It has been another great quarter and despite all the flight disruptions, geopolitical tensions, you have managed to post an 11% year-on-year RevPAR growth. Tell me, what is the secret sauce? How resilient is your domestic business?
Puneet Chhatwal: There is nothing like a secret sauce out there. It is what we have been communicating, what we have been doing. We have a very strong brand which is rated as India’s strongest brand across sectors. Taj is still the backbone of the company. It tends to command a premium. Our RevPAR premium to the market that we have achieved is north of 50% depending on which markets we look at. In many markets, we have completely outperformed and in many we have also suffered when 33 airports shut down during Operation Sindoor. We have a Taj in Jaisalmer and a Taj in Jodhpur, and a Taj in Amritsar and in Srinagar, and so we had our share of challenges.
But generally, a strong brand and a strong promise helps you sail through. Our efforts on asset management are paying off well. Our renovations are paying off well, helping us drive premium. And our new business growth as you might have seen is at 27%. Our guidance has been around 35% and we will achieve 35% for the year and there’s a very high margin on new businesses.
Are the aberrations because of Operation Sindoor, well behind us now?
Puneet Chhatwal: Yes. When Operation Sindoor ended, suddenly there was the Iran and Israel conflict. It does have an impact on the foreign tourists of business people from outside of India coming in. There is a certain drop. Then, there were air disruptions because of the unfortunate accident (Air India crash). But generally speaking, everything is behind us and our guidance stands at a double-digit growth on a very high base for the year and it is driven 70% by the market and 30% by strong openings that will follow for us from September till March. We expect to open at least 20 to 25 hotels in this period, and a total of 30 to 36 for the full year.
I was just looking at your EBITDA margins and they remain steady despite a change in your payroll cycle. What are the cost control or productivity initiatives you are prioritising right now in order to maintain or even expand margins going forward.
Puneet Chhatwal: As we have consistently communicated, it is about finding the right balance or the sweet spot between capital heavy and capital light, between growth in brands like Taj and brands like Ginger, having the right formula for growth in our private membership club, the Chambers and new destinations for the Chambers like we will be opening one now in Frankfurt, we are doubling the size in both Taj Mahal Palace in Colaba which is under renovation and it is also happening in London.
So, increasing capacity of high margin businesses like private membership club, increasing the speed of growth in businesses like Ginger which are also high margin businesses and smart renovations of assets like we have done at the Taj Mahal Hotel popularly known as Taj Mansingh in Delhi, this is a combination which creates the high margin versus what we used to do 8-10 years ago and that is not changing because the quality of our pipeline of projects both for renovation as well as new construction and the fee-based growth is very-very robust.You have reaffirmed a double-digit revenue growth for FY26. Is there any key geography or brand Taj, Ginger or SeleQtions that you are going to be focusing on or that will drive this growth?
Puneet Chhatwal: What has worked very well for us in this quarter is the growth going back to a very normal level, not a high level is San Francisco, the Taj in San Francisco, the Pier, has done very well for us in Q1 and is showing good trend in Q2 also. What’s very important is that London is coming back strongly. London was very sluggish for a couple of years because of the elections and all the other things that were happening there and so was San Francisco. These are our company-owned assets and we expect them to do very well in the remaining nine months of this financial year and going forward also. Cape Town has also shown a great turnaround in the last few years and that is how things are working on the international front. And on the domestic front, obviously, Delhi, Mumbai, Rajasthan, Goa, Bangaluru continue to perform well, and I see no reason why they would not be doing as well as they have done in the past in the remainder of the year or in the years going forward.
Since you touched upon London, I want to talk about that in greater detail because I understand you are investing a sizable 22 million pounds in London alone this year. How are the international markets both in the UK and the US which you just flagged off, contributing to your overall EBITDA if you could give me some colour on that and how do we see their margin profiles evolving going forward?
