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Good afternoon, ladies and gentlemen. On behalf of Ambit Capital, we welcome you all to the Q4 FY '22 Earnings Call of EIH Limited. We have with us Mr. Vikram Oberoi, Managing Director and Chief Executive Officer; and Mr. Kallol Kundu, Chief Financial Officer of the company. A brief disclaimer before we start. We would like to inform you that the management may make certain comments on this webinar that one could deem as forward-looking statements, specifically the financial guidance and any pro forma information that the management will provide on this webinar are their estimates based on certain assumptions and have not been subjected to any audit due or examination procedures. Please be advised that the company's actual results might differ from these statements and EIH does not guarantee these statements or results, also is not obliged to update them at any time. I'll now hand over the webinar to the management for their opening comments, post which we can set the floor open for Q&A. Thank you, and over to you, Vikram sir and Kallol.
Sure. Thanks so much, Karan. Good afternoon, ladies and gentlemen, and thank you for joining us on the call. Kallol, I will just make some quick opening remarks before you go through the presentation. So I mean we've all been -- our industry has been through 2 years of COVID and fortunately, both corporate business and leisure business have picked up. When we look at the past 2 years, what really kept Indian hotels and Oberoi hotels and Trident hotels going was the large demand within the domestic market. We saw a strong demand for our leisure hotels, whether that was Trident or within the Trident or the Oberoi brands. Whereas corporate travel was really restricted, people were working through other means like we are doing today and corporate travel took some time to resume. I think India's vaccination drive with the low counts of COVID or the low counts of hospitalization have really seen that turn and we saw a significant upturn in corporate business starting in March and that trend continues today as well with strong demand even in our city hotels, driven by both corporate and MICE segments. The other thing that's come to us is a positive surprise is the return of both international corporate business as well as international leisure business to our hotels and to India. We haven't really anticipated this would happen as quickly as it has. For leisure, we were looking at quarter 3 of this financial year. And for corporate business, it was the second half of the year. But we've been pleasantly surprised in our hotels where like Delhi, Bombay, Rajasthan, Agra, et cetera, where you get foreign travel coming in. These numbers have picked up far greater or far more quickly than we had anticipated. So we hope this coming financial year '23 would be a good year for us and as well for our industry after COVID. We also hope that there are no variants that cause significant hospitalization, either in India or overseas. And if that continues as is, I think this financial year will be a very positive year for EIH and for the industry as a whole. With that Kallol, I'll pass it on to you to go through the financial results, et cetera, which are part of your presentation.
Thank you, Vikram. Good afternoon, ladies and gentlemen. Warm welcome to all of you to this conference call. I'll begin with the key highlights for the quarter 4 of financial year '22, where we see domestic air traffic increased by 38% as per HVS Report. During March '22, the nationwide hotel occupancy for the first time crossed 60% on an overall basis since the onset of the pandemic sometime during this quarter of FY '22. The return of big ticket conferences and events, such as IPL drove Mumbai's occupancy to pre-pandemic levels for the month. The city along with Pune saw the greatest increase in occupancy in March '22 compared to the previous year. And as Vikram mentioned, improving corporate travel demand is also assisting in occupancy movements. Compared to the hospitality industry as a whole, our company's RevPAR growth has been higher, fortunately for us during the last 3 months of financial year '22. Then we see the ADR and occupancy resulted the RevPAR grew by about 88% on an average in March. For the industry, the same has grown by between 108% to 148% at EIH and the RevPAR index continues to be high as compared to the industry in general at about 2.5 times, which has substantially increased from 1.95 times to 2 times of last year. The relative indices to competition in case of domestic hotels, the data presented here is for all the domestic hotels of which are owned or and/or managed by EIH Limited. This shows a trend from April 2019 to March 2022, where we are happy to share that the RGI has been by and large, except one month of June 2020, it's always been above the dotted line of one, which shows that the index is at a higher pace than what the industry has been doing or what our competition has been doing. And obviously, when you go through these charts in detail, probably there'll be more questions which will be happy to then answer. Our outlook continues to revolve around our 3-pronged strategy of endure, revitalize and flourish. When we talk of enduring, we continue to speak of our strong balance sheet, our strong asset base. The slight decrease that you see here at between 2021 and 2022 is because of sale of one of our non-core asset, the EIH printing press. But despite all of that, I think the bank debt has been at very reasonable levels. The bank net debt at INR 270 crores. The net worth continues to be high and positive and the robustness of our balance sheet have helped in controlling the finance costs and as a result of which we do enjoy very competitive rates from our banks. The weighted average cost of debt as of March 31, 2022 was 7%, which is a reduction of about 90 basis points in the last 1 year. The other thing that has helped us and we've been talking about it in the past towards our endurance is our ability to improve on our operational efficiencies on all aspects of operational efficiencies and as numbers at the bottom of the grid would show that the total expenses vis-a-vis FY '20 has reduced in FY '22 by about 22%. Our