Advani Hotels & Resorts (India) Ltd.
|BSE: 523269||Sector: Services|
|NSE: ADVANIHOTR||ISIN Code: INE199C01026|
|BSE 00:00 | 18 May||72.90||
|NSE 00:00 | 18 May||72.85||
|Mkt Cap.(Rs cr)||337|
|Mkt Cap.(Rs cr)||336.80|
Advani Hotels & Resorts (India) Ltd. (ADVANIHOTR) - Chairman Speech
Company chairman speech
Dear Fellow Shareholders
On behalf of the Board of Directors of your Company it is a proudprivilege for me to address you on the 34th Annual General Meeting of your Company.
In normal years the growth of GDP of India trickles down to the hotelindustry. The past year was nowhere close to normal. Most countries tried to prevent thespread of the highly contagious Covid-19 by imposing severe restrictions on travel andentertainment. Our industry was one of the most adversely affected.
A study conducted on India's Tourism Industry by the World Traveland Tourism Council the London based think tank shows that in the calendar year 2019the travel and tourism industry contributed US 10.4% of the world's GDP. As a resultof Covid-19 the contribution of travel and tourism to GDP in the world dropped to 5.5%.
The travel and tourism industry in India contributed 6.9% of GDP in2019. The contribution of our industry dropped to 4.7% in the year 2020. As per thisstudy this industry contributed 31.8 million jobs or 7.3% of total jobs in India in 2020.
In a recent article in the Economic Times our Honourable PrimeMinister Mr. Narendra Modi while noting Goa's contribution to the country'seconomy stated "Goa is a key centre of India's tourism and thus in India'seconomy". I am very grateful for the acknowledgement of the tourism industry as animportant economic activity and especially for the recognition awarded to Goa of being avital centre of India's tourism; and that such an acknowledgment would come from ourHonourable Prime Minister.
I have been consistently fighting for issues to grow the tourismindustry in India. Some of the successes achieved including bringing international hotelchains to India and to Goa promoting Goa as a tourist destination worldwide and startingthe Casino industry in Goa. Your Company has made all its investments only in Goa.
In a recent article in the Economic Times our Honourable PrimeMinister Mr. Narendra Modi while noting Goa's contribution to the country's economystated "Goa is a key centre of India's tourism and thus India's economy''.
The Economic Survey presented to the Parliament in January 2021 by theChairman of the Council of Economic Advisors stated "We can create 4 crore jobs by2025 and 8 crore jobs by 2030 by focusing on exports."
Our hotel industry provides the most jobs in travel and tourism as itrequires personalised service (which cannot be delivered by a robot). Moreover hotels inIndia have a competitive advantage over most countries as labour costs (which comprise amajor expense) are relatively low. Our industry is also an export industry in thatforeign tourists spend a major part of their expenses in hotels. Yet despite being avaluable earner of foreign exchange for our country the hotel industry receives very fewincentives to encourage hoteliers to actively seek foreign business and earn foreignexchange. The hotel industry makes huge investments as it is a capital intensive andneeds incentives to grow. The Government has recently announced that hotels may qualify asan Infrastructure Industry' which will help hotels to obtain loans at a lowerinterest rate and repayable over a longer period.
Foreign inbound tourism is important as it increases our exports. OurCompany has been particularly active in seeking foreign business as foreign tourists cometo Goa because they can stay at a hotel located on one of the best beaches in the world.They find Goa to be tourist-friendly safe and not overpopulated (which is even moreimportant in Covid times). With this objective I met the Minister of Tourism of India onhis visit to Goa recently and requested his help in allowing foreign charter flights toresume to Goa. I am glad to report that not only have charter flights to Goa been clearedbut also Visas are available to those foreign Tourists who travel on charter flights witheffect from 15th October. Foreign tourists arriving on other flights will be eligible forVisas from 15th November. Our Company normally derives valuable revenue from thesetourists (primarily from the UK and Russia) who stay for a minimum of a week. I havealways suggested to the authorities that we need to target few selected countries withthe right message for attracting foreign tourists.
The Government of Goa has selected me as a member of the Goa StateCommittee on Promotion of Tourism. As a result I have had meetings with the ConsulGenerals of India in New York Chicago and San Francisco to seektheir assistance inpromoting tourism from USA. The highest number of foreign tourists coming to India arefrom the USA and UK.
During the last financial year our Company had to rely solely ondomestic business. Fortunately unlike many other countries India has a huge and robustdomestic market. Much of the business for hotels in Goa was derived from domesticFIT'S and some small Weddings. Conferences were postponed or cancelled due toCovid-19.
On a positive note leisure hotels such as ours are recovering from themassive blow suffered as a result of Covid-19. Research shows that resort hotels are doingextremely well not only in India but throughout the world. Marriott hotels worldwiderecently reported that they are making profits because of the immense contribution made bytheir resort properties.
The first 6 months of the financial year 2020-21 were a disaster forthe hotel industry in India and for our Company due to the lockdowns and travelrestrictions as a result of Covid-19. After being closed for 6 months we opened inOctober 2020 and managed to generate approximately I NR 281.8 million in revenue fromOctober 12020 to March 31 2021.
In the current financial year 2021-22 we had to again shut the hotelin May 2021 and re-opened in August 2021 due to second wave of Covid-19. In October 2021our occupancy went up to 82.4% as compared to 31.6% in October 2020. Further our totalrevenues also went up by 222%.
After Covid-19 there is an increased propensity to take the entirefamily for a holiday. Goa and particularly our hotel is an excellent choice as our resortis designed to be child friendly. Studies show that Goa had the highest occupancy rates ofall major cities in India.
We have also won several awards and accolades during this period aswell!
Our Financial Results:
Our operations team took immediate and effective steps to reduce fixedcosts and also to rationalise labour costs with the cooperation of our employees and theUnion. The ratio of total employees per room has decreased from approximately 3:1 to1.5:1. The energy costs also decreased from INR 51.2 million to INR 32.7 million duringthe financial year. (The newly installed heat pump in March 2021 will help streamlineenergy costs in the future). As a result the losses due to the closure of the hotel wereminimized.
The total revenue for the financial year dropped by 60.4% from INR711.6 million to INR 281.8 million. Despite this huge drop in turnover we incurred a netloss of only INR 40.8 million for the financial year. We have survived the pandemic periodbecause our operations team in Goa were quick to move and were able to rationalise costsand make sacrifices. In addition our strategy of being debt-free and having internalfinancial reserves - protected the Company from the costs of financial distress during theclosure period.
For the seven month period between April to October 2021 we havealmost reached a breakeven point; (despite being closed for over 3 months due to thetragic second wave of Covid-19).
I am happy that ourteam at the hotel has done an outstanding job incoping with the extraordinary circumstances which have never occurred before. We have alsowon several awards and accolades during this period as well!
Leisure hotels will bounce back and surpass pre-Covid levels as thereis a strong desire to enjoy a holiday (especially after the number of totally vaccinatedpersons increase). The number of Covid positive cases in India have declinedsubstantially.
I thank our Board for their immense support and advice to me in thesedifficult times. Our shareholders tour operators travel agents and our repeat guestshave been the pillars of our strength over these years. We are grateful to all our guestsemployees bankers Government officials in the Ministry of Finance Home CommerceExternal Affairs Tourism Civil Aviation Road Transport and Niti Aayog. We are thankfulto the Government of Goa especially the Chief Minister. The Village Panchayat of Varcahave extended their full support.