Puneet Chhatwal: In the US, it is not a secret that San Francisco was fine till the city took a dip because of reasons beyond anybody’s control in any sector, but now it is coming back to where it used to be and maybe it will take another 12 to 15 months. London has always been a strong performer for us and a very strong contributor. I was there for a day-and-a-half privately this month and I have to say that this month London is doing so well, it is so buzzing, the whole hotel, the property during Wimbledon.
During cricket, we had the men’s cricket team there, along with the women’s cricket team and we had all the Wimbledon celebrations out there. So a lot is happening in London the way it always used to be and it is the most important lodging market in the world, besides New York and Paris and investing in that asset helps us to become a very strong brand that is an icon for us. It has always contributed well and we expect that it will continue to contribute even more than it has ever done in the past both on a percentage basis as well as in absolute terms.
I wanted to talk about these 392 hotels and the fact that you are planning to add 504 own rooms across four properties in FY26. What is your road map to achieve the 700 hotel milestone by 2030 that you have talked about and which will continue to be largely asset light for you?
Puneet Chhatwal: Yes, absolutely, our guidance for 2030 under 2030 has a 700 hotels portfolio of which, at least 500 will be in operation. Our growth brands will be Ginger, Gateway, Tree of Life and other new businesses which will significantly contribute to the number of rooms and number of dots on the map. We will keep the purity of Taj as an absolute priority and a selective growth of Taj in select international markets.
Of our own hotels that we are talking about, two are in Ekta Nagar – a Vivanta and a Ginger, which are slated to open in September and October respectively, followed by the Taj in Frankfurt by the end of January, which means in this financial year or at the beginning of Q4. So, nothing is changing on that front. We had a great year last year in terms of growth. We had 74 signings and 26 openings. We expect to sign at least a hotel a week this year too and open 30 to 36 properties and that will be the trend going forward. 30, 35, 40, or even 50 hotels per year to open because our pipeline is so strong. We are already at 140 plus hotels in our pipeline.
TajSATS has seen a solid growth of 21% on an annual basis and you have guided for a 20% growth for the full year as well. How central is the airline catering business to IHCL’s diversification strategy and are there plans to scale it up internationally also?
Puneet Chhatwal: At the moment, our focus remains India only. We might get opportunistic if something comes along our way in let us say Sri Lanka or Maldives, etc, because it makes sense for us to do it then for TajSATS to do it from Singapore, that is one.
The second is that TajSATS is also diversifying into non-aviation business, into institutional catering very strongly. We expect that segment to get to 20% of the total revenue of TajSATS over the next three years. And very importantly, we should not forget that India has ordered more than 1,000 planes amongst various airlines. As they come in, the needs and wants of the flight kitchen business is expected to grow. We are the largest with more than 50% share of all meals served in the sky. We think TajSATS is very well positioned to take advantage of that.
Spiritual tourism will be growing in the coming years and it has been a great growth driver for you as well. Are you developing any new products, locations, or experiences to further tap into this emerging segment?
Puneet Chhatwal: Well, we are in a B2C business and the needs and wants and preferences of customers are always changing and evolving and that is why it is also a capital intensive and a labour intensive business. Being the largest hospitality ecosystem from India, we have to be at the forefront of any new innovations that come in. Over the last few years, as you are aware, one of our big customers favourite – Homestay came out of nowhere. Today we have a portfolio of 300 Homestays and almost 140 are in operation and another 160 will open in the next few years. Home delivery with Qmin to Qminsation of Ginger – all these are new concepts including Tree of Life. I do not know if anybody would have thought five years ago that we would be having these brands in our portfolio. Continuous evolution is a part of the journey and being at the forefront of the hospitality sector, it is our responsibility to take this to the next level.
What is the final message to your long-term shareholders? What should they be expecting? Is the stock fairly priced right now or still undervalued?
Puneet Chhatwal: I am not qualified to comment on it but what I can definitely say is that Taj will continue to be the crown jewel not just of Indian Hotels but the crown jewel of India. We will do whatever it takes to secure the next 100 years of Taj and we will put enough power behind our new businesses and scale them up as fast as possible so that they are all standing on their own feet and are recognisable business units contributing well to both the top line as well as EBITDA and the net profitability of the company.
