Indian Hotels Company Ltd

NSE:INDHOTEL

Earnings Call Transcript 2023-Q3

[Operator]

Ladies and gentlemen, good day, and welcome to the Indian Hotels Company Limited Q3 FY 2023 Earnings Call. Being hosted by Mr. Puneet Chhatwal, Managing Director and CEO, IHCL; and Mr. Giridhar Sanjeevi, EVP and CFO, IHCL. [Operator Instructions] Please note that this conference is being recorded. At this time, I would like to hand over the conference over to Mr. Puneet Chhatwal. Thank you, and over to you, sir.

[Puneet Chhatwal, executive]

Good evening, everyone. Thank you for joining late in the evening. We are very pleased to report our Q3 results with a record level on all key parameters, revenue, EBITDA, EBITDA margin, PAT, strong free cash flows and being net cash positive as we have communicated. I'm just hoping that everyone has had a chance to look at the presentation because that has been uploaded. So I would not be going in that sequence. So I'll just pick up some key messages and the first of those is that as we informed post Q2 results, that Q2 is the weakest quarter in the year, and Q3 is the strongest. You can see the difference between Q2 and Q3, the 27% margin has become 37.6%. And Q4 is traditionally the second-strongest quarter of the year. And with the month of Jan gone by almost tonight, we see the momentum continuing. We have a fair idea and depth of the business on the books and the pick up the way it is coming. The outlook is very strong, albeit it is all built mostly on domestic because foreign involve is still lagging behind '19/'20 numbers. And, and a lot of events which are happening this year, including G20, including world uptake, should further boost the demand or provide the necessary buffer should there be any form of headwinds coming from any world.One of the key highlights of the PAT this year is on most of the numbers that they have, they are the highest ever even when compared to our best full year number. So the INR 383 crore tax for this year surpasses the best ever financial year in the history of the company. And we think that after 3 consecutive record quarters, the Q1 was a record Q2 is the record Q3 is a record. We see no reason at this point of time as management of the company why Q4 should be any different. Then strong bedding business is taken strong conference business pickup, and we are also witnessing very good leisure demand, which is holding. It's -- people thought it was pent up in Q1 or in Q2, but I don't think after 9 months of the coated way, we can still keep calling it pent-up demand. And I think there's a permanent shift in the way the customer behavior is impacted in taking -- combining more business with measure or taking more extended deacons by driving to a destination and working out of there.I think also in the presentation, year-on-year for the quarter as well as for the 9 months, the chart clearly shows that we have as a sector on the right track, I think the sector is doing very well. And within that sector, we being the largest hospitality ecosystem, serving the needs of the consumers, both on the ground and in the air, we stand in a very good position to take advantage through our diverse portfolio of over 125 plus destinations, excluding our home stay business to cater to the needs of all segments. I think the other positive news is that there are green shoots of recovery in international travel. MICE business is beginning to come back. And we have seen already 7 events of G20 that alone parts has posted. So I think that momentum is going to only accelerate going forward. And very pleased to report that I think we are of the belief that we have industry-leading RevPAR growth -- we have industry-leading brands in all the segments and the portfolio growth.In the calendar year, we've signed more than 30 new agreements and added 14 hotels, which open alone in this financial year and '17 for the full year. So for the calendar year. We also feel we'll end this financial year anywhere between '17 to '18 or as we have consistently communicated about 1.5 hotels opening a month and almost 2 to 2.5 hotels as a signing per month. Travel is coming back. Of course, foreign travel is not as strong as it used to be, but domestic has been very strong, especially in the month of December. And demand will continue to outpace supply. See supply growth will remain constrained for a variety of reasons, what we've all experienced in the last 2 years. And the demand will grow, but also even if new supply is coming through a lot of new destinations that are coming in the country alone with the government's focus on infrastructure and building new airports that will bring in some supply. But what we have to see is how does the supply in each of the markets, which are very important in capital for, let's say, a company like us is Mumbai, Delhi, Goa, Rajasthan, Bengaluru to name a few. These are very important markets for. How is the supply in these markets. And I think there, the supply levels are lagging far behind in terms of the demand. And that we start seeing the difference in the average rates or the ability for the brand to charge.Moving forward, I think on our hotels in pipeline, which I think is also an industry-leading pipeline. We have a smaller base load that is crit, but our pipeline of number of rooms is almost 35% of the total portfolio on operations, and we expect to open more than 40 hotels in the next 2 years or 2.5 years. And 70% of our pipeline is management contracts. There are a few leases for Ginger, which we have communicated that model on a low revenue, but that small percentage of fees doesn't make sense. And more importantly, we have now reaching certain milestones with certain brands. So Taj is today at a portfolio of 95 hotels. It has 75 in operations, 20 pipelines which getting close to 100. Ginger has 85%, also getting close to 100. Ama, our home stay has already reached 100. So I think the scale in each of these individual reads is very critical, and we hope to be giving the similar news and selections and Vivanta reaching 50 hotels in each of these respective brands and platforms in the next 3 to 4 quarters. Some of our openings we have shared with you on the investor presentation. But under AHVAAN 2025, we guided that we will have a 50-50 balance portfolio, and we are well in that range to did almost 48% -- 46% to 48% is all the management contracts and the remaining on the lease or own portfolio. But very important is that also today Taj and the rest of non-Taj portfolio is almost 50-50. And that is very, very healthy. Also Taj are from fuel cars is the one that has always been driving revenue and profitability, but it is nice to see other businesses grow and start contributing because they have flow through and their margin is higher.When it comes to in terms of EBITDA split, of course, Taj takes more than 3/4 of the EBITDA of the -- at an enterprise level. And if we took it at a stand-alone level, the number is maybe 10% lower. So important, we thought we must share this time is our more growth in our flagship brand. And we didn't share this in the last 4 or 5 years because this was work in progress. 