corporate costs in the same period have reduced by about 22% again. And total fixed costs, we have something been consistently been talking about is the reduction in fixed cost has been 15% vis-a-vis FY '20. This means that this would mount to a significant quantum in number in absolute value. How much of this is sustainable in the long run is something that internally we are working on in the organization. But we believe that a substantial part of this will remain as such going forward. The third facet of our endurance has been our ability to maintain the highest standards of health and safety, and we are happy to share that 5 audits were conducted during October 2020 to April 2022. And the good thing is that every single Oberoi and Trident hotel has received the highest safety and hygiene rating, which is platinum by Bureau Veritas. So all-in-all, as a result of all this, our guests continue to repose their faith in us. And of course, adding to that, we initiated efforts even during this period of COVID, whereby we looked at energy conservation, carbon footprint, 4 of our hotels that we -- 2 of them we own and all 4 of them we manage, of course, where we have commissioned solar plants, where the generation of electricity is close to 35% to 40%, which is completely through solar, where this has helped in reduction of our average cost reducing from about INR 11 on an average to about INR 6.6 per unit. The number of hotels, which consume renewable energy today in the group are new Trident Gurgaon, which are 100% on solar energy, which are managed by EIH, Oberoi Amarvilas, Udaivilas and Trident Tower, Trident Udaipur as we've mentioned here, the Oberoi Mangalore, Trident Chennai, these are on wind power. So a substantial part of our initiatives on the energy, conservation side or ESG initiatives as they call it is really something that we are looking forward to within the company. We do talk of being revitalized as would be evident from the sharp RevPAR recovery post third wave of COVD-19, which clearly shows the impact of each wave as it came. The 2 parts that you can see are for own hotels of EIH and the other one is the domestic hotels in India, including managed hotels. And all of these, you would see the recovery, which is there after the third wave has been pretty good, especially in the month of February and March. There are several kinds of analysis that we've provided and I'm sure all our friends would like to go through them and come back to us with questions, if any. The recovery in ARR and occupancy, the previous slide was on RevPAR. So that's broken up into ARR and occupancy in domestic hotels. And as you can see here, FY '22 is represented by the red color in occupancy as well as in ARR. So both are seeing a significant increase in uptake, both in occupancy as well as in ARR. City-wise, if you want to look at it, the revenue recovery has also been good. And I'd like as Vikram Oberoi mentioned, the leaders were, in this case, Maharashtra and NCR, followed by other cities like other leisure locations where we are placed like Udaipur, Jaipur, Shimla and Chandigarh. There's been an uptake in Bangalore and Hyderabad as well. The overall operating metrics if we were to compare them between the various categories of hotels that we have as we classify them traditionally as Oberoi metro properties, Oberoi leisure properties or Vilas properties, Trident Metro properties, Trident Leisure, Trident City and others have followed by a total. So again, this again shows from a slightly different point of view as to what the various kinds of recoveries have been across different categories of our hotels. Food and Beverage business in domestic hotels, including managed hotels also continues to be robust with an increase of revenues that we are seeing in FY '22. In fact, it stands at INR 58 crores, which is amongst the highest in several years. When we talk of flourish, the third leg of our recovery process, there are several key initiatives that has been launched under the book direct, the best freight promise. A special mention for the Oberoi Select, which has really been very popular and therefore has been now brought out in its second avatar. The Oberoi One is now picking up post opening up from after the pandemic. There are strong tailwinds in corporate and MICE and I think this graph is pretty revealing. It gives a picture of 1 year as to how the various segments have moved. And clearly, the happy thing is that the city hotels are beginning to pick-up with an increase in MICE and corporate business. Leisure has, of course, maintained its momentum and Direct too has maintained its momentum. Overall, the performance highlights, these have been published. So I won't spend much time talking about it. While on a stand-alone basis, the PAT was a loss of INR 7.3 crores. This included exceptional items of INR 13.2 crores, which has been highlighted in the notes, which has been published along with the results in the stock exchange. On a stand-alone basis, this gives a picture of the results quarter-on-quarter for revenue, EBITDA of PBT and PAT. Of course, the last quarter, vis-a-vis the third quarter is because of January, which was really -- saw some effect from the Omicron virus. But on a consolidated basis, we have a positive total comprehensive income of INR 27 crores in quarter 4. The 12-month, of course, was a loss. Again, similar kind of results as we saw in stand-alone, except that the PAT here is positive. One last point that I would like to make is that the process of looking at non-core assets and unlocking value from them has been taken as conscious decisions. So the printing press was the first one to go off the block, where we had a net gain of INR 55 crores. This is going to definitely improve our profitability in the periods going forward because in the last few years, there was -- this unit was having EBITDA losses. And therefore, we believe that this is on a Corporate strategy side, this is a good thing for the company. The business blueprint is like the corporate structure is as it has been. There's no major change here. We continue to have about 4, 512 and 749 keys under the Oberoi brand across the globe. Thank you so much, and we'll be happy to answer any questions that you may have.
