Refused to commit on transient demand business vs.

My first question is regarding greenfield hotel openings. Puneet and Ankur, you have in the past spoken about how current economic rates are still not viable for greenfield asset development. But if I look at recent industry reports, more than 50% of hotel signings in CY '24 were in the form of greenfields. How much headroom do you think still exists before we start seeing a lot more conversions in the form of greenfield additions? Or rather at what rates do you think these projects should start looking more viable?

What we have referred in the past is actually with reference to buying out land from scratch, and actually taking approvals and going through the whole process of setting up a greenfield. This is like a pure greenfield asset, which we had talked about that in the Capital Market Day, we had said that at that time, the rates will give you an attractive IRR. To that extent, our thesis has not changed, because if you see whatever has been announced is either a combination of assets where, for example, in our case, the land is coming to us in the form of lease at attractive rates, making the proposition viable or if it is an existing parcel of land, which is being put to use like we did in the case of Ginger Mumbai Airport. So, if you step back and look at the larger picture, even if you look at the first quarter for this financial year, it is looking strong, both as far as ARRs and RevPARs are concerned. Puneet Chhatwal added: there is no 1 size fits all. The greenfield opportunities in Tier-2, Tier-3 cities or new markets are quite interesting. For example, we are going to open this year greenfield in Ekta Nagar Vivanta and a Ginger, both together. From our point of view that land came at a very compelling proposition and to build straightforward greenfield assets was at a very reasonable cost. So we expect very quick payback of projects like this, which will definitely not exceed 7 years. If we are lucky, it could be in 4 to 5 years' time.

In Slide # 26 of the investor presentation, we can see that the share of bookings from your own website has increased by 100 bps to 15% in FY '25. Could you highlight the savings that accrue to you from change in this mix? And what aspiration or plans that you have to increase this share going ahead? And if you can also quantify what cost efficiencies do you expect accruing because of that?

This number is a little subdued for last year. This number will go up because we have only relaunched the new website of the Taj brand. And we have also done that with Ama. But almost every 6 weeks, we will have best-in-class websites getting launched. And we hope to get more and more traffic with the combination of the new digital initiatives as well as Tata Neu initiatives to get more traffic through our website, and each percentage increase or each room night that we don't have it going through there saves us anything around INR 1,000 to INR 1,500 based on the total mix. But as the growth is coming more in the upscale and mid-scale brands, so you can safely assume around INR 700, INR 800 per booking that is channeled directly through our website.

On Taj Bandstand, if you can update how the construction is expected to progress in FY '26? And as a follow-up, have you elaborated on the structure for this asset? Will it be entirely on IHCL balance sheet? Or will you be looking to nurturing some of your existing partnerships such as with GIC or with an external partner for this asset?

Right now, it is being planned to take this in our subsidiary company. So not on standalone, but on a consol basis, it will be 100% owned. As of now, that's the plan. The GIC partnership, as you know, is a partnership which actually has got over, but we continue to be in dialogue with them if there is anything interesting which we can do together. But for now, the plan is to do it on our balance sheet. One positive development, which is actually likely to come up is that spur to Taj Bandstand and Lands' End, the road from going to the ceiling is likely to get approved. In the next few weeks, we expect to hear some good news in terms of the CRZ approval, which is the next milestone as far as this asset is concerned. And once that is in place, then it's then awaiting 1 final note on the height, because we already have a height approval till 145 meters, and we have now applied to take it to 165. Once that comes through, we are in a position to start construction. So somewhere latter part of this year, construction can actually start towards the end of the year. Puneet Chhatwal added: With the cash that we have generated and the reserves that we have, and the expected cash that we will have, it does not make sense to partner. If need be, we can partner both from within Tata Group or outside Tata Group like with the GIC or anybody else. As things stand today, given the change in our position from being net debt free and generating so much cash, it makes absolute sense today to do this on our own.

How should we think about CAPEX next year? And what are the key areas that you would be spending it on?

We have guided in the press release that firstly, in the context of the CAPEX, this year, we have spent close to about INR 1,100 crores. This is on a consolidated basis, INR 1,074 crores number, which is evenly split between greenfield and renovation and routine and digital. The greenfield also include, by the way, the money we put out for securing the FSI for Bandstand. We have in this current year, we have a few projects which are going to get to completion, Ekta Nagar the 2 projects. We also have Banaras adding brownfield expansion of 100 keys, that will also get done this year, which is being done through our subsidiary. So overall, we have guided towards INR 1,200 crores plus CAPEX for the year, and we feel comfortable about that. There's also large renovations planned in some of our assets, including Taj Palace in Delhi, Fort Aguada in Goa, St. James in U.K., Taj Kolkata, so Taj Bengal. So essentially, if you put all together, we would think about 60%, 65% of the CAPEX would get spent on renovations and digital investments, and the rest would really be going towards greenfield assets.

On the foreign tourist arrival. Pre-pandemic, this used to be always trending up, was a good profit margin business also. I do understand in the near term, we have a little bit of border uncertainty, so it could impact tourists adversely. But is there anything that the industry or the government is doing collectively to take this number much higher?

