that, for me, is more rewarding than anything else. So with that, I'll pass it on to Kallol for the presentation, and we'll be happy to answer any questions. Thank you very much.

[Kallol Kundu, executive]

Good afternoon, ladies and gentlemen. I hope my screen is visible. So to start with this, some industry highlights from HVS Anoro, the latest report. This, of course, report is a month delay. So it basically gives a trend for the month of August, where average home rates and RevPAR continue to be higher than a few pandemic levels generally across the industry. India's domestic air traffic has also grown by over 4%. Mumbai, as per the industry estimate is -- has had the highest occupancy rate in August, followed by Nederland Hyderabad. In case of our hotels, of course, there is a slight going forward where you can get to see where occupancies are growing and where the rest product is coming from. And gentlemen, this is again for the month of August because of nonavailability of information for September industry-wide. We just changed the August figures where growth at our guests has been higher in general industry.

The license related to competition shows a pickup in market penetration index in the average room rate index and the revenue -- RevPAR growth index as is evident from the graph. Our balance sheet continues to be strong as before. Net worth pretty strong, strong asset base. That debt has substantially come down from INR 270 crores as on 31st March to INR 217 crores. And with buoyancy in business, this is expected to go down even further. The weighted average cost of debt, we are happy to share that despite inflationary trends and increase in interest rates, we were able to hold at 7.6%.

In terms of financial agility, I think the Cobia taught us quite a few lessons where we see when we compare with the pre-Covid quarter of '20. We see that while revenue has increased by 17%. I think expenses have increased by 2%, and there's an 11% reduction in payroll as also some reduction in [indiscernible]. Our company continues to march on with ESG initiatives. And while a lot of initiatives are coming by, here is something to share what we've already been able to achieve, basically commissioning of solar plants with a total capacity of 3 megawatts, which is expected to be generated about 4.2 million units, were 47% on an average of the legit consumption is being extrasolar which also reduces -- I mean, apart from the environmentally friendly, the average cost has also reduced from 10.9% to 5.9% at these locations.

At our other locations, also, it's a combination of hydro as well as wind energy. And as we move ahead, this is only going to increase. The various hotels where different kinds of renewable energy is used is highlighted here. And of course, the endeavors to just keep increasing use of clean energy. This is heartening. Like Vikram mentioned, the RevPAR of quarter 2 surpassed preguidance levels. This is a quarter-on-quarter performance. But if you see the 2 areas which are traded with a start, you would see that quarter 2 of FY '23, the RevPAR has been, if you take OE-owned hotels, 996 versus 6,750 in the same period of '19-'20.

Similarly, if we take all hotels, including managed Codel, the RevPAR is 804 as compared to 6,151 sold, so substantial growth that one can see. In Q2, the ARR and occupancy performance is also very similar as well as the quarter. So monthly performance occupancies continue to rise. Monthly RR continues to rise. The same story goes when we compare the whole quarter into account. So against an overall ARR of INR 9,565 in quarter 2 of FY '20 with an occupancy of 64%. We have already achieved 11,0467 at an occupancy of 70% when we were to include domestic hotels and due management.

I mentioned a while earlier about the trend that we have noticed in our hotels across cities. So when we compare with quarter 2 of FY '20 with FY '23, the highest growth has, of course, been seen in Shimla, Chandigarh, followed by Bangalore, Mumbai, Delhi, Udaipur, almost all these places. Kolkata has seen a relatively lower growth in RevPAR of 8% and Bhubaneswar too, and Agra has actually seen a real growth. Occupancy and ARR performance at domestic hotels including managed in all the parameters, whether it's an occupancy ARR or FAR, you would see, in most cases, it's grown under all the categories in case of our Opera Metro properties, over leisure properties, Tridemetro properties, tridesure, tridensity, and others.

So if you look at RevPAR, for instance, in case of Obrietro, it's grown from INR 6,950 to 9,867. So a lot of traction there. The same follows for leisure properties from 7,820,000 to 10,044. And the story is quite similar in every other segment. So I think what is very effective here is to see that the older brand, which is -- which has for luxury, the maximum growth is happening in these segments. Food and beverage also has seen an increase, and we are doing a higher by about INR 35 crores, about 8% as compared to the same pre-pandemic. So this is a question that normally comes to everybody's mind, what is the percentage of tourists. So here is a month-on-month comparison.

In April '22, if we were to take Opera hotels, the percentage of foreign traffic was 29%, which is now about 40%. So as we speak, this is September. So obviously, for the second half of the year, possibly the trend looks going upward, which is always well for our rates and our hotels in general. But the same story is in the case of the Titan brand as well, going up from 13% to 31%. And on overall basis, PC, it goes up from 33% to 35%. We're happy to share with everybody that we will be voted the best hotel brand in the world yet again at Travel and Leisure Bold Decibels 2022, with[indiscernible] ranked #1 resort in North Africa and the Middle East. There are, of course, many other awards, but these are the highlights that I wanted to mention. We continue to maintain the highest levels of safety and health. I would request you Vikramjit to share some information on strategic development.

