Seeking new horizons
We are happy to share with you that IHCL has progressed well on itsfive-year strategy Aspiration 2022. We are moving swiftly in our transformational journeyand have exceeded our expectations on select metrics. These include new signings of 22hotels - highest for us over the past few years higher than expected margin expansion andhealthy growth in profits.
We want to make IHCL the most iconic and profitable hospitality Companyin South Asia. We are committed to strengthening our stakeholder communication and haveembarked on the journey of adopting Integrated Reporting framework this year. It is ourattempt to communicate to our stakeholders how our strategy governance performance andprospects in the context of the external environment help us create value in the shortmedium and long term.
IMPROVING INDUSTRY PROSPECTS
The global travel and tourism industry continued to see encouragingmomentum during FY 2018-19. Interestingly 2019 marks a decade since the US travel andtourism industry recovered from the depths of economic recession. The recovery coincidedwith the economic resurgence in emerging markets translating to a historic growth intravel demand felt by segments across the travel industry**.
India's travel and tourism sector witnessed healthy growth during theyear with the Government's focus on making the country an attractive tourist destinationwith advanced communication facilities and digital conveniences. Technology and digitalinnovation have immensely benefitted the travel and hospitality industry in a very shortperiod of time.
Occupancy levels stood robust at 65.3% in 2018 highest in the past10-years at all-India level*. Favourable demand-supply dynamics aided an upswing inaverage room rates (ARR) as well as revenue per available room (RevPAR). Global travellersare increasingly demanding more personalised exclusive and authentic experiences fromluxury hotels.
Wellness and sustainability are two emerging dimensions in this segmentwith our patrons looking for holistic experiences that include nutrition and yoga.Customers are increasingly preferring hotels that have embedded eco-friendly practices intheir operations.
In parallel demand is growing rapidly in the midscale and upscalesegments. Leading hospitality players like us are well poised to benefit from thesetrends given that we offer a full-suite of hospitality services to our guests.
A YEAR OF OUTPERFORMANCE
The industry momentum is reflected in our performance for the year goneby. I am pleased with the progress in the first year of Aspiration 2022 our five-yearbusiness strategy. On a consolidated basis our revenues stood at Rs.4595 Crores and grewby 10% over the previous year. Similarly our EBITDA margin saw an expansion of 229 basispoints to 19.9%. This is the second year in a row that we have achieved positive profitafter tax of Rs.287 Crores. This metric has also grown rapidly by 184% over FY 2017-18.The net debt to equity ratio has improved to 0.37 and the net debt to EBITDA has declinedto 2.11. There is significant room to deleverage our book further. We aim to reduce ournet debt to EBITDA levels to less than 2 over the short term. International businesswhich forms 15% of our operational inventory witnessed a healthy turnaround owing to anencouraging performance of hotels in USA and the UK. This performance was an outcome ofsolid execution of our strategies during the year the year.
We have revisited and refreshed our brandscape to cater to diversehigh growth and relevant market segments. We have designed a multi-product multi-segmentbrandscape to provide a unique value proposition to each customer