There are 2 ways to look at this, Binay. Technically now in the last few months, the number of arrivals has gone up. But just the terminology, FTA is not appropriate. So that's why when I was giving my 10 points, I called it foreign arrivals and I missed that T, I took out that T. Because as India gains more and more relevance and importance as being the fifth largest economy and progressing towards third largest, there's more and more business interest that is getting generated from outside of India. And more and more people after G20 are still traveling. So this is a trend you will see in auto sector, you will see that in the Global capability centers that are being built. But when it comes to the tourism part, we have not seen us going back to what it used to be pre-COVID. What we have done is we committed to Indian Association of Tour operators at their annual business conference last year, and we have put in as Indian hotels, committed INR 25 crores to be spent over 3 years in helping promote India outside. We have done that at the WTM in London, most recently last week at the ATM in Dubai, and in March at the ITB in Berlin by hosting the India Day. We have made also for travel agents many other terms favorable by changing their cancellation policy, by including breakfast in the rate component, etc.

I have seen Taj sets margin in this quarter is lower. So what is the key reason for that?

So Sumant, we put a note also explaining that basically the new contract we have signed in some of the facilities, the way they are accounting for levy change as per the new contract. Earlier it was not a P&L item. Now the levy flows through the revenue and also through the cost. Essentially, that impacts the margin per se, because firstly, it increases your revenue without changing your EBITDA. Also in some of the facilities, there is a levy on levy. Essentially, if it's a part of your revenue, you have to pay levy on that as well. So both of these factors actually have impacted the margin. And if it was not for that, for example, this quarter, the margin would have been actually lower by only 0.5%. Overall, if you look at how we are looking at their numbers, the next year, FY '26, we expect because of this, there could be a 1% impact on the margin, but this will also help in growth in the revenues because this levy now gets added to the revenue itself. So if they were doing 13%, 14%, they could do an additional 3% to 5% because of the levy now going through the P&L.

Considering current scenario in international market, do you think the U.S. and U.K. business is likely to see a challenging year for these 2 subsidiaries, FY '26?

No. On the contrary, see we have only 2 properties in U.S. San Francisco went through 2 very bad financial or 2, 2.5 very bad years. But since January, San Francisco is slowly coming back as it used to be. And on the occupancy, it has reached the level where it was. And on the rates, it's increasing by leaps and bounds. And we do believe that San Francisco will be a big positive surprise this year. The April was extraordinarily good for San Francisco, but that changes in that city based on the big events that they get. In New York, our size of the hotels is not that big. These 2 hotels put together are like close to 300 rooms. But our efforts in New York, as I said, are beginning to pay off. And for the first time, P&L was EBITDA positive, and we think this journey will continue in a positive way also this year.

In April month, you were talking about 17% growth? And which city has driven the growth?

It's actually across the board. Domestic and international. Actually, even international has done well, mid- to high teens across the board. So I don't think it's a specific city which has given the growth. The big cities, the metro cities continue to fire, which was expected, which is Bombay, Delhi, Bangalore and even markets like Hyderabad, Rajasthan have done quite well. Puneet Chhatwal added: the first 4 days of May have also been very good because the commercial capital, Mumbai had the WAVES event, and Delhi had some heads of states visit. And fortunately, for us, one of them we hosted. Very strong ARR driven.

On city-wise RevPAR growth, like we have stopped giving that data, but like in terms of tourist cities versus business cities. So overall, 16% RevPAR growth in the quarter, like how does it show up in different cities?

Prateek, most of the cities are very strong. The only place which is a little bit under pressure or flat is Goa. But it's still having the highest rates or the highest RevPAR in the country, so at least for us. And if I was to take the growth in Q4 in Mumbai was 14%; Delhi, NCR was 27%; Bengaluru was 28%; Chennai was 12%; Rajasthan was also 12%; Hyderabad, 14%; Kolkata 26%; and also Kerala 16%. It also depends what is the base you are coming from. So in Goa, the base was 18,000 for us. Now Rajasthan was 23,800. Hyderabad was also 19,800. But Delhi was only 11,598, and it went to 14,700. And we are very pleased with the performance of all these Mumbai, Delhi, Bengaluru, all these places, we have very strong presence. The only city that we miss for us, with strong company-owned presence is Pune, which is also doing strong.

You also highlighted on like people or travelers are generally a bit cautious on booking in near term, immediate term. But how is this general to understand, how is this mix evolved from pre-COVID, like people wanting to book in 1 month or 3 months or 6 months in terms of industry tender yourself?

Nothing the visibility. The booking window is becoming shorter and shorter. More and more people that travel don't make all these plans so much in advance, except for the usual. When you have school holidays and you have the summer vacation, the Christmas, if you take that out, the rest of the extended weekends, et cetera, are just planned maybe sometimes even 24 hours in advance or 12 hours in advance, versus what we have highlighted since last 10 quarters that when people had to drive themselves during COVID, they got used to a different holiday with the family. And many of them never went back to the old way of using other mediums or other help to drive, they would just get into the car and drive themselves, and that is a lot. So the booking window, except for the main holiday season is becoming shorter and shorter.