Thank you for the detailed opening comments. [Operator Instructions] So we have the first question from Vikas Ahuja.
Sir, this is Vikas from Antique. So my first question is related to the margins. So if I compare the margins, we have achieved this in single digit on a consolidated basis. And if I look at your peers who have reported, they are closer to 18% to 20% EBITDA margins. So what am I missing? I mean, why our margins are kind of lower compared to the peers this quarter. One one-off you talked about around INR 12 crores, but there's anything else besides that?
Kallol, do you want me to?
Sure, Vikram.
So I think one of the things is if you're referring to EIH Hotels, EIH's portfolio is 95%, in fact, yes, 95% of our room inventory is our city hotels, 5% there are 2 leisure hotels that are owned and managed by EIH, which is Udaivilas and Vanyavilas. Udaivilas has 87 keys and Vanyavilas has 25 keys. Other than that, hotels are all in metro locations where you're highly dependent on corporate travel.
So margins are a function of 2 things. It's a function of your top line and your bottom line. And because of our large skew towards our city hotels that are highly dependent on corporate travel, that didn't resume in March. Obviously, margins were squeezed also during Omicron for example and also the wave in April and May of last financial year or 2022. That's the first thing that got impacted. In fact, leisure hotels didn't suffer as much.
So it's really a function of both topline and bottom line revenue and expenses. And I think Kallol, we didn't put the charts in for that showed the significant initiatives that we ran on at least some major expenses. I don't know if you have those currently available and you can run through the numbers. If you want to add anything beyond that, please feel free to do so.
Thank you, Vikram. Yes. There are 2 points I would like to add. One is when you do a comparison. I think one of the factors that we mentioned was we are looking at our non-core assets. So when you look at our stand-alone accounts and you refer to the stand-alone accounts, by the way, it's not in single digits, it's in low double digits, the EBITDA percentage. But that includes the loss that basically we incurred from Oberoi Flight services. So I think an apple-to-apple comparison would actually be to take out the flight services number and then do a comparison in which case you will find it's much more comparable and it would actually be even better because there's one expense which probably I must highlight here that in the employee expense, there's a INR 7.5 crore expense, which is on account of a one-time payout because the printing press came to a closure. So that's not a regular expense. If that were to be removed, then overall, I think the EBITDA margins are pretty healthy subject to the points that Mr. Vikram Oberoi made.
And I think also the printing press, which now we don't have any more.
Till 31st we had. So yes, that's right. I mean up to 31st March, there was a contribution to the loss from the printing press as well.
Sure. That's helpful. And secondly, this question is from more of a medium term. So if I look at your pre-COVID margins, we used to do close to around 20%. Some years, it was a little down or up. And also, you have highlighted the saving in terms of the payroll cost and corporate structure...
Sorry, you are on mute. Yes.
Yes. Can you hear me now?
Yes.
Yes. So I was just talking about our EBITDA margin, which used to be closer to 20% pre-COVID. Now with some of these savings, especially in terms of payroll costs and all, can you put some color on what are the puts and takes for the margins in terms of the medium term would be? I mean, is it fair to assume that now most COVID margins would be much better than what we used to do pre-COVID and there could be maybe a 300 basis points to 400 basis point improvement we can see in maybe 3 to 5 years from the past? And I'm assuming a full-blown recovery, so not assuming any fourth favor or something.
Kallol, do you want me to?
Please Vikram.
I'm a bit mindful about what I can say and what I can't say about the future. But really there are 2 parts to it. One is whatever we've seen in the recovery, which has taken place in March and April, our hotels, and we watch SCR on an everyday basis. Our hotels are performing certainly on topline or RevPAR better than others in most of our city locations, if not all of them. And I don't have the chart in front of me, SCR1. So that's a function of revenue. And on the cost side, many of the initiatives that we've undertaken, whether that's at our corporate office at our hotels, a large part of that will be sustained even with the recovery. And I think this hasn't finished for us here. We will continue to see how we can drive additional efficiency, particularly on our corporate side and how we can ensure or how we ensure that the assets and the investments that we've made, give a return. So those are the areas that we continue to look at.
