Indian Hotels Company Limited expects the October-December period to be one of the strongest quarters seen in the last 10 years and hopes to end the fiscal with a nearly 30 percent margin, MD and CEO Puneet Chhatwal said on Friday, November 11.

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“Q1 is a historic Q1 this year, Q2 is also historic and the first six weeks of this quarter suggest there is nothing that stands in the way of Q3 also being historically the strongest quarter that we have seen in the last 10 years,” he told CNBC-TV18.

Chhatwal explained that 45 percent of the total revenue comes in the first half of the year, on a pre-COVID base, and the remainder comes in the second half with the October-December quarter being the strongest and Q4 being the second strongest quarter.

Moreover, with incremental demand due to the return of international travel as well as the G20 kicking in (during which government delegations look to book stays), the company expects Q4 to also be very strong. The firm is targeting Rs 5,500-5,600 crore revenue in the 2022-2023 fiscal.

Also read: Leela Palaces eyes higher room rates, more properties as occupancy climbs post-COVID

Chhatwal’s remarks come a day after the Tata Group-backed Indian Hotels continued its streak of strong quarterly results. The firm outperformed its pre-pandemic performance as well and posted a profit of Rs 122 crore compared with a loss of Rs 121 crore in the same period last year. Even as it was a weak quarter sequentially on account of seasonality, lower finance cost further boosted the company’s PAT.

The company reported a topline of Rs 1,258 crore in Q2, a 67 percent year-on-year growth over last year.

The occupancy for the quarter was at 70 percent compared to 68 percent in the pre-COVID period. The company is on track for a 25 percent EBITDA margin this year and 33 percent by FY25.

“The margins keep increasing with the revenue ...the flow-through becomes 100 percent. What we are missing is a certain percentage point because the rate flow-through is not the same as went in Q1,” MD Chhatwal said.

He said the way Indian Hotels’ brands are positioned, it has the ability to charge at a premium to competition. “Our revenue growth index compared to the market is at 1.5 pan-India and in some markets is more than 2. So on an average, for us to expect 30 percent more with the Taj brand, in any given market, is almost a given,” he said.

However, Chhatwal believes luxury hotel rates are still at lower levels. Even as they have gone up, it's not a fair comparison to the COVID time’s rates. Most of the firm’s luxury sector is still at around $150-175 average, he noted.

“A similar style of hotels firstly, does not exist. But other markets, west of India, are charging anything north of double that amount. We may not be able to charge double, but at least definitely 20-25-30 percent higher rates should be possible at the top end of the market,” he said.

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(Edited by : Shoma Bhattacharjee)

First Published:Nov 11, 2022 9:08 PM IST