On demand trend again. Like regarding this global tariff or is there something which you envisage on, again, foreign tourist or overall business sentiment...

Fortunately, nothing comes to my mind on how this sector could be impacted with tariff. At the moment, I don't know what 1 could do is increase what GST. That they cannot, that influence cannot come from overseas. Ankur Dalwani added: the business sentiment, it could help India because it's one of the beneficiary of the tariff regime is that India has got relatively lower tariff than neighbors. And if those continue to hold, you could see more visits coming into India for doing more and more of outsourcing from here. So that's, in a way, not a negative, but definitely could be a positive also. Puneet Chhatwal added: it could be a great opportunity to channel some of the business from Europe instead of going to U.S. to get them to India. The flying time is not any different. It's the same.

In one of your slides where you show demand supply by city, it showed Delhi going into negative. Now did that happen at the beginning of the year? Or is that something a new development?

Yes, this is more statistical. This is STR data. So we have checked it with them, but it's not necessarily representative of the trend. Essentially, this is probably what has happened. And if you see the supply going negative, some hotels were not available. Effectively, the room nights available have gone down statistically. But in general, if you see across the board, supply is growing in the region of 2.5%, 3%. That's what the trend we picked up. Some of this, I would not really read too much into the minus 1.2% number here, but that's more of a statistical number. Overall, the supply is in that zone which we mentioned earlier.

If you look at the interplay between ARR and occupancy, can you talk about what the incremental margins are on both these drivers, ARR and occupancy?

See, if the business comes through rate increase, the flow-through is very high. It could be 80%, 90% or even 100%, depends on what rates we are talking about. And occupancy driven, you'll still have the operating cost per room. So finding the right balance and the right mix is a good way forward. We see that the willingness of the people to pay for premiumization in India has significantly increased in the last 2, 3 years. Previously, we spoke about a few hundred thousand people today, you can easily say more than 1 million people in India are willing to pay for quality, are willing to pay for experiences and are willing to take more holidays or spend on discretionary expenses like hotels and restaurants. As an example, it was unthinkable that you could have smaller restaurants. It happened in the West, but not in India so much with 10, 12 seaters sold out for 3 months before you get a table or a booking. So these are new trends that are emerging and something we, as a sector should also observe closely.

Previously, you used to give the pipeline number beyond '27 as well, but it's not there. So how should we put that in our model?

The total pipeline is there, which is the total signed pipeline. And effectively, if you see, we have got roughly about 3,000 to 3,500 keys opening in the next 2 years, if you look at the numbers which we have put out, not factoring any potential conversions, which might happen. So essentially, between the 15,000 would get absorbed by FY '30 or FY '31 kind of a number, right, if you think about it.

About the rising competition. Recently, IndiGo announced to open additional 30,000 rooms by 2030, along with Accor. On the other side, if you see the GIC is taking a bit active part, they bought 35% stake in Samhi in 5 hotels, and they are spending almost INR 1,000 crores there. So how do you see the competition rising? Do you think the industry is still expecting this demand versus supply growth or the gap between demand and supply to continue for 4, 5 years?

See, as India gains in importance as a strong economy, more and more brands and organizations would want to have presence in India and a strong presence. And all companies, as far as I can see, have made big plans. The benefit we have is we embarked on this journey some time ago. And just given our signings of 74 contracts last year has given us a very big boost and an edge. And given that we are today net debt free, having a gross cash of INR 3,000 crores and generating cash as we speak, positions us very well to take advantage of any other inorganic opportunities that might come. Now what others are doing that is their entitlement to do, but I can only say that we, as management, this is what our thinking has been. And also very important that we are not in the business of counting rooms only. So we have certain legacy. We have certain commitment through our businesses to the nation, and we will keep doing what we think is right and not follow blindly some other thing. We are going to go for profitable and sustainable value creation.

My question is specifically on Ginger brand. So in the slides, we can see that they have seen a RevPAR growth of 8% for FY '25. Now with new initiatives of Ginger, and positioning it as a Lean Luxe model now, would it be fair to expect ARR growth for this segment to be higher compared to other brands? Or do you think it is still some time away?

So see, Ginger is actually very well positioned in the mid-scale segment. This is a segment which is relatively more price sensitive as compared to, let's say, the luxury and the upscale segment. And actually getting a 10% and an 8% growth rates on RevPAR is actually very commendable for this segment, because relatively, the growth rate in this segment is lower compared to the overall hotel segment industry, especially the luxury end of the market. And also what will happen in case of Ginger is that there is a completion of the Lean Lux program, which will actually get done in this year, which means almost the entire inventory will be fully renovated in terms of getting it to a lean lux position, which will help us in pushing the ARRs through. And this is actually a great segment or the brand is very well positioned to target not only consumers, but also corporate, where the price sensitivity is a little bit more, but there is a strong preference for them to come under the Ginger brand.

Mr. Dalwani, how much of the 60%, 65% renovation cost of INR 1,200 crores can pass through P&L?

No, all that is renovation CAPEX. So it will all get capitalized. It will come to the P&L under the form of depreciation as and when it is completed. So obviously, first, it will get spent and then get capitalized.