[Vikramjit Oberoi, executive]

Thank you, Kallol. We also thought it will be prudent or wise to share with you what we're looking at in terms of growth. So this is broken up into -- from this financial year up to financial year '27. And this year, later, in fact, this month, we'll open a club in Mumbai and followed by a restaurant in Mumbai in March of 2023. In financial year '25, there you can see the list of hotels that are listed that are given for opening along with the number of keys. And then in 2026, also the hotels that will be opening. So that's in terms of hotels that are already underway. We're planning, design, et cetera, and in some cases, construction has all restarted. In addition to that, I would share if you look at financial year '27, these also projects that are under active consideration. And this includes the overall in go up, tried me to go, and the overall Zoro. In fact, these are all in the design phase. Some work has already started at 2nd October also just adjacent to the site with the same owning company. And then most important or future pipeline. Sorry, I'm getting -- I can't quite read that.

[Kallol Kundu, executive]

So additionally, there are 11 hotels, 3 overall branded hotels, 7 Trident branded hotels, and 1 service apartments, which are in active discussion stages. So overall, we are talking about 2020 apart from the one climate front. And as we progress through the quarters, as and when these discussions materialize into planning and construction space, we'll be happy to share with you.

[Vikramjit Oberoi, executive]

Yes, absolutely, we'll be happy to share. So I mean, just in conclusion to that, and I'm sorry, I couldn't -- I know that there were 20 projects. The bottom part of my screen wasn't clear. So I apologize for that. I want to give you the exact breakup between overall and Trident and of course, one service department, which is in Mumbai as well. But I think the important thing to highlight is that we're focusing on growth. We'd like to be as aggressive as we possibly can on growth. We still want to operate managed hotels of the highest standard, whether they're under the Oro brand or the Tribe brand, and offer our guests unpaper levels of service that they are accustomed to at our hotels.

So that remains an uncompromising commitment and at the same time, focusing on growth, which is important for really 3 reasons, and I'll just articulate that, obviously, from a shareholder point of view, growth is important for value creation. But equally, we should be mindful that growth is also important for our guests. When our guests travel, we should be in locations in India where they train where we have hotels. And of course, for our colleagues, it's also very, very important because we promised our colleagues learning, development and growth. And we would like that growth to come from within the company. So for all 3 reasons, this is something which is very important, and we will continue to focus on this and hopefully have even more news to share with you, I hope, in the future. Thank you.

[Kallol Kundu, executive]

I'll just add something to that. And this is in addition to the renovation projects that are also underway. In some cases, there is additional capacity. For instance, [indiscernible]. There are several other renovation projects which are underway, which also are essentially will be contributing to incremental revenue for the organization. And the third thing that I would like to add before I move on to the next slide is, so we are committed to looking at our noncore assets, 2 of them we have already taken decisions, and we have one of them has been disposed of and [indiscernible] at the conclusion of the last financial year.

And the other one, the Vabiservices limitations which, was also declared to some changes. This transaction is almost towards its end, and this will decide soon. So I think overall, from a company balance sheet point of view, it's always strong for the company. Coming back to the presentation, we see strong tailwinds in corporate as well as the direct business. The mines, this is our quarter-to-quarter kind of performance from quarter 1 of FY '20 to quarter 2 of FY '23. But the last drop in mines is because of lesser number of specious states for weddings, et cetera. But otherwise, generally, there's a higher traction. What is also heartening to note is that as compared to all the previous quarters, where the slope was downward in the first 2 quarters, in case of 2023, it's upward both on quarter 1 as well as from quarter 2.

These are the stand-alone results. I won't be very well on that. We're happy to share that the performance this quarter has been among the best in the recent years. There's, of course, an exceptional item, which is on account of some impairment. I mean that's only about INR 13 crores, but we don't expect any further impairment on that account anymore. And on the consolidated accounts also, there is an additional, I think, which has been reported along with our mention figures, which is on account of a legal case, which was on, which we have accepted the award as a company. And in general, that we believe is a good decision for the company. So he's because would already be with you. I won't take your time on this. If there are any questions, we are happy to answer.

[Navin B. Agrawal;SKP Securities]

[Operator Instructions] The first question is from Baidik Sarkar from Unifi Capital.

[Baidik Sarkar;Unifi Capital;Analyst, analyst]

My question is really around the narrative around the cycle in the industry and the context of the fact that ADRs are still sub-1,000, 11,000 with occupancies at around the 70% mark. But do you think the numbers add up with the [ nalative ]? I mean, I know Q2 isn't the strongest season for us. But given the noise around pent-up demand, pricing power, lack of supply, and all of that, one would have assumed that these numbers were significantly broken on the upside. So would you reckon the super cycle is still some way off? Or would you reconcile in the midst of it? And would you say that beyond the certain ADR, even in the space that we cater to price elasticity will probably set at some rate?