So I'll just add one more point to that, Vikram if I may. Yes. So if you follow the trend of what we've tried to highlight in our presentation, it shows a buoyancy in terms of room rates specifically. And because at one level we have reached a point where our costs have really been optimized to a large extent and of course, we'll continue to be looked at as Mr. Vikram Oberoi said. Therefore, one can assume that the baseline has already been set.
So therefore, any uptake in revenue beyond what we are doing is going to directly flow to EBITDA. So therefore, there is very little, I would say, fixed cost that would be incurred to earn that additional revenue that we are today earning or wherever the rates are going up. So obviously, anything that is incremental will add up to your bottom line and will improve your EBITDA margins.
Also, you've talked of EBITDA as a margin, but I would also like to highlight the fact that our returns on capital employed, et cetera, are also things that need to be looked at because we are looking very closely at the opportunities that lie in front of us and so far is what can be done in terms of structuring and restructuring. And that is also beginning to yield results for us as we speak.
Sure. That's very helpful. One last question. So your competitor have highlighted during their results that April and May, the corporate travel has picked up for them significantly and it's actually better than pre-COVID levels for them. Are we witnessing the same trend? And also, if you can just talk about the pipeline of room additions we have maybe from maybe 3, 4 years per se. And maybe any kind of a rough estimate around that would be helpful.
So let me break this up into 2 parts. Let's talk about our City Hotel first, which are the bulk of EIH owned and managed hotels. In a number of hotels, not all of them that we've had, forget about '19, '20, we've had our best years ever on record. And so there's been significant, significant increase in average room rates and occupancies and therefore profitability for those hotels. And like I mentioned to you, we watch SCR. And if I'm not mistaken, in the month of April, every single Oberoi City hotel, every single one of them that is owned by EIH other than Trident Bandra, Kurla was SCR1.
And on the pipeline, if we can sum it up?
Well, we have a number of projects in mind. One is the we're doing Rajgarh and I'm talking about EIH Hotels. Now here's Rajgarh Palace where work is underway. We are also looking at Hebbal, which is an amazing site on overlooking the lake where we can develop 1 million square feet. So these are the 2 ones. We also have a site in Goa and we are really looking at what we do with that site in Goa as well. Kallol, I don't know if you want to add. I have just covered the main ones, not the...
Yes. So there are some hotels that are being looked at, some projects in some of our subsidiary companies as well. But since this is a meeting of the EIH, therefore, we will probably limit it to EIH.
We will take the next question from the line of Amit Agarwal.
Hello. Can you hear me?
Yes. We can hear you, Amit.
I just wanted to know about Cou Cou. Has the plants been formed for the expansion. There's been 6 months and some of us visited -- I was in Bombay, and I visit Cou Cou. You've done a wonderful job and your team an excellent job. What are the plans for expansion for the same?
So I think in one of the previous meetings I'd mentioned on expansion of Cou Cou. And this isn't about an expansion over year-on-year. I think long-term, we want to establish Cou Cou and grow Cou Cou long-term. Cou Cou is -- the mall has -- the Jio mall has had -- they have also had issues with Omicron. So that's restricted the number of people. But again, now, touchwood, it's good. But the apples or, which is the key anchor stone the mall has still not opened. And I'm sure that will bring significant more footfalls. But I think long-term, our goal remains the same as what I've expressed earlier on to really expand Cou Cou into a brand across locations in India.
But do you have some vision for the next 5 places, 10 places, 20 [indiscernible] 5 year down the line that is as good as instantly growing it.
Yes. I completely agree on it. And we've identified locations that go beyond 2 and 3 for expansion of Cou Cou over the next 5 years. We've done it city by city, location by location, and we do have that. I think really, our focus is to get the first Cou Cou right. And no matter how much we know, we always learn. One of the things that we had anticipated was there would be significant high demand for confectionary items, pastry items. The reality actually is that there was far great demand for food, so we made changes to accommodate that. And we've seen a corresponding impact on sale. I think of it as a tree. If you think of a tree, they are trees that grow very fast, but don't have deep roots. And those trees tend to suffer if there is high winds. It's much better to establish our roots first. And we're not here for the short-term. As you know, EIH is not -- and our whole management approach isn't short-term. We want to get it right. We want to provide the best to our guests and we want to learn and then roll-out our expansion. So we're still, I would say in the phase of learning. But we have a very clear idea of where we want to go. But let's first make the first one success rather than focusing on growth just for the sake of growth.