5 years ago, we had 31 hotels on a Taj branding operation. And today, we have 75. That's a 2.5x growth. We regulated better set, we use all the tools available to us under asset management to upgrade a lot of our assets totaling almost 24 to Taj that includes the Holiday Village, the [indiscernible], the Fisherman's Cove, the Mahal – Taj Mahal and Lands End, they were brought back to their old glory. And then we opened 20 new hotels. Our portfolio in terms of number of rules also doubled from 5,500 rooms to 11,000 rooms. And the percentage to enterprise level the renewal system-wide because of our management contract-driven asset-light growth, it went from 52% to almost 70% to which I just diluted.Similar by story we have with Ginger. Ginger has a revenue of INR 225 crores. But the 9-month margin has gone up to 40% and 50% of the Ginger Dean as in Ginger is in the Lean Luxe portfolio. And Ginger has now also gone live in this month on Tata Neu, and we expect it to benefit from that. All of the new brands, Qmin 25 stores, Ama, I already spoke to you about it, the humanization of Ginger, almost 18 hotels. Ginger branded properties will have a [indiscernible] lines have already converted, 9 others are getting converted before the end of March, taking our total then of portuin resistors as put services for 25 today to almost 35 before the end of this financial year. Other than that, I think some of the key drivers of our revenue, I think 70% of the growth is coming from existing hotels, some from new hotels, some from new and emerging brands and very, very marginal or a small amount from a nonoperating income, all as an exceptional item. With that, I think I should know, okay, Giri, since I should continue. So I'll continue. Key markets for us. Every market, we are performing better than the pre-COVID level, which is leading also to margin expansion. [indiscernible] so that is definitely the case. Also, Mumbai is doing very, very well. Even January was very strong for Mumbai, our occupancy in business hotels in Q3 went up to 77%, later to 65%. Our balances was at 57% in Ginger to 61%. But more important is if you look in the presentation at underneath the leisure portfolio commanded a rate of almost INR 17,000 and the balances at INR 46,500. So -- and the business is getting close to 10,000. So I think these are some very significant increases in rates, and we all know that the increase in rate leads to higher flow-through and conversion. On international portfolio also we have done quite well. U.S. was positive. U.K. has been positive, Maldives was good. Dubai was very good. And also Sri Lanka beginning to come back to almost 50% occupancy level. So there is no cash burn happening in Sri Lanka -- in terms of domestic versus international operations, I think if we were -- the way we report, I think if we were to add a line on our reporting on income from international contracts and management business or to add it back to the international portfolio, then you'll see that even the international portfolio is almost at 22% EBITDA bounce. So that is extremely positive. Very important is the control of the cost.If you see the fixed cost as a percentage of revenue in Q3 vendor to 28%. Payroll costs went down to 24%. A lot of you asked this question last time in the Q2, what happened payroll? Is the cost getting inflated, what kind of salary increases are there, and we said this is just a weaker quarter where you're seeing that increase and the salary raises that we give at a certain time of the year, which has had an impact, but you will see the difference in Q3 and now, I'm sure you're able to see that difference. And we are very happy to see that our corporate overhead as a percentage of revenue has grown below 5%, which was always almost 7%, 8%, 5, 6, 7 years ago. Our 9-month management fee growth surpasses highest ever full year management fees to same story. Our Q3 management fee has grown by 86%. We remain confident that this income will keep growing. And in 2025, we will exceed the guidance that we have given. Chambers remains a very important source of our profitability because the flow-through is larger than 80%. Very happy to report that the chambers in Bangalore [indiscernible] is going to commence both. We're adding on New Spark investing, and we're also adding a newly launched Indian restaurant called Loya, the concept also bringing it to West End and then to Lands End and finally, Taj Mahal Palace in Colaba over the next 12, 14 months. [indiscernible] margin expansion remains existing tens by, again, asset management. We have renovated a lot. We have done a lot of innovative concepts in existing hotels. We have added a lot of new hotels on a management fee basis, we have the new businesses of Ginger, Qmin, Ama, which also add to the margin, so does the chambers and that eventually is the reason why a 9-month comparison of 24-plus percentage EBITDA has grown to 32.1%. And most of you would remember that we had given a guidance of 33% under AHVAAN 2025. We see no reason why we should not achieve that given our growth momentum, given the strength of our pipeline, given our momentum in openings and also our continuous effort on asset position. With that, we would like to open for questions to the rest of the information is in the investor pack. And for any questions off-line, we'll make ourselves available. So please feel free to contact us. Thank you very much.