[Vikramjit Oberoi, executive]

So I would just like to Colony could... ADR figure for our hotels. So overall metros for quarter 2 was 13,0427. Overall leisure was 27,172. Tidler locations was 9,156, Trading leisure was 6,345, and triticities, 74. And if you take the more combined cloud, what are the -- this would be above Dental, I don't have -- I think it's about, if I'm not mistaken, it's well over the 12,000 mark. We can calculate and give it to you. 1,467. So first of all, Batofnice to be on the call with you. Thank you. We've already crossed the 10,000 thresholds as Kallol as explained with the numbers.

And I believe if demand continues to be strong, there is still upside left in average run rates and in RevPAR without compromising occupancy levels. Typically, in the second half of the year, financial year, we see stronger demand. We hope that will be the case this year, too. And led by overall leisure and the Oberoi City, followed by Trident, City and Trident Leisure as well. So we continue to see this trend. More specifically, I think there are opportunities that we need to explore in some of our hotels where occupancies are very, very high. This would be, for example, Tritan Banglacura and Triton NarromanPoint, and the overhead Bangalore, amongst others. But as we go into winter, we will be looking at maximizing our rates to the largest extent possible with demand still being strong.

[Baidik Sarkar;Unifi Capital;Analyst, analyst]

Your foray into clubs is very interesting. Could you perhaps throw some color on how scalable this is? Is this a space that you think we will scalable? I mean, we will scale up as a chain, some color on that?

[Vikramjit Oberoi, executive]

First, [indiscernible] we've been operating a club in our hotels for many, many years that we in it has a stronger entry. It's a sort after club membership. And so we've been doing this for -- I don't know when we iron started. I don't recall exactly here. But Davides exists in our city hotels. So that was the first point I wanted to make. The second point is on the club we're opening now, which is a much larger club, it is approximately 150,000 square feet. It has facilities for the entire family, whether that's for the parents. From a business point of view, we have meeting rooms. We have multiple restaurants and bars. They have 2 pools on the rooftop, Tennis coral tenants, golf simulators, scotch cores, a whole host of facilities, quite extensive food and beverage as well. And for children, an incredible children's facility, which is really designed to ensure a well-balanced growth of a child for this format years. So this is certainly quite different to Velvet and you're absolutely right to be pointing that out. I would like to say that let us make this a success.

Let's provide exceptional levels of service to our members. The facilities are -- I mean, I would really say that I've not seen a club, not but I've seen many private clubs but I'm not aware of any car anywhere in the world that is of this standard. And we're committed to giving members an exceptional experience. And if we do that well, perhaps we can look at other opportunities. But I think our focus is on the club today, on getting it right today and providing membership with facilities and service that are second to none.

[Navin B. Agrawal;SKP Securities]

Okay. Next, we have Vikas Ahuja.

[Vikas Ahuja, analyst]

My first question is regarding the RevPAR and how it has been in the month of Cuba taking from strong improvement. And secondly, how should we look at corporate demand coming back now in second half on F '23? Finally, we did give a breakup of foreign travelers coming back. If you can get some color there, that is what part is the leisure and what is the corporate.

[Vikramjit Oberoi, executive]

So one was on corporate demand. So let me -- I don't know if I could -- I got all your questions. Sorry, your voice -- the cost was difficult for me to follow, so I apologize. But I can start, and maybe Kallol can assist. We've seen strong -- the direct segment is very, very strong. But equally, the corporate has a strong recovery in corporate as well. And I don't know if Claw has any numbers that we can share on corporate as well and how that's been growing for our hotels. But we'll come to that. So I think we're seeing a strong recovery in -- for example, I'll give you the overall new Devi, corporate demand is back to pre-pandemic levels of the overall udemic. I would say that in some of our hotels, it's still not back to pre-pandemic levels, but the overall, New Delhi is certainly one. Direct is -- continues to grow.

And I would also like to point out that you can get people coming or guests coming and staying in our hotels -- coming through direct channels, but who are actually corporates coming on corporate-related travel. So one shouldn't look at just corporate in isolation at our city hotels, you really need to look at both corporate and direct. And if you take both of them together, there will be a strong increase over pre-pandemic levels. Now that's not to say that all direct segments are corporate, but they are not mutually exclusive. So that was the point on corporate. And sorry, I also covered direct in that.