And on more thin, regarding Cou Cou only. I saw CocoCart doing the same thing just in every mall and it's already at the airports. It's already in Delhi, Bombay. So I hope -- because they are similar name and they're doing a similar thing. So are you aware of the competition of this CocoCart?
No, I wasn't aware. It's called CocoCart.
CocoCart. Coco cafe.
No, I'm not aware of Coco.
It is everywhere in Bombay, is in Delhi, city walk. It is in Bombay every mall.
And what is it, Amit?
They are Coco cafe, their CocoCart, they are coco confectionaries, all 3.
I will certainly have a look. I'm not aware of it on...
They are on domestic or Bombay airport. They're at City Walk, they are at Bombay, many malls.
Yes. I will go and have a look. I haven't -- I'm not...
With the similar name. So I spoke to 2 or 3 people in Bombay, so they take it as the main...
How do you spell it? Could you just tell me its spelling.
COCO.
So it's exactly the same?
Yes. Cafe and Cart, they have 2 brands.
Okay. That's very good to know because I'm surprised that they're using Cou Cou as a name.
I think there are 2 friends. They started the business for 3 years and I think they are on many good locations around the country now.
Right. Okay. No, we will certainly look at that. Thank you for pointing that out.
Amit, maybe we can take that offline.
My another question is...
Amit, if you can please come back in the queue. I think we have a long queue of...
Okay, if you want. Okay.
We have the next question from the line of Achal Kumar.
This is Achal from HSBC. So I, of course -- as instructed, of course, I'll restrict to 2 questions. First of all, on the optimism versus pessimism. So you know, now, of course, most of the hotels are sort of saying that or rather more optimistic about the kind of recovery. Now so on that point, I have 2 questions actually on the recovery itself, first of all. So how much of your business was coming from inbound international tourism peak of it. And now I understand that the recovery has still very -- still we are far from where we were pre-COVID level. So do you think there is a reason to be very, very optimistic once the recovery starts and then we can sort of have a strong recovery or a strong uplift to our numbers once the inbound international tourism starts. And similar on those lines, given that capacity still remains constrained and that's the message we are getting from whether it's from STR or from all the consultants. So do you think that is another reason we should believe that Oh my God, the capacity is constrained and the demand is rising, so the ARRs would benefit from that also. So that is my first question. If you could please share your thoughts on that.
Achal, so your first question was really on the optimism and related to foreign or inbound business into India. Like I mentioned in the opening remarks, actually, we were surprised at even in March when things were just opening up for inbound travel and also in April, the inbound business, both domestic and leisure, in fact, led by corporate was stronger than leisure first of all. And obviously, leisure is we're in the middle or beginning of summer. It's not the ideal time for people to travel to India, but we were surprised at the number of guests and the percentage of occupancy of foreign guests in our hotels that attract these numbers, foreign travel. So that came as a very pleasant surprise. We never anticipated it to be as great as it is. And if that trend continues, I think it's very, very positive for us and for others as well. If I remember correctly, and Kallol you need to correct me if I'm wrong, but it's about 55% historically of foreign, 45% of leisure. During COVID, it was, of course, all -- sorry, what am I saying? Indian and foreign. So it was 55% foreign, 45% domestic. During COVID, it was primarily all domestic. And like I mentioned, those numbers are positive even in March and April of this year. And between March and April, we also saw growth for foreign corporate business as well as foreign leisure business in our hotels.
So do you mean Mr. Oberoi that 55% of the foreign travel or 55% of the total revenue which used to come from foreign is already back or do you think that we're still far away from that?
No, it's not back. And this was year around. And like I said, India is seasonal. Even for our corporate hotels, foreign business picks up significantly more between October and March. But what I'm saying is that we're surprised at how quickly both foreign corporate and foreign leisure have returned in March and April. Are they at pre-COVID levels? Absolutely not. So if I implied that they're pre-COVID levels, that is not correct. And I apologize if I implied that.
Okay. My second question is around the loyalty program. Now given that the situation we are in, what are your thoughts about the focus on the loyalty programs, how important loyalty programs would be, how they would feed into our recoveries and the revenues and the profits. So what are your thoughts on the loyalty programs?
I haven't -- our loyalty program is important. Is that the question or...
Yes. I mean now given the current scenario, given the current trend, I mean do you -- how important are the loyalty programs going to be? I mean, how focused, how much focus do you think the hotel operators or maybe airlines or whatever it would be given to would be giving to the loyalty program? And how would those feed into the profitability and the numbers? What are your thoughts on that?
