From The Desk Of The Managing Director And Ceo
We strive to redefine standards and deliver value that positively impacts ourshareholders business partners employees and customers.
The reputation our Company has built over the years is an important asset conveyingconfidence solidity and solvency. We have steadily penetrated the depths and redefinedstandards by encompassing aesthetically crafted premium properties and have tie-ups withsome of the best brands tailored to premium segments across some of India's keymetropolitan markets. The resulting operating efficiencies help us deliver value throughour robust asset management model allowing us to achieve industry leading growth on keyparameters.
Favourable macro environment
Today India's macro-economic environment is conducive to the Indian HospitalityIndustry. The country has once again regained its status as being the fastestgrowing economy in the world' with strong GDP numbers of 6.7% in 2017-18. It has overcomethe temporary hiccups owing to demonetisation and Goods and Service Tax (GST)implementation. The Government continued to introduce newer reforms during the year tostrengthen the economy's liquidity and accountability. The travel and tourism industrycontinues to witness a strong growth and is the 3rd largest foreign exchange earner forthe country. Besides there are several other interesting data that will drive thehospitality market.
The GDP growth is expected to be between 7.4% and 8.1% over the next five years
The demand for hotel rooms has increased from 26300 rooms per day in 2008 to 84100rooms per day in 2017
Passenger air-traffic movement at the key markets for the Company witnessed 9.2% CAGRbetween the financial years 2008 and 2018 while10.3% CAGR was achieved on all-India basis
Net absorption in the top 8 cities (Ahmedabad Bengaluru Chennai Delhi NCRHyderabad Kolkata Mumbai and Pune) for India's commercial real estate crossed the 30million square feet (msf.) mark over the period 2014-2017.
This can be credited to India's consistent and accelerated economic performanceresulting from strong government spending greater economic activity and improvinginvestor environment.
In the backdrop of improving economic performance and business confidence thecommercial office leasing activity sustained momentum from last year whilst the investmentactivity saw increasing interest resulting in some landmark deals.
Growth in per-capita income changing demographic dynamics rising urbanisation andhigher discretionary spending trends are expected to assist the growth of the hospitalityindustry in India.
At Chalet given our presence in the key metro cities we are expected to predominantlybenefit from the above-mentioned growth parameters.
Asset Ownership model
We have branded our hotels with leading global hospitality brands which we believe arewell matched to the location size target customer base and intended hotel segment of ourhotel properties. This allows us to save on the time and cost required to build developand maintain our own hotel brand'. The hotel operation and related agreements withMarriott give us access to Marriott's management expertise industry best practicesonline reservation systems marketing strategies systems and processes human resourcesand operational know-how. However a critical part of our growth strategy is to continueour focus on maximising the cost efficiency of our portfolio by following a disciplinedapproach to asset management. We have collaborative working arrangement with our hoteloperators to drive strategic and tactical initiatives and drive profitability.Resultantly we have industry leading operational and financial parameters such as ADRoccupancies RevPAR and EBITDA margins in the space we operate.
We believe we have a competitive advantage in key metro cities due to the significanttime outlay required for companies to build and establish a profitable hotel or commercialproject. Our early mover advantage in large mixed-use developments in specificmicro-markets and availability of unutilised land at some of our hotel properties allowedus to successfully expand our operations. Further the availability of land with ourcompany in proximity to our developments for further expansion and high entry costs todevelop projects in metro cities where our developments and projects are located provideus with an advantage in our relevant micro-markets.
The luxury-upper upscale hotels are expected to witness a strong demand from the MICE(meetings incentives conferences and events) segment. We believe that given our presencein key metro cities and size of our hotels including large sized banquet outdoor andconferencing facilities particularly at our hotel at Sahar Mumbai and at our hotel andconvention centre at Powai Mumbai we are well-positioned to benefit from the growthpotential in the MICE segment. It will facilitate both domestic and internationalbusiness meetings and conferences. We believe the technology and facilities available atour properties in addition to their locational advantage will allow us to capture theexpected growth in this segment.
Commercial and retail spaces
We have strategically positioned ourselves in the commercial and retail space owing toour in-depth understanding of the commercial rental market and the needs and preferencesof consumers. We believe that our clients have confidence in us demonstrated by ourrelationships with several large corporate houses and domestic and global retail brandsincluding a long-term agreement with a leading global professional services company for109228 sq. ft. of commercial space at Whitefield Bengaluru. Such relationships will helpus secure clients for large commercial or retail spaces at suitable model rates.
Future value drivers
We have our strategies in place that will further strengthen our value-generatingassets. These include:
focus on maximising performance in existing portfolio through active assetmanagement model disciplined development of assets in the current pipeline
portfolio expansion through opportunistic and accretive acquisitions
maintain sustainable capital structure and ensure prudent capital allocationre-negotiate better terms for hotel operation contracts and evaluate option of re-flagginghotels to include more international and well diversified brands
We are developing two additional hotel projects and two projects in commercialoffice space which are expected to be operational by 2021-22. We have traditionallyacquired large parcels of land at competitive prices with the intention to develophotel-led mixed-use projects. We seek to leverage unutilised FSI at some of our hotellocations which allows us to develop additional commercial or retail spaces.
Our total income was Rs.8512.78 million for the financial year 2017-18. Our EBITDA wasRs.3004.77 million for the financial we have traditionally acquired large parcels ofland at competitive prices with the intention to develop hotel-led mixed-use projects.
year 2017-18 and our EBIDTA Margin was at 35.3%.
At our core we are in a business of people serving people. We strive to provideexceptional experiences at every hotel for every guest every time. We are incrediblyproud to have shared our unparalleled hospitality with all our guests across ourproperties till date. On behalf of team Chalet Hotels I thank you for your continuedsupport as we deliver on our commitment to be the most hospitable company in the world.
Managing Director & CEO.