In terms of foreign travel, you've seen the trends. We've actually also break this data up to look at reservations for the rest of the financial year. And the U.S., I'm pleased to say, has recovered to just short of pre-pandemic levels. Unfortunately, the U.K. and some of you may have experienced this yourself with colleagues trying to come to India. EVs are not available from the U.K., and Visa process can take time. And the last big I saw, which is, I think, 2 weeks ago, was the U.K. was still 50% below pre-pandemic levels. France and Germany are also important locations. And there, it was in about the 70th percentile for future reservations. But at least I'm confident COVID, I believe, is behind us. I think India in the winter is a very attractive destination. People have not traveled for a long time.

And at least I'm cautiously optimistic that we will see this trend continuing into the remainder of the financial year, which is when October too, in fact, beyond the financial year, October to April is when we see the highest levels of international travel into India. We -- in hotels that cater to foreigners visiting, particularly in Rajasthan, Agro, et cetera, for leisure. It varies from hotel to hotel. -- but it's in about the -- if I'm not mistaken, around the 60th percentile of what it was during pre-pandemic. And that's as of now, I'm sure that will improve. So I hope I've answered your question. If I've missed anything out that I didn't hear, feel free to repeat it and will.

[Vikas Ahuja, analyst]

Yes, sir, that was very helpful. One thing I wanted clarification was if we compare October versus September, how the operating drivers has been led by -- I mean, it has improved further in October? And secondly, on the corporate travel, I also wanted some color that, obviously, there has been a resurrection in the U.S., U.K. and second half or FY '20 for was more like that we will see a lot of pent-up demand coming in corporate travel. So any color around it -- and the first one was October versus the September of the overall September.

[Vikramjit Oberoi, executive]

So you can tag... I think it's fine to share with... Sorry... So I'd say the trend is positive. I think for the reasons Kallol has explained, we can't get into any specifics, but the trend is positive. On your question on whether corporate demand will continue, given all the problems that are happening in Europe and North America as well or in the developed world. Actually, my perspective and it may be right, it may be one. First of all, I can't predict what's going to happen there. So let me -- but if I was an organization that was facing issues with demand in those countries in inflationary pressures, et cetera, a slowing economy, I would certainly be looking at opportunities in the developing or in the high-growth markets, India being one of them. So if that is followed by organizations in Europe and North America or in the Americas, I'm sure that will be something that India would see the benefit of, and that will help with corporate travel to India, to all hotels, and to others as well.

[Navin B. Agrawal;SKP Securities]

We have a question from Ann Pasar, Head of Equities IDFC Mutual. Last 2 years, hotels in India did not have to compete with international locations, and this could have helped raise As. Indian tools are no longer captive, and Indian hotel rates have crossed hotel tariffs in Thailand, Vietnam, Bali, and Malaysia. Could this limit growth in ARR going ahead, especially in the upcoming peak season?

[Vikramjit Oberoi, executive]

So first of all, hello, and thank you for the question. I think my kind of perspective on this is -- and this is my perspective. Again, you can see if it holds any ground. But for a comparable hotel, super top-end luxury hotel, and let's -- if we were to talk about that, let's take whether it's the over a New Delhi, the overall Mumbai, our leisure hotels, bevel, Homebase, et cetera. Anywhere in Asia, you go and you set the top to top hotels -- in fact, I would say our rates will be lower. They won't be higher for the best hotels, a hotel of that quality, whether it's the over in New Delhi or with even us as an example.

So I don't believe for high-end hotels catering to high-end travel, there's certainly an opportunity for rate increases if demand were to go up. And I don't think we are priced in any way higher than those hotels in our region, in Asia, in the Middle East, et cetera. So -- and that's easy enough to check if you see the top hotels in these, whether it's for sees, whether it's Mandarin, Peninsula, Aman, et cetera. If you see their rates in whether it's the Middle East or Asia, they will be in excess of $1,000 on par, maybe even higher.

So that was the first point I wanted to make is it's really important we compare apples with apples. So is this trend going to continue? I remember working at the overall in Mumbai many, many years ago, where demand was very strong, and our rates in those days were 19,000 recruits. So it's really a function of -- and in those days, actually, we were expensive at 19,000 repeat. The repeat was not as -- hadn't devalued to the extent it has today. And in dollar terms, we were charging in those days, $400, $500, which was expensive. I don't think that's the case in space. I believe there is at least for international travel when people compare our rates with other hotels in that same segment, they will not be unrecently high. I know I don't -- if I haven't answered any part of your question, please let me know.

[Navin B. Agrawal;SKP Securities]

I hope you can see or you can do the question out here in the case you have things left an answer or I can do it when we come up... Okay. Here's a follow-up one. When you talk about new supply of hotels in key metros. Will it be limited? Or do you see a fresh wave of hotel construction?

[Vikramjit Oberoi, executive]

I really don't want to comment on that because I don't want to -- I don't feel -- I don't -- I'm not aware of every project in every single metro. So I -- and I don't want to say anything which is not based on fact and rather my perception. So if I could please excuse myself from that question, perhaps Claude may want to take a go. I'll pass on that question, if that's all right.