[Operator]

Will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Prateek Kumar from Jefferies.

[Prateek Kumar, analyst]

My first question is on occupancies. So occupancies versus pricing. So it seems occupancies have been like largely stable versus like the vet period, but pricing is like 25% range higher cover period. So what -- like what can you make sort of explains this? Is this like a difference in transient demand mix, which I also saw is like 8% higher versus pre-COVID period? Or how are we looking at it?

[Giridhar Sanjeevi, executive]

No, I think as we have always said, I think it's a combination of factors. So number one is that the demand continues to be very strong. Consumption patterns are strong here. So hence, that is explaining why the occupancy is strong and the supply constraints that is clearly showing up and at least all the key metros. And we have been able to sort of ensure that we kind of continue to maximize [indiscernible]. So we believe, and as Puneet said in the beginning, we see the continued momentum even in this quarter so far. So I think we will continue to see strong occupancy and price growth. And if you see the price growth also, I think while the leisure price average has been around 17,000. The business is still at around 9,000 or so. And we have always been maintaining that the potential for business to grow is still significantly there. So there's no reason to believe that both occupancy and price growth will continue. And you asked the question in terms of transient growth. Clearly, the transient growth has been very strong actually. Our cost per dependency also, if you notice has been around 7% and 11% or so. So this we are not big on corporates and there also we have explained so think in the past that we patter negotiation factors. We have changed the principles where for many of the corporates, it is not a fixed rate that we negotiate for the year, but the rate of the bar, which means that it's a variable rate, which was both ways, both for customers as well as for us actually. And of course, all the other segments in terms of MICE and leisure groups, all that is kind of coming back. So there's nothing which indicates that there is a kind of slackening of both occupancy and rate drivers [indiscernible].

[Prateek Kumar, analyst]

My second question is on management fees. So the management fees has been now running very strong and with many more hotels coming on management fees. So would you look to revise INR 400 crore guidance for FY '26 for 2025, which we have?

[Giridhar Sanjeevi, executive]

So what we will do on this rate is that we normally do this around the Capital Market Day. Lastly, within the Capital Markets Day after our first quarter results, maybe around that time, we will once there has ended, we will take stock of all the guidance that we have given, and we'll come back in terms of the revised guidance, wherever appropriate actions -- that's what I see. You're right that the management fee for 9 months has crores. So looking at a very strong growth and dietary by portfolio growth as well as by the underlying performance. So we'll come back on the guidance. At this point in time, we are not changing the core variance that has happened as part of AHVAAN '25.

[Operator]

The next question is from the line of Achal Kumar from HSBC.

[Achal Kumar, analyst]

Congratulations on such strong numbers. So I have a couple of questions, please. First of all, of course, on the EBITDA margin, you already reported 32.5% and Puneet said that there's no reason you should not be able to achieve 33%. Now of course, the question is that if you're already at 32.1%, what -- how do you see the EBITDA margin bridge from here to FY '26. I mean, don't you see no significant potential upside to your long-term margin given that anyway next year, you have G20 meetings -- sorry, this year, you had G20 meetings and then what [indiscernible] is there and then you're collaborating with Tata Group. So all that, how do you see the margin bridge going into FY '26. My second question is on G20 meeting. So you already mentioned that some of the meetings are already happening at multiple places and again, from the last time I repeat my question. So I guess it could be slightly easy for you to quantify the benefits now. So could you appreciate your thoughts in terms of how much the G20 meetings should accelerate the occupancy and ARR for the industry and for you? And how is that divided into sort of room revenue and MICE because I understand all the G20 meetings are sort of to have room revenue as well as a big event afterwards. And finally, my last question is on your collaboration with the Tata Group, but of course, not only in terms of Tata Neu, but also in terms of Tata Group's aviation business. So how do you see the benefits for IHCL? Thank you.

[Giridhar Sanjeevi, executive]

Okay. Taking one by one, Achal, thank you for your question. I think on the margin guidance, as I said, we'll come back on the guidance on margin. I think 33% to very decent margin for service industry. I think -- but more specifically, if you ask me what are the triggers, and that's exactly one the questions were. I think if I look at the figures for margin, it's the diversification in pipe line that we have in terms of some lines that we will build the growth in management contracts, the growth in chambers, the growth and management teams and the growth that we are in have been getting on both the other businesses that we have. So I think the diversification of pipe line on high-margin businesses is something that is there. And we are very clear that every new business that we do will have to be, what do you say, get us a margin above 35%. Otherwise, you will not be able to get your 33% margin -- so it is -- so I think we are confident of our strategy and execution on all of these drivers. And on the cost, you saw the productivity coming through. So we will work on it and we see no reason why the margin should not go up, but a little patients still at Capital Market Day in terms of the guidance on these magnets being a bigger and is what the margin.So the second thing is that as far as the lease renew -- I mean the G20 is concerned, I think the -- it was very happy to report that we have done a number of events in the run up starting with [indiscernible] poles to Delhi to both to China now. So I think in terms of the share that we have share of voice that we have is clearly very strong, and we need that actually. And the real business yet to merge because many event in September, October. And we are yet to see the follow-on in terms of the business delegations and all which happened green follow-on business dedication. So this will emerge. I think that is the second point. And we will talk about it separately as well on this. But this is -- we see the strong momentum. And the last point you had was on the aviation business. Absolutely, I think on the collaboration with both Tata Neu as well as the airline businesses, I think it is developing well. We have a slide which talks about the growth of the loyalty membership base. So the total loyalty revenues have gone up significantly happened by INR 1,500 crores. Basically, what that means is that the incremental people have used our hotels at each one fixed loyalty earning numbers has been about INR 800 crores or so. So I think this is something that will continue to develop and with new brands also joining like Tata as an example. So that is a [indiscernible]. On the airline partnerships, so that is clearly developing. And you have seen the asset numbers in terms of the leadership that we have deviated. In fact, the 9 numbers for that, that are very strong. I think we is INR 443 crores has been the top line for that tax and with a very strong EBITDA. So you will see that testing to do well. I think -- yes, I mean -- so I think all good... You want to comment...