So let me just start by when we were launching Oberoi One, in fact, prior to launching Oberoi One, with our guests, so we didn't talk to other guests, but we spoke to our guests, and it was largely qualitative in nature, so it was administrated through a questionnaire, quite a detailed questionnaire on which we got, I think, an over 50% response, a large sample size, which means that the margin of error is small and the level of certainty is high statistically.
But when we administer these questionnaires, loyalty was not a key driver of selecting a hotel, either for corporate or for leisure. I think for us where loyalty comes in is very, very important or a recognition program is today guests can use multiple channels to make a reservation. And unless the name and all the details match, you may have a separate profile for the same guest.
What a loyalty program allows us to do or a recognition program allows us to do is make sure that every time that guest stays with us, he or she is recognized and especially amongst some more valuable guests, which are in the platinum tier or in the gold tier. How we can provide an incredible experience to them because these guests come and stay with us often.
They are also higher spending guests. They stay in the highest category of rooms and suites and spend the most amount of money on food and beverage. And they also are our brand ambassadors. So how do we make sure that they have the most amazing experience when they come and stay at our hotels.
And I think that's a very, very important consideration for us in administering this loyalty program or the recognition program, which is the one at Oberoi. So it's not a points-based program at Oberoi hotels. It's a recognition based program at Oberoi hotels, similar to what some of the other luxury hotel brands have.
We will take the next question from [ Pratik Poddar ] and then from Rajiv Bharati.
Yes. Am I audible?
Yes. Pratik, we can hear you.
I just have one question. In your view, what is the sustainability of the numbers, which the industry has seen in the month of March and April. Do you believe these trends are here to stay and they will only get stronger as the recovery takes place.
So Pratik, let me just break -- and Kallol, please, I feel bad that I'm the only one talking. So please just barge-in.
This is your area, Vikram. No issues.
No. But we can do it together. So it's a team effort. It's never one or the other. So please feel free to add. So again, I'd like to just point out 2 things in this. One is we have been pleasantly surprised by how strong demand has been in our city hotels across location. That's the first thing. And the only hotel that hasn't performed as well is Trident Bandra, Kurla. We had buyout then when this took place. We hadn't anticipated a strong recovery. But other than that, every single hotel has performed very, very well, both on occupancy and rate. In cities like Calcutta, I still think there's an opportunity to further drive our average room rate. Occupancies have been strong, so there may be an opportunity to increase rate over in Calcutta. But in all other markets, rates have been very, very strong and occupancies have been very strong. That's as far as the city hotels go. I think the other thing that we've noticed is that with borders opening up with the ability of guests to travel more seamlessly across location or across geography, what we've also seen is that leisure hotels have -- we've seen occupancies fall and this is even at a hotel like Udaivilas, which is probably amongst the highest RevPARs of any hotel in India. And certainly, SCR1 on RevPAR in Udaipur. So last financial year, Udaivilas closed SCR1 in Udaipur. So other than similar with demand is still strong, Rajasthan, we've seen occupancies come down. That may simply be because we're entering the hottest months or it may well be that people are now looking at going overseas or to other locations. So I think that's something that we need to be mindful for hotels where -- for hotels that are present in leisure locations. That hasn't happened in similar like I said, but we have experienced that in our Rajasthan hotels.
As a follow-up, you talked about Trident BKC having a buyout. Is this the IPL thing which you are referring?
This is the IPL, yes.
But had the entire hotel being sold out or it would have been a part, right.
The entire hotel. We created a bio bubble at the Trident in Bandra, Kurla.
We'll take the next question from Rajiv Bharati.
Hello. Am I audible?
Yes, Rajiv. We can hear you.
Yes. Sir, my question is in continuation to the previous participant's question. So if you look at your slide number 16, where you share ARR and occupancy recovery, so if you compare, let's say, the leisure assets, which is Oberoi and Trident separately. So if we see the ARRs have been -- since ARRs have been dropping on a Y-o-Y basis on the Oberoi Leisure side, but while the Trident Leisure, we are seeing that the ARR is basically between 17% to 25% up as compared to pre-COVID levels for the last 4 quarters. But the same number for Oberoi leisure was 16% to 30% higher in Q1, Q2, and now we are below pre-COVID level, below pre-COVID levels in terms of ARR. Although occupancy is stronger and occupancy is holding up 7% higher than the pre-COVID levels. What am I missing in terms of the 2 leisure assets?
So I think the key thing you're missing is that in winter, traditionally pre-COVID, I'll just give you some broad numbers. If Oberoi leisure hotels were doing, let's say, 25,000, 28,000 in pre-COVID summer, they would -- what are the numbers shown on the chart, if we can just put on growth, we can just refer to the exact because I'm going by memory. So what was the ARR pre-COVID in the summer for Oberoi Leisure.