[Kallol Kundu, executive]

Well, we can talk about our projects and we are quite happy to share, I think investors and analysts have been asking us this question, and we had promised that in 6 months' time, we'll start answering questions, and we have started with this one. So I hope in the coming months, we'll have more to share from our end.

[Navin B. Agrawal;SKP Securities]

We have a question from KK maniacal. I see you are high in occupancy. The pipeline of room additions from new projects for EIH is quite minimal.

[Kallol Kundu, executive]

If I can just answer that before you answer this. I think Vikram mentioned that there are 11 hotels which are under active discussions. So I would request you to wait for that to unfold in the next few quarters. And hopefully, you will not find that figure minimally.

[Navin B. Agrawal;SKP Securities]

Let's take the next question from [indiscernible].

[Unknown Analyst]

So I guess, partly you answered my question in the last response, which is that we need to wait. But still, I don't want to specifically highlight one thing which we -- I think Oro the brand has been is enormous with large, but India, as a destination, is gaining traction, especially in terms of beach destinations, where we, as of now, don't have any -- I know you had in the presentation and Gibela, at upcoming soon having the demand actually, which is supposedly going to become maybe a next model or something. So any specific reason or we -- or is it like because of the Pallas kind of hotels, we don't want to get into the destination?

[Vikramjit Oberoi, executive]

No. I think anywhere where, like I said, our guests travel to, whether they're from India or overseas, we would like to be present. But we would like to be -- to have the right hotel and the hotel -- before we get into a -- whether it's a management contract or our own development, we need to be sure that the hotel will be successful. It will give a return to our owners or to the company if we're developing it or one of our other companies that is developing our hotel -- so that's very, very important for us. And we -- Kallol hasn't covered the locations that are under active discussion. We will be in all those who were to materialize. And these are projects or opportunities that aren't just here say. These are things that we're firmly working on. And if they all materialize, most materialize, we will substantially be increasing the number of hotels we have. So I think one just needs to keep that in mind.

[Unknown Analyst]

Second question was you see in response to our early question, you highlighted about the club, which we are planning, which is going to be launched soon. You also had time restaurant over there. I think last year, we opened a cafe in BKC. So is this a new strategy or new stream, which we are trying to evaluate?

[Vikramjit Oberoi, executive]

We opened Cohu, and Cohu initially opened more as a French artistry. What we've learned along the way is, in fact, this is work, which is as we speak currently underway. I think the opportunity is in morph dining experience and we're reworking that right now so that we can cater to the needs of our guests who come to quickly. And by the beginning of next year, we'll be making changes that I hope will help with Cohu. I think it's really important we have had plans to expand Cohu, but we'll only do that once we are absolutely sure that we have a successful formula. And I hope maybe by -- in the next 2 quarters, we would have seen what is working, what isn't. And I hope what we're planning to do will be well received by our guests who come to Cohu. So I think like I said, it's important we -- whatever we do, we do well, we do successfully, and we learn before we pursue active growth in that segment. Of course, hotels are something that we know very, very well, and we have a proven track record on. So our focus will be on growing the hotel business, and that's reflected in the projects that we shared earlier with you.

[Navin B. Agrawal;SKP Securities]

We have a question from Amit Agarwal.

[Amit Agarwal, analyst]

My first question is like to Wallar. So it's good that you've given a pretty brief about the debt of the court. So what is your take on the duct? I've gone through many news articles. And the thing -- as a layman have come to know that this is -- this property is converted from free hot lease, and it's a 40-year old lease. So is it a bit negative on the property? What is your take?

[Vikramjit Oberoi, executive]

I'm going to pass this question on to Kallol, he'll do a much better job answering it than I can. And in addition to that, Amit, if you have any further questions, we'll be happy to take that up. But if I could just request Kallol to give a brief on what the current position is, and then we can take further questions from that.

[Kallol Kundu, executive]

Thank you, Amit. I'm glad to be talking to you here. So this was a long pending litigation, and it was, for various reasons, we have chosen to appeal. But at this stage, the division bencher came out. It's definitely not a negative. It's a positive for the company. But I would refrain from commenting too much because our proposal back to the government has already been shared and we are waiting for further steps. But this is pursue to an arbitral award that was already announced in 2005. Unfortunately, the arbitral award is not in the public domain. So therefore, it's difficult for me to share the lease agreement is entered with the government. But by the way, let me just share that the lease approvement is -- the lease period is not just 40 years, it's 40 plus 40 mutual agreeable conditions. But overall, I can say that we've done the valuation, and it's definitely a beneficial decision for us to really accept the word, and candid implement it.

[Amit Agarwal, analyst]

Sir, the brief you gave is always talking about INR 120 crores in RD. So will that be free? Or would that be shared by the company with the government?

