EIHOTEL - EIH Ltd Share Price

The management of EIH Limited provided a positive outlook, emphasizing growth opportunities in the premium hospitality segment. Key highlights include:

1. RevPAR Growth and Premium Positioning:

• Oberoi Hotels continue to lead with 22% RevPAR growth (vs. 17% for EIH overall), driven by strong demand and pricing power. The premium segment is seen as underpenetrated, with room for further rate increases compared to global benchmarks.

2. Expansion Pipeline:

• 19 new properties are planned (13 Oberoi, 3 Trident, 3 luxury boats/cruises), including 8 owned and 11 managed hotels. Two new management contracts (Oberoi and Trident) will be announced soon.
• International expansion (e.g., Bali, Marrakech) and domestic projects (e.g., Tirupati, Rajgarh) are prioritized, with some properties operational by 2025"“26.

3. Financial Performance:

• Q3 standalone revenue rose 6% YoY (11% excluding the Oberoi Grand Kolkata renovation). Consolidated PAT grew 21%, aided by subsidiary performance.
• Strong cash reserves support expansion, with focus on high-ROCE projects like mixed-use developments (e.g., Hebbal).

4. Operational Resilience:

• Occupancy remains robust (~79"“80%), with ADR-driven growth prioritized over volume. Management emphasized elasticity in leisure/MICE segments and flexibility to balance occupancy with pricing.
• Flight catering services and international hotels (rebounding post-COVID/geopolitical disruptions) contributed to margin improvements.

5. Demand Drivers:

• Domestic tourism, corporate travel, weddings, and MICE events underpin growth. Direct bookings and wellness/leisure trends are key revenue drivers.

6. Risks and Mitigation:

• Geopolitical risks (e.g., Middle East conflict) and market sensitivity noted, but demand remains robust. Renovations (e.g., Trident Nariman Point) and strategic pricing aim to sustain momentum.

Outlook: Management remains bullish on India's luxury hospitality growth, leveraging premium branding, expansion, and operational efficiency to drive ARR and profitability.

1. Question: "Sir, we had this impressive mid-teen increase in ADR. How has been the trend in Jan-Feb of this quarter? Some colour on this. And after healthy growth in India post-COVID, continuation of similar growth is doable, or should we expect some softness there? Any guidance for FY26 would be helpful."
   Answer: Management expressed confidence in sustaining ADR growth, citing high occupancy and underpricing relative to global luxury hotels. They emphasized India's growth potential, premium positioning, and opportunities for rate increases despite strong demand, with no expected softness.

2. Question: "We cancelled the Pune project. Are we adopting a conservative approach to owned hotels? Most new properties are managed. Will this trend continue?"
   Answer: The cancellation was due to undisclosed site-specific issues. EIH remains committed to growth via mixed-use developments, management contracts, and owned opportunities. Two new management contracts (Oberoi & Trident) in India were announced, with continued focus on expansion.

3. Question: "What is the proportion of owned properties in the portfolio, and what is the market value of owned land?"
   Answer: Ownership details are in the presentation slides. Land valuation hasn't been conducted, and specifics like Nariman Point's lease details (99-year) require follow-up. Owned vs. managed split wasn't explicitly quantified.

4. Question: "How do you reconcile 17% RevPAR growth with only 8% revenue growth? Are stock market declines a risk to luxury demand?"
   Answer: Lower revenue growth was attributed to Oberoi Grand's renovation (11% growth ex-Grand). No observed correlation between stock markets and demand; strong RevPAR/occupancy trends indicate resilience.

5. Question: "Will Wildflower Hall be auctioned post-March? Can EIH regain it?"
   Answer: Management declined to comment beyond public information, reiterating efforts to retain the property but avoiding specifics due to sensitivity.

6. Question: "With most new hotels opening post-2027, will growth rely on price hikes until then? How will FY26 growth shape up?"
   Answer: Pipeline delays reflect development lead times. EIH emphasized aggressive expansion via management contracts/JVs. ADR-driven profitability remains priority, with upside from rate hikes outweighing occupancy trade-offs.

7. Question: "Why is metro RevPAR outpacing leisure cities? How does this align with your leisure-heavy pipeline?"
   Answer: Outbound travel growth impacts leisure demand, but EIH aims to capture higher domestic/wedding/MICE spend. Mixed-use city projects (e.g., Hebbal) and tier-II leisure hotels (e.g., Tirupati) target balanced growth.

8. Question: "Can you sustain high ROCE amid rising construction costs? What ARR growth is needed?"
   Answer: ROCE sustainability hinges on mixed-use developments (e.g., Hebbal) and premium leisure pricing. Tier-II hotels like Trident Jaipur and Udaipur show elasticity, with disciplined project IRR analysis guiding investments.

9. Question: "What drove the 20% international RevPAR growth? Is this sustainable?"
   Answer: Recovery from 2024's Israel conflict and post-COVID demand boosted international performance. Hotels like Oberoi Marrakech and Bali have untapped potential, with optimism for further gains as geopolitics stabilize.

10. Question: "What is the ideal occupancy level for maximizing RevPAR?"
    Answer: No fixed target; strategy varies by segment/city. Focus on yield management: prioritizing premium segments (e.g., weddings/MICE) for rate hikes over corporate/elastic demand, balancing seasonality and market dynamics.

11. Question: "Why aren't flight kitchen financials disclosed? How are margins trending?"
    Answer: Flight services (B2B) saw strong revenue/EBITDA growth alongside airline expansion. Margins improved significantly, but disclosure practices may be reviewed post-feedback.

12. Question: "When will Oberoi Rajgarh open? Any plans for Hyderabad?"
    Answer: Rajgarh is slated for August 2025. EIH is actively seeking Hyderabad opportunities, inviting partnerships for an Oberoi property.

13. Question: "How do tier-II hotels perform vs. metros? Examples?"
    Answer: Tier-II hotels like Trident Agra face elasticity, but premium properties (e.g., Udaivilas, Amarvilas) thrive. Projects in Tirupati and Jaipur target high returns, leveraging lower land costs and niche demand.