[Puneet Chhatwal, executive]

No, I think the outlook, as we said, is very strong. And if the rates keep increasing, the margins will automatically increase. I mean that is the key. And -- we are very blessed with the Indian subcontinent because here the SMB part of the business is very strong also. And we are seeing a lot of demand for a lot more buoyancy in the bedding segment, and we went a lot more events happening and a lot more people participating, and that is really driving that non-rooms revenue. And those kind of businesses are also high margin. So I think the restaurants is not as high as the event conference and reading segment. So I think as far as management is concerned, today, what we know, what we see, what we have as business on the books, we feel the growing is Robust. It will stay strong. And with certain other events, one-off like just now we have world cup hockey, we catered to the teams in Rocla and ones. We had, as Giri mentioned, we have already hosted 7 events on G20. We also did the catering for the India Pavilion in Davos, and Switzerland for the World Economic Forum. So there are a lot of activity going on and all that, eventually, everything adds up. And I think it's going to stay at that there's nothing that suggests under there is another COVID or something else that happens, which is we won't anybody's reasonable control or vision. But also we have to invest. We have the most iconic portfolio. And our strategy is in which over segments we are present. We have to be the most premium brand in that segment. So it's not just the percentage only that should be maybe INR 35 and 35 become 36 is finding the right balance of the top line, of the absolute amount of EBITDA and having a healthy margin. So if there was a downturn, we are better hedged and we have less volatile despite being in the hotel sector.

[Achal Kumar, analyst]

Okay. Thank you. I have a couple more questions that I'll come in the queue, in case there's a time with on.

[Operator]

The next question is from the line of Binay Singh from Morgan Stanley.

[Binay Singh, analyst]

Hello. Hello. Congratulations, a very strong set of numbers. Two questions. In the past, you've often talked about inflationary pressures that the business is facing, which clearly you've managed quite well. Timing today, what are the key inflationary pressures that you are seeing now? Anything you would like to call out on? That is one. The second is you guys have extensive industry experience. This is a cycle high margin than the industry is making. So when do you think capacity growth starts to kick start? There will be a time period by it come in, but how do you see capacity growth incrementally when does it start to take start so that we see some bit of equation of demand/supply matching.

[Puneet Chhatwal, executive]

If oil goes to court, Mr. Mandeep Lamba did a session recently is just the beginning of -- from HVS Anoro. As one of the examples he said was, is this the beginning of a 5-year upside which is going to compensate for the last 15 years, right? I'm not sure this is what he said, right? What I note is that no matter what capacity climbs, we tend to forget, Listen, what has happened in Mumbai. There is a very big conference center, which has come up in BKC. What is happening in [indiscernible] in Delhi is a huge convention hall that has been built for the G20. What is happening in Dwarka in Delhi a big convention center committee. These facilities as infrastructure were not available when now they are available, big events will also come. So I think that is one. But I already gave in the introduction, the post-COVID consumer behavior that is changing. The third is our focus on each of the brands with the comprehensive brand management strategy, which we have always communicated consistently. And finally, not starting any new businesses which do not provide less than 35% margin, then we'd rather focus on what we have existing. So I think the combination of this will help us drive top line will help us drive absolute EBITDA, PBT, PAT and still maintain a very healthy margin. But we have to keep investing in our portfolio. Like we have done, even in the last 3 years or 4 years, despite COVID being there, we have to invest because we have these iconic assets. And as communicated before, staying the most iconic but also most profitable company, we cannot ignore biotomic element.

[Binay Singh, analyst]

That is definitely there. Anything on the inflation, but any cost items you in there inflation [indiscernible].

[Puneet Chhatwal, executive]

The inflation has softened. It's not going up the same way as it had gone up like 3, 4, 5, 6 months ago. So we are able to mitigate the inflation impact. I think actually inflation in some ways is good to drive the average rates. So that also helps if the dollar has strengthened so much and the foreign travel wants to come back. And if we can stay in the past at 15,000 is at $180. And when we go to New York, we pay $1,000, including in the period. So I think there is a positive and a negative to it. But I personally believe safe for any geopolitical factors for any Blackstone event, I think the demand will keep growing the spend, as I mentioned earlier, our infrastructure will help the sector. And we are very well positioned because we are in different -- we're addressing all consumer segments, and we are addressing all businesses -- so only a black swan event can stop, but otherwise, something will always keep doing well.