[Kallol Kundu, executive]

Well, as for the terms of the award, the company if the lease happens, and if this is obviously in the middle of a process, so I don't really want to comment too much about it. But it's clear that if the company becomes a 100% subsidiary of EIH, then all assets and liabilities, including all the cash, and then balance with the belonging year.

[Amit Agarwal, analyst]

Just last question. I got the same dispute. So what is the starting year of the lease period?

[Kallol Kundu, executive]

That's still under discussion with the government.

[Amit Agarwal, analyst]

And my second question is regarding Coko. Is that been converted into the restaurant or talking about?

[Kallol Kundu, executive]

Actually, nothing has been done, Amit, in terms of the deal. What we will be doing is making changes in the menu. And for that, there's minor changes in kitchen equipment, which is already underway, after which we'll be introducing an additional menu or a new menu. It won't be entirely different, but it will have many new IPs. And the endeavor is that it becomes more of a dining experience.

[Vikramjit Oberoi, executive]

Just in case I've understood you correctly, are you saying -- are you asking about the restaurants that we have listed on because that is different?

[Amit Agarwal, analyst]

There's a different case. And this is a restaurant. Okay. Any idea that you'll be taking this club and the restaurant to cities like Deli?

[Vikramjit Oberoi, executive]

I'm going to have already answered that question. So beyond that, I don't want to say anything.

[Amit Agarwal, analyst]

And my last question was regarding bad Dubai, which left 6 months back, how much revenue that hotel was adding to turnover?

[Vikramjit Oberoi, executive]

I don't have that figure with me. So this was a management contract. And so I don't have that figure, which...

[Kallol Kundu, executive]

In terms of revenue, that's not such a significant [indiscernible]. No, it's about 10%. On an average, it's about 10%. It varies. In many cases, there are capital base management tier 1 or a couple of percentage points on revenue in addition to a percentage of the profit. But yes, of course, I mean, the flow-through to profits -- I mean, whatever special management fee is close to income, whereas in case of hotels, it's the larger tank of renin expense. So obviously, the flow-through is -- the quantum of flows on this vessel. I mean the point of receipt of the revenue is much lesser.

[Vikramjit Oberoi, executive]

I'd have to interrupt you. If you can request you to join the queue.

[Navin B. Agrawal;SKP Securities]

The next question is from Pratik Kumar. We can hear you, but there's a lot of disturbance in the background. Pratik, it's difficult to understand what you're seeing.

[Unknown Analyst]

Okay. Maybe I'll get back to the queue.

[Navin B. Agrawal;SKP Securities]

The next question is from Sumant Kumar.

[Sumant Kumar, analyst]

So my question is regarding the PPT, the client, and over laser destination or has declined versus pre-pandemic. So can you talk about the reason for that?

[Vikramjit Oberoi, executive]

Sorry, Sumant, I didn't understand your question.

[Sumant Kumar, analyst]

This is regarding Trident and Oberoi lease occupancy rate versus pre-pandemic has declined.

[Vikramjit Oberoi, executive]

In Q2. Kallol, do you have it for half a year because half year still.

[Kallol Kundu, executive]

[indiscernible] I'm talking about Q2. So you can refer to Page #15.

[Vikramjit Oberoi, executive]

From, I think, -- was it 42% to 38% or some...

[Kallol Kundu, executive]

Yes, 14... Page number is 14. So overall you're talking about...

[Sumant Kumar, analyst]

Private leisure and Trident leisure and Oberoi ease.

[Kallol Kundu, executive]

And you're talking about occupancy...

[Sumant Kumar, analyst]

Occupancy declined versus pre-pandemic. Q2 '20, Q2, 2... 30%.

[Kallol Kundu, executive]

Yes, that's true. 40% to 38%.

[Sumant Kumar, analyst]

And then private laser is 69% to 66%.

[Kallol Kundu, executive]

66% -- now there is a growth in RevPAR. So the same period, if you look at overall leisure, it's 7,800 to INR 1,444 crores -- so effective revenue has gone up.

[Sumant Kumar, analyst]

So our strategy to hold the price, not focusing on occupancy. So industry is moving towards that, right?

[Kallol Kundu, executive]

I don't know what the industry is doing, but the objective is obviously certainly for us, and I would imagine fathers as well to drive RevPAR, which is a function of rate and occupancy. And I think for us, certainly, lowering our rates is something we don't think in the long run is a good idea. We're not a commodity and commoditization, which is price driven is the worst thing we should do because the commodity demands a premium pricing. So certainly, we do not want to price route. We would like to keep our rates I wouldn't say high, but keeping in mind, I guess what are reasonable and fair rates for the quality of hotels we operate. And for our guests to see value in that and choose our hotels rather than looking at reducing prices.

[Sumant Kumar, analyst]

So at this price, can we expect the kind of occupancy we have in, say, Vilas 38%, we can improve this occupancy to optimum level and the price might increase from here also.