I think, firstly, let me get it right. Rajiv, are you referring to slide 15.
Yes, the one which is seen here, yes.
So I think the question is on quarter 4, Vikram.
Okay. Quarter 4, then it's very, very easy to answer. So the pre-COVID, let me again take one step back and start what I was saying. Pre-COVID you would see rates driven by foreign travel to India, which would start in October through to March with November and February being the 2 strongest months. And you'd see a sharp rise in average room rates. And if you look at historic data, you will see that certainly for us and I would imagine for others as well, the whole industry for Taj, and us and Leela would significantly take their rates up. So in Q4, we were already at a very, very high rate in pre-COVID. So any upside is very limited. Whereas in the summer months, because there was no opportunity for people to go to other locations, even in summer, we were able to charge high rates in Oberoi leisure hotels. As far as your question on Trident, that's been driven by Trident Udaipur that went under renovation. And we saw a sharp increase. If I remember correctly, can I give rates close or better not to, right? But we saw a sharp increase in rates at Trident Udaipur post the renovation and particularly in Q4, driven by not only domestic leisure, but also by weddings and social events.
Perfect. And my second question is on the flight services business. If you can give some headline numbers there in terms of revenue path, PBT and what is the utilization and what is the capacity here?
Kallol, do you want to just run through those? I don't know if you have those handy.
Yes, I wouldn't be able to give numbers. So again, we are talking of quarter 4. So the revenues of quarter 4 for FY '22 would be in the range of about INR31 crores as compared to -- this is double than what we did in FY '21 last quarter. The EBITDA is also -- was a negative of about INR9 crores in the quarter 4 of last year, and that's come down to INR4.7 crores in this quarter. And obviously, this is when we just got 3 days of international flights, which started only on the 27th of March. What was your second question, Rajiv, on OFS?
Sir, the utilization here, in the sense, what is the utilization you are clocking right now, in the latest month or last quarter?
Yes. So utilization is hovering around 50%. But the important thing is that the mix of that is more domestic, as you would recall. And domestic business, obviously, domestic airlines come at a much lower profitability. So yes, if that answers your question. And also just to add that our new flight in Mumbai, we just capitalized on the 1st of January.
And when do we breakeven in the sense that what you tell on domestic side or do we break even?
No, it's a combination. Like I said, that when the international travel increases, it's not a straight kind of formula like the hotel business because it's a mix of the international and the domestic business and that's completely skewed in terms of profitability when you look at international coming in heavily. So there isn't one level that we can say. It has to depend on the mix. And if, let's say, what it was earlier, which was 90% international travel, then by now, we would have booked -- the breakeven would have been achieved.
So we have a couple of questions in the chat box. Firstly, Kallol, if you can take the first 2 questions. Firstly, how much of the cost control can remain when things open-up. Do you need to hire back again when occupancy picks up? And any thoughts on ability to hire in current times? That's the first question. Yes. Maybe you can take the first one and take the second one after that.
Sure. So as I mentioned earlier during my presentation that our fixed costs are down by about 16%. I'm sure the math can be done. In a normal year, about 70% of the costs used to be fixed costs. And when we are talking of a 16% reduction, it's easy to derive the numbers there. I think in 2021, the reduction was a little more in terms of the fixed cost, which obviously with increase in business levels in '21-'22, there is obviously recruitment that has happened back and the numbers have started going up.
We anticipate that we will be able to retain a large part of it, but it also depends on the mix of business and it also depends on the pressure that the hotels are seeking and it's also a conscious strategy for the company to improve the work-life balance.
And as a result of that, even if it makes financial sense to have lower numbers, the organization has taken a conscious call to really make sure that hotels are adequately and evenly staffed, so that really speaking, there is less stress on people and with increasing volumes of business. So some percentage of that will come down, but we still believe that a large percentage of the saving will continue to remain. On the recruitment bit, maybe Vikram, you can add. I mean, I can talk about some of the functions that are not front of the house. So there of course, there is much more competition than what it used to be in the past, which are really industry-agnostic functions. But in terms of operations, I don't think there's a significant changes. Vikram Oberoi can really add to it.
And actually, I would say that at our hotels, it is becoming more difficult to find the quality of people that we'd ideally like to have. So we just have to work a lot harder to attract and to select. And I'm talking about even entry-level positions. So these are people who are very, very important to our guest experience because they are the people that interact most with our guests. And our selection criteria is never to select for a position. Our selection is based on the ability of the person to grow at least 2 levels. So that is entry-level, supervisory and manager. So when you interview me, you should ask the question, does Vikram has the potential to become a manager in time at an Oberoi Hotel or a Trident Hotel or even outside our company. And with that criteria, we are seeing that it is more difficult to -- more difficult to do the selection process.