[Giridhar Sanjeevi, executive]

In fact, bind I remember right, because the modern report which talked about real estate being a headings [indiscernible]. I think if there's only one area where I think costs are going up is probably the project construction cost actually. I think that has certainly gone up. But otherwise, ability to pass on price increases is not at least so far a problem for this. And that is mind that let's see what happens tomorrow on the budget because the or valet because of the pre addiction yes, people are, I don't know, the infrastructure spending push, whether there will be anything like the MSP increase that happened in 2019. I think some of those also should give pilot. So overall, if you look at our presentation, the macroeconomic factors in terms of the growth of the country, the consumption trends recorder pre-election years and then the hospitality demand supply. All of it, I think, is in the right place, actually. And we're growing also secular. It's not just the key city. It's kind of growing across the interland as well. So I think I think all are good at this point of time.

[Operator]

The next question is from the line of Sumant Kumar from Motilal Oswal.

[Sumant Kumar, analyst]

So my question is related to the key markets like Goa and we have seen a significant improvement in ARR. But when we come to the potency level compared to pre-pandemic 2019, we are still lower than pre-pandemic. And also the other observation is from the pallets and is destination the occupancy is lower despite of -- so are we targeting higher ARR? Or what are the reasons where the occupancy is lower in the canister, lease destination and market like Goa and even we have seen daily NCR of the Delhi lower compared to the pre-pandemic.

[Puneet Chhatwal, executive]

See the -- there is no reason for us to target lower occupancy. We had 35 rooms which were renovated and were shut in as Holiday Village, which were not available for sale, especially on the sold-out base. They did not -- they were not there, but they have more come back in this quarter, they are back. So that's one of the reasons. But we -- when you take out inventory temporarily, if it's less than 1 year, you don't reduce the room count, right, because that's how it works in the professional services where we share that. Now when it comes to the RevPAR is what we should look at and the average rate, if you will. The RevPAR is almost having an increase of 45%. So the -- it's good to have the ability to charge higher rates. And sometimes the change in channel mix makes that happen. So '19, '20, the amount of international charters coming in to Goa was very high. Now it's getting back there in terms of international business slowly picking up. But when your channel mix changes, then you rather have FITs, transient or leisure groups, which are not like kind of charter business. Charter business is -- you cannot charge the same pricing. So I think there is a little bit is a marginal adjustment but 83% versus 80% occupancy. So it's not such a big difference. The big difference is 14,000 rate versus 21,000. So there's a 50% increase in rate. So that's what has driven the profitability in New York.

[Sumant Kumar, analyst]

Okay. Any -- can you throw some light on U.S. and U.K. occupancy when we can expect the normal level of occupancy, what we had in Q3 FY '19?

[Puneet Chhatwal, executive]

That's a very good question. So both these markets are not at the level that they should be. Occupancy in U.K. in '18 was around 84% in '19. And this time, it was around 71%. And okay, there was an increase in the rate. So the RevPAR again, increases but not good enough. And U.S. still has to recover on the occupancy front, the rate we are doing fine. And why I said it's a good question, is that outside from U.S., U.K. and Cape Town, which we now own 100% is expected, what we are seeing is performing better than '19, at least for the month of Jan. And the outlook for February and March remained sustained that it is expected to perform better.

[Sumant Kumar, analyst]

So can we expect in FY '24, we can recharge the pre=pandemic level or close to pre-pandemic level?

[Puneet Chhatwal, executive]

I think it will be to pre-pandemic or even higher, marginally higher.

[Giridhar Sanjeevi, executive]

Yes, because I think if I look at the U.S. as an example, we invested in [indiscernible] we were able to open the bank at units June, which means we did not have the benefit of a full bank at revenue in the U.S. actually. So there's no reason why we should go back or should not go back to the pre-pandemic level in the next financial year. I think U.K., while, of course, the challenges in Europe are there. I think the strong Indian business the -- some of the domestic business in the U.S. business. The U.S. business will certainly help actually. All of these will help in terms of driving to pay. These are our 2 important markets. And as Puneet said, down is also coming out strongly. I think they've been the last to recover, but I think this is a big season, and they should also do well. So I think [indiscernible] '24 we'll see us go back closer to the pre-pandemic unless there are geopolitical ceramic factors, which impact actually is what I would say.

[Operator]

The next question is from the line of Nihal Jham from Nuvama.

[Nihal Jham, analyst]

Congratulations on the strong performance. So, my first question was on the contract change that you've done in the corporate business, does that incrementally reduce the number of room nights that the segment was getting? Or does it get rate parity between the corporate and transient segment more or less? How would it end up changing the business mix or the ARR realization in the future?