[Vikramjit Oberoi, executive]

Sure. I'm just going to cover maybe it's a bit too much detail, but the occupancies have tried to fallen because of Trindagara. Is it -- should I get into that all forward. So there was a -- a Trident Agra, there was a piece of business, which was Tiago is just under 140 keys. And we had 20 room nights, which was a long-stay business that we had pre-pandemic. That business didn't actually come back. So if you look at the -- that impacted occupancies at -- so that's the first point I wanted to highlight.

I think in all fairness, we should just look at a quarter because if we look at the quarter, we may arrive at the one conclusion, and therefore, some of my recommendation is please also look at the half year. I don't know if Kallol has the figure not ready. But I think we'd be coming to the wrong conclusion if we just looked at a quarter. And in terms of rate, occupancy, et cetera. So that's the other point I would make. Kallol at the half year, I think it's broken up if we do. Otherwise, we will be happy to take that offline. So I think -- and the idea is to give you a true and fair picture of business. You may not get a true infant picture if you just focus on one quarter.

[Sumant Kumar, analyst]

Okay. And in Slide #16, we were talking about increasing room night from foreign tourists. So it is showing a 40% from over this is a 40% of pre-pandemic level?

[Vikramjit Oberoi, executive]

No, no. This is a -- 40% is the composition of the foreign room rights as well...

[Sumant Kumar, analyst]

So currently, of the total loans, Oberoi has a 40% is from 60% domestic?

[Vikramjit Oberoi, executive]

Yes, right.

[Sumant Kumar, analyst]

So can you talk about the versus pre-pandemic, what was this number, the 31%, 35%, and 40% versus Q2 '20 or overall annual basis, what percentage of the business we have, we got from the foreign to East 50%, 70%?

[Vikramjit Oberoi, executive]

We don't have that number ready, but we'll be happy to share that number with you.

[Sumant Kumar, analyst]

Just can you talk about the trend, it is below 90, 80, or some 20% 30% business is still -- has not come to India.

[Vikramjit Oberoi, executive]

We'll be happy to share that with you. Kallol?

[Kallol Kundu, executive]

Well, it will be in our previous presentations, but I can try and look at it while the call is still on.

[Sumant Kumar, analyst]

But just to give a color on how things are happening.

[Vikramjit Oberoi, executive]

So I don't want to -- it's best we give the actual numbers. I can tell you that it hasn't recovered fully, that I can tell you. But if you ask me to what percentage, and I don't want to give you a figure which is incorrect. So let's refer to the data and give you the correct figure rather than either one of us an educated guess because we may be off by 5 percentage points. We don't want to make that error.

[Sumant Kumar, analyst]

And the last question, can you talk on the corporate rate hike negotiation happening for EIH?

[Vikramjit Oberoi, executive]

Yes. Again, our objective is to get the maximum rates possible. We have to consider supply and demand. And we also need to keep a net long-term relationship we have with our corporate clients. And keeping all that in mind our endeavors to increase rates to levels that are acceptable to our corporate clients and that don't jeopardize business, but ensure you drive revet.

[Sumant Kumar, analyst]

The overall sentiment is positive and we can get a higher price increase from the corporate side? And can you talk about what is the mix of corporate in our total room night.

[Vikramjit Oberoi, executive]

Again, I think you need to Sumi, please just on look at for our city hotels, just corporate. Direct business is also a transient business through direct channels is also a large part of that is the business, whether that's in Bombay or Banred, whether that's in any city location. So you need to consider both. But we are positive that corporate demand will -- corporate travel will continue to increase. The hotels would not be doing the occupancies they're doing in our city locations if it wasn't for corporate demand. And I'll give you -- I'll give you a reason why this is. If you look at when business came to a standstill in COVID, really, the only driver of business was leisure, and this is when travel had started again. And 50 hotels whether they were ours or others, did very low occupancy.

So the change you're seeing is being driven by corporate travel, whether they are companies with rates with us and on our corporate client list or other people who may not have a rate contract with us but who are traveling on business, that demand is strong. And if you go into our hotels, you can see that it is corporate travel, the way we progress, you can tell they're there for work, also single occupancy as opposed to double occupancy. So we are -- we have good reason to believe that corporate travel is returning. It's still not at pre-pandemic levels. If you look at just corporate, but if you look at corporate and direct, it's ahead, and we feel that trend will continue.

[Navin B. Agrawal;SKP Securities]

We'll take a couple of them off-line. Runouts default travel recovers, 80% to 90% in the second half of '23. How do you see ARR and the revenue from current level?