And second question, Kallol, if you can highlight what's the contribution from MICE pre-COVID and how is it today versus pre-COVID. Any contribution?
So MICE also is really speaking, what we look at income. See, it's not really about MICE or any segment kind of contribution. It depends on which channel is being received from. So let's say, if the business is from a direct channel, which is, let's say, OTA, for instance, in this case, MICE will obviously not be much to the OTA channels. So Vikram, would you like to have a guess on the margins on MICE business?
The margins?
No, this is revenue contribution.
The revenue contribution overall. Is it?
That's right. From MICE pre-COVID and how is it today versus pre-COVID.
Okay. So that was -- if I'm not wrong, pre-COVID Vikram would be around 20%...
Yes, 20%, 25% is my guess.
Now it's beginning to pick-up. It has really gone down. And my guess is it would be in the range of 12% to 13% at the moment. And again, you need to break this up into really 2 parts; one is leisure hotels and the other one is city hotels. So leisure hotels, even during COVID in fact, hotels that have never done social events before started getting that business because it's high-paying business, weddings were small. There were restrictions on size. So you saw hotels that even a 100-room hotel, even at 71 room hotel, Rajvilas started getting weddings and Rajvilas is in a location where there are no hotels that are in close proximity to Rajvilas of that standard. But we benefited from that because wedding sizes were restricted with COVID. So I think it's very hard to just apply the same brush. What we've seen is -- what I anticipate is going to happen is in leisure hotels, actually, the MICE contribution is going to come down. And what I see in our city hotels is MICE contribution is going to go up.
And just last couple of questions that we've received in the chat box. So Vikram sir, maybe you can take that. Firstly, we are hearing across the industry that demand is dominating supply heavily for the hotel industry. First, compared to the FY '03 to FY '07 phase, which was a golden phase for the industry, how is the current scenario? And can we see a similar phase for the industry over the next 4 to 5 years? That's the first question. And second, Reliance as a shareholder. So what are the long-term thoughts on that. It is the last question.
So I think the first question is your ability to predict what's going to happen over the next 3 to 5 years is probably as good, if not better than ours. What we know is that demand is at least so far strong and it's still early days. We've seen strong demand in March and April in our city hotels. We hope that will continue. We also know there's not a lot of supply that is coming on board in the next few years. So demand is strong, then you will see rates and occupancies go up. Whether that's as good as it was, I can't tell you. What I can tell you is what I said before in April, a number of our hotels outperformed their previous numbers. So forget about '19, '20, but even prior to that. So they did very well. I can't tell you whether that's going to continue for the next 5 years or not. But I think, again, what we need to look at is what's happening. If we expect demand to be strong, what we know is supply is limited. And if demand is strong, supply is limited, occupancies and rates will go up.
I also wanted to say one other thing. And again I have no data to support this. But just in talking to our guests, I think with COVID, people will go to brands and hotels that are recognized for quality because safety is probably more important than price. And I think hotels that are of high-quality enjoy a high reputation, will reap the largest benefit. Do I have data to suggest this, no. I know if I were to travel, that's what I would do, and I assume our guests will do the same. So that's the other thing I wanted to mention.
Sure. And perhaps the second question on thoughts on Reliance being a long-term shareholder.
So Reliance is an absolutely fantastic partner. They have Board representation. And other than that, I have no further comment. But they are extremely supportive as is the rest of our Board and we value the advice and the guidance of the EIH Board and of the Reliance Directors in that.
So that was the last question. So any closing comments that you'd like to make?
No. Well what's nice is -- Karan is that we -- there seems to be -- people on this call talked to other hotels and other hotel companies. And what's encouraging is that there is a wide sense of optimism on future demand, which is good for our industry. And so this is not something that is just our perception, but it seems to be a perception that you hold and our other hotel partners hold. So I think that is good for our industry. More important than that, it's good for tourism. And tourism is such a large employer and has the potential to employ so many people, which is our greatest need in India is to create employment. So if these trends continue, our industry and the travel and tourism industry will employ more people, which is a real benefit to our country.
Thank you, Mr. Vikram and Mr. Kallol, for taking our time in answering everyone's questions so patiently. On behalf of Ambit Capital, I wish you all the very best. And thank you, everyone, for joining the webinar. You may now disconnect your lines.
Thank you.
Thanks so much, Karan. Thank you, everyone. Thank you. Bye-bye.