[Giridhar Sanjeevi, executive]

So I think what we have done in terms of some of the rate negotiations is a positive thing. Earlier on, when we had a fixed rate with corporates, they would have restrictions in terms of the number of room nights that we would give in busy seasons. -- but there is change in mix to a rate of the best available rate. What happened is that you will be able to offer better flexibility to the corporates also. And it's a much more dynamic right now. And hence, I think -- and I think it's good in terms of driving not just satisfaction the cost base but also the profitability. And secondly, what we have also been doing is that in many cases, we have allowed corporates to be more used the transient rule and not necessarily through negotiations, especially the smaller corporates actually. So when you say transient business was 58%, I think it does include some of the smaller projects as well. So overall, I think we continue to have focused strategies [indiscernible] the different segments, actually. So I think all good is whatever the same. But we are the first to change this dynamic pricing for corporates actually, and they're also seeing value.

[Nihal Jham, analyst]

That is helpful. The second question is on the foreign test part. For our India business, what would be the current sort of foreign gas versus cover info has that number available?

[Giridhar Sanjeevi, executive]

I think it is yet to develop. I think as we've always clarified, I think it has been slow. I think it's not just because of a difficult deal, but because of other reasons as well. We expect it to come back now starting next year. Generally, what we have seen is that the foreign customer, Manicare also Indians who are staying abroad. We have seen about 15%, 20% of the few foreigners and the Indians who come who will don't get measured because they have -- I mean India tens not a business generic, I think that constitutes another 15%. So historically, it's been about 35%. It's not come back to the full. So you will see that as an opportunity going forward in the current year.

[Nihal Jham, analyst]

So just one last question was that in the current environment with the kind of demand supply situation that you see, are you walking the long-term pricing that you believe this sector or you would want to take in the coming years?

[Giridhar Sanjeevi, executive]

Long-term pricing, I think, as we said, the long see, there is tactical pricing and long-term etc. Long-term prices, you have to look at the long-term factors, the economic growth, the consumption trends, the pre-election years, the budgets tomorrow. I think a lot of the long-term progresses in terms of consumption, demand supply, overall demand, demand is surprising actually, continues to be very strong. So long-term price trends definitely are on the way up is what we believe. And relatively speaking, also, I think we are still business pricing at INR 9,900 is what, $120 actually. And as we said, the U.S. is about $890 Singapore pilot, all these places are much higher street. So I don't see any problem in long-term pricing trends being much, much strongly.

[Nihal Jham, analyst]

Understood. Thank you so much, I wish you all the best.

[Operator]

The next question is from the line of Karan Khanna from AMBIT Capital.

[Karan Khanna, analyst]

Just a couple of questions from my side. Firstly, if you could talk about the home stays business, where we are seeing a lot of competitive intensity that's increasing from international brands. Wherein Marriott recently announced their plans to it around 500 premium homes under their brand Hogenson. So how does this affect your proposed 500 home sales and even the contracts or the negotiations with your partners in this business, if you could talk about that, that's number one. Second, on the overall this is asset acquisition opportunity being the largest in parasites hotels in the country. If you could talk about how you're looking at this space given your balance sheet? Any meaningful opportunities that you're seeing here? I think that would be great to hear your thoughts on that.

[Puneet Chhatwal, executive]

You see we like to believe that the best competition is when you're competing with yourselves. And we are already at 108 homes sales and we see no reason why we should not get to 500 because in this 108, we have not even used any of our own capital. So once we start using some capital on our land banks and start building some of the Ama villages, it goes very fast. So it's not also always just number of home stays and it's a number of listing, what is your margin from those? And what kind of revenues you are driving. -- this number gain on asset light, we need a very large scale to make it any kind of a meaningful business. So I think we remain very confident that with what we already have, the strength of Tata gain, the strength of the legacy of Taj. It provides a great platform for other brands like Ama to drive going forward. But we are not in a rush. We do keep the portfolio clean because, as I mentioned earlier, we want to be perceived as the premium offering in any business that we are in. We should not be the cheap one. That was the biggest change. We also did with the Ginger brand was taking it from a price-driven positioning to a more experiential-driven position. So I think that is the answer on the home stay. The second question was on... Growth... That is a -- and sorry, what was your second question? You had another question.

[Karan Khanna, analyst]

Yes. So second question was on the entire asset acquisition opportunity perhaps being the largest and the orders [indiscernible] you could talk about any meaningful opportunities that you're seeing in the domestic market.

[Puneet Chhatwal, executive]

We think they will start coming as the ECLGS has alluded to in Q1 and Q2. Once it expires. And then we have a default or lot of default. Some of that, I hope not a lot, but some of that inventory comes into market. We are very well positioned without having any debt, having free cash flows to take advantage of any opportunity that bit. And we don't always have to buy an asset. We produce sliver equity, we produce management, we could use leasing, we produce mezzanine debt, we could take, take a small stake, we could use our GIC platform. I mean we have so many opportunities available, and we have the brands available, so we can benefit from such opportunities. And your question is from a timing point of view, good because now we are beginning to see some opportunities come on to the market in the last few weeks, I would say, since 10, 11, 12 of January, some properties possible in Mumbai, some in even destinations like Alibag or in South. It's -- there is some discussions and also from, I would say, from the state government. I mean there is a possibility to do some business there. Also from our own group related companies. So one of our focus is on the Northeast. So if we can get some plantations of the brands or to expand our footprint in Northeast from currently 13 or 14 to 25 hotels. That's what we have driven the market to 25%. Yes, we will use our capital to expand because we also have certain other incentives to go in these markets.