[Vikramjit Oberoi, executive]

Again, Navin, I'm a bit reluctant to answer that question. First of all, I can't predict what foreign demand is going to return to. I think the trends are certainly positive. And I know the rates that we have, at least leisure hotels, we will be able to achieve those rates even with our domestic segment. And that's certainly reflected in the ARRs that you see at our leisure hotels, particularly over India, which Kallol has shared. So I think the -- our winter rates will be maybe a little bit higher than they were at the pandemic levels. And if demand is strong versus an increase in occupancy. I also wanted to highlight how travel happens for leisure. So when people come to -- and sorry, I'm stating the obvious, many people may know this. So please forgive me if I'm saying something which is you already know.

But people come to India and go to multiple destinations. They don't just go to one destination, whether that's for, obviously, coming through Delhi or Bombay, et cetera. The outrates about a 10-day stay and they're going to at least 3 nations, if not 4, in that time. And although people book these itineraries directly with us, the vast majority or maybe I wouldn't say the vast majority, but about 50% of that is booked through destination management companies in India or tour operators and travel agents to the world. And for those segments, we have rates which are negotiated rates, just like we have with our corporate net non-commissionable rates. 

And so, therefore, we can't just change those rates. We made commitments to our partners. We have to respect those commitments. And therefore, what you'll see is a surge in demand. Of course, the blackout dates, et cetera, Christmas, New Year, and other high peak periods. But the -- what we'll see is rates for both India yes, are strong. And any additional demand will help drive up occupancy further.

[Navin B. Agrawal;SKP Securities]

Thank you, Vikram. Okay. Before we're just running out of time frames. So before we wind up, I'll take a last question from Rajiv. Rajiv, if you can please make it short.

[Rajiv Bharati, analyst]

I have a couple of questions. One is in the note store accounts, you have stated that the stipulated consideration for the in the Manoa agreement. What is that to yeses, apart from the lease? Is there anything else?

[Vikramjit Oberoi, executive]

So there is a -- there was a lease -- this is actually the Machava accounts, not in the -- although we provided it an exceptional item in the AI. So there were lease payments from 2005 from the arbitration award up till now. And that, if I remember correctly, is 799 crore -- there was also INR 3.5 crore, which is for the delay in the hotel being completed. That's 3 5.. And then the -- there's a 7 crore, if I'm not mistaken, for the government share in the equity holding of the short.

[Rajiv Bharati, analyst]

I think this INR 37.9 crores of centerline is already in the accounts, as you can see, which is there is an exceptional item. So you can do your calculation, 27.9% and 17 years. So I hope that gives you some clue as to what the rental per year could be. And sir, if you can give an update on the flight catering business, have you got any improvement there? And if you can highlight, what is the H1 numbers in terms of revenue.

[Kallol Kundu, executive]

Rajiv, will be -- it's not a separate segment of business for us for reporting purposes. But yes, we are certainly better off than last year. And by the end of the year, definitely, we'll not have lost there.

[Rajiv Bharati, analyst]

And my last question is on the OTA dependence. Have we seen an increase in OT dependence because when we see, let's say, make my trudatare their take rate is going down, kind of indicates that they are basically skews towards 5-star hotels now. Is it a trend?

[Vikramjit Oberoi, executive]

To be -- again, I'm reluctant until I can hazard a guess, but I don't want to give any...

[Kallol Kundu, executive]

The agenda is what invest... Yes. So Rajiv, I don't believe the proportion of OTA business as a percentage of our overall business has changed in any significant way. I think OTA business has increased in line with other business. So that would be my response to that question.

[Navin B. Agrawal;SKP Securities]

Friends, we need to wind up because Mr. Oberoi and Mr. Kundu have a prior commitment. That was the last question. And before I invite Mr. Oberoi and Mr. Kundu for the closing remarks, congratulations once again on being voted the press hotel brand in the world.

[Vikramjit Oberoi, executive]

Thanks, Navin. I think I'll pick up on what you just said on being recognized as the Best Hotel brand. We're really proud of our Indian heritage. We're an Indian company. Our roots are very strong starting with our Founder, Chairman in similar and then at the grand and to take and fly the Indian flag around the world and to be recognized as the best is something that we're very proud of, not only for -- in fact, for the country first and then for ourselves. And really, the true champions of this are everybody working at the hotel who uphold Tamar, values, the principles on which we run our business, the care we show to our guests, the care we show to each other I think this is what really drives the Oberoi group culture, and we try never to compromise on that culture. And the true heroes like I said, our general managers, our executives at the hotels, and all our colleagues that they are -- they deserve the credit. We're going to support them that they deserve the credit. So I'm deeply grateful and express my gratitude to all of our colleagues above all else.

[Navin B. Agrawal;SKP Securities]

Thank you very much. On behalf of all of us at SKP Securities, I'd like to thank Vikram and Kallol for their time, and we look forward to hosting you again, thank you, ladies and gentlemen, and have a wonderful day.

[Kallol Kundu, executive]

Thank you so much. It's a pleasure to host you.

[Navin B. Agrawal;SKP Securities]

Thank you so much. Thank you.