[Operator]

The next question is from the line of Naser Parik from Lites Capital.

[Unknown Analyst]

So first question is, if you could just help lay down is the same number of rooms at APAR, if it is owned versus it is under a management contract, both onetime as well as percentage margin wise, what is the difference in EBITDA that we can get?

[Giridhar Sanjeevi, executive]

You are talking of the growth in growth has come see growth is coming at this point in time EBITDA company on the mention. Absolute on, maybe we take it off plan to sort of talk through that. I think. The only thing that I will point out is when you look at the margin, what do you say, progression chart, where we are showing an increase in margins, you will see that a significant margin is coming from existing assets. So our overall margin grew from 24% to 32%, which is an 8% growth in margin on that, the existing hotels contributed 5.2% of the margins actually, which is really the growth in our existing properties and new hotels, Ginger Kumina, chambers, all of those add-on actually. So this is probably the nearest I have on a slide. But if you want more specific numbers, we can check separately, not a problem at all.

[Unknown Analyst]

Understood. Okay. And my second question was on figures like 75% of EBITDA. I think what rooms we have till '26, we are adding maybe another 10% of small rooms, around 1,200 rooms over the 11,000 days. And given where our occupancy and ARR levels are, how do we look at the growth in the Taj brand itself over the next 2 years.

[Puneet Chhatwal, executive]

So we have guided to 100 properties in the part brand actually. We are close to that. I think that is the car brand today has around 11,700 rooms in operation. There are another almost 3,000 rooms in the pipeline. And we think that this brand will continue to drive on the performance, especially with our asset management efforts, which I mentioned before, let's say, the past month. Another 6 months, the renovation will be completed. It will have some impact of that renovation and the efforts. We've already seen that with only 50% of the hotel being operational. So soon it will be 100% operation. And completely in the state-of-art absolute flagship for us in Delhi. Other things we are also investing in Lalor, we'll be opening a second casino now over the next 12, 14 months in a place called Rusin. So there is a lot of development that is happening on the past front, both on a company in terms of asset management and also drive driving growth by the management contracts. Then it gets further interesting because, as I said before, we like to maintain a certain balance also in terms of resorts. So we want to defend the positioning of Taj in terms of palaces in terms of number of results. That's why we bid for luxury because Taj created or when I was not even in the hotel industry, and Taj also created the destinations like Kerala. We have also created analog and Andaman and the next one will be luxury. So I think not only finding just growth and just management fees but a nice mix of portfolio, which helps you drive rates, performance, keep the customer with you with the help of a strong loyalty program, which we now have access to with avenue. I think it should all help in the customer journey for the Taj brand, and we are very pleased that it is going up to 70% of the total contribution. And which is also interesting. It used to do maybe 10, 20 years ago, it was maybe 99% or 95% of the revenue one-off and carrying the board. But today, almost a small number though, but more than 1/4 of that is coming from our newly reemergent businesses, which are driving the margin expansion as.

[Unknown Analyst]

If I can just ask a follow-up. I'm referring to Slide 7, where in Taj, you're adding around 1,200 rooms till 2025, which is around 10%, 11% on the current basis. So my question is more so to say that where we are in terms of occupancy at pre-COVID and our ARR is significantly high and has increased over the last 12 months. From a growth perspective, does that become limiting? And do we see just the 10%, 12% growth over the next 2 years for Taj? Or how should we think about it?

[Puneet Chhatwal, executive]

No, no, no. This is not how it works. So -- see if you look at the chart here fully, you will see pipeline rules, which is INR 2,773. I told you it's almost 3,000, right. These do not include some where there is a condition precedent, which could get resolved for some of the hotels, which we have also signed up, but there are certain conditions to be fulfilled by the Ones. So that's one. Also, this does not include any conversions. See everything does not come as a new construction. So when we did this as resort and convention center in Goa, together with [indiscernible], these 500 rooms were not a part of any pipeline. When we signed within like a few weeks [indiscernible] and within a few months, they are target and convention center. So there is something called conversion of existing properties. Then there is something called a brownfield, which means hotel is very 60%, 70%. It means another 30%, 40% completion times. So it will not take so much time. This what we are reporting is what we actually have today, which is signed legally binding and a press release has been issued communicating it to all the investors and also to the market.

[Operator]

The next question is from the line of Achal Kumar from HSBC Securities.

[Achal Kumar, analyst]

So a couple of things. One, in terms of liquidity, so you ended the quarter with a liquid $15 billion with net cash of approximately $8 billion. Given that you don't have too much of debt commitment, what's your plan in terms of usage of cash? Are you -- I mean, you already highlighted that you are open for inorganic growth. But what exactly are you committing to that? Do you still expect a free cash generation of around 15%, 20% pre-CapEx of your revenue? And are you open for return to shareholders. So what is -- if you could share your thoughts on that. Secondly, any update on crores previously, of course, you said that you will have some update. So I just want to understand if you have any update on crores as well as usage of this INR 40 billion investment platform for GE -- and finally, last question is about -- I saw you have put a slide talking about B2C channels. So do you see B2C sale is going up, which means the commission out could reduce. So what is your thought on that?

[Puneet Chhatwal, executive]

So I think answering each one of your questions, Achal. I think you're absolutely right that the cash of INR 1,500 crores, of course, includes INR 450 crores, which is earmarked towards the fit from the QIP toward eventual payment. So it's about INR 100 crores of cash and cash generation will be strong. So I think this is kind of a developing area in terms of utilization. In me, there are 4 broad buckets in terms of utilization. Number one is the regular renovations, which will broadly be in line with the depreciation of the company. That's how it's always been there. The second is the greenfield projects that we have signed up to will have a second bit of utilization, which will happen. Then the third one is your point on dividends. I think very clearly, we have been kind of -- the performance has been not like the present in the earlier year. And therefore, we have been cautious in terms of dividends. And very clearly, we are open to relooking at that as we come to the end of the year, and it is clearly not something that I can personally comment on except to say that we will certainly relook and it will be depicted by the Board at the internal quarter. But are we open in terms of relooking at it and depending a dividend policy, which is more closer to a tax-based dividend policy. I think those are things that we're thinking about. And fourth is, of course, is that -- we're also committed given that the difficulties of the industry has faced, we also want to make sure that we have a recent strategic reserve, which will help us against any future pandemic or any other things like demonetization or GST. So we will have a strategic reserve. But it's also true that we are likely to have money beyond it, which will be used towards potential acquisitions. So this is an area which is developing at and rest assured that we are working on it very openly with the full understanding that anything we do has to be accretive to the closing performance and the returns to shareholders. So that's the approach we're taking. So that is number one. The second question was on D2C. So D2C, the way I think to look at D2C is that anything which is not areas or GDS, I think that's been around 3%, 31%. And our 69% has been D2C direct-to-consumer I think we are quite comfortable with the way the GDS and ADS specifics are there. I think there is a role that the ideas place, whether it has MakeMyTrip or Booking.com, they do have a role to play in terms of reaching the consumer. But we continue to invest in our PRWs, new partnerships, the loyalty programs also help us to get closer to customers actually. But do we expect dramatic changes to the D2C percentages from the current server of 70%. I think it's -- I think we are happy where we are. And if it goes up, it is better. And we don't necessarily treat ADS and GDS as bad. They are important as part of the contribution they do in driving saleable. They all have.

[Achal Kumar, analyst]

And any update on for, please?

[Puneet Chhatwal, executive]

Yes... On -- so Yes, we made some progress with the LC Jeremy and now we want to apply for trench-formation both to MoES and to DMC. And we'll be able to update you more in the next quarter. But this quarter update is that we've got a lot of formal measures from a man that please go ahead and apply.

[Achal Kumar, analyst]

Thank you so much.

[Giridhar Sanjeevi, executive]

I think if there are no other questions, I think -- is there any big new but -- maybe we take one more question and then before we close the call. In any case, as we advised, we are always available. So we'll take one more question.

[Operator]

The next question is from the line of Prateek Kumar from Jefferies.

[Prateek Kumar, analyst]

My first question is on Ginger Santacruz timeline. We'll be able to update on the time lines there? And second question is like now YTD pricing for FY '23 appears like around 25% higher versus breakover pricing of, I mean, your stand-alone pricing at least. So how does this pricing like, let's say, compared to peak pricing years like 2006 to 2008 for a company or maybe for industry?

[Giridhar Sanjeevi, executive]

Yes. I think okay, let me I think as far as the India is concerned, we were already expecting it to open around June, July. I think it probably a couple of months, there may be some plus/minus. So I think that is something that will definitely open in the middle of the next financial year. As far as pricing is concerned, I think the market in 2007, '08 was very different, actually, with 60,000 rooms and today, we have branded rooms are more than 160,000. I think the dynamics are completely different in action, given the dynamics are completely different. And I think there's really no point in us comparing back to 2017 in terms of what was there. I think as we said in the beginning, the macroeconomic fundamentals is strong. The consumption team is strong. The hospitality parameters is strong. So I think we can only look forward to sort of say that both occupancy and rates are likely to grow higher. And as we clarified, I think the business area is still around 9,000 as we saw. So there is still, we believe, potential in terms of growth in areas -- so -- and there are no indicators that we have at this point of time that suggests the operating flattening or canines actually, I think you see international tourists is still not fully come back. I think there are a number of factors which are really helping a.

[Operator]

Yes. I now hand the conference over to Mr. Puneet Chhatwal for closing comments.

[Puneet Chhatwal, executive]

Thank you, everyone. Thank you for joining us, and thank you for your support, and we look forward to continuous record quarters like the first 3 quarters of this financial year have been. Thank you for joining. Thank you.

[Operator]

Thank you very much. On behalf of the Indian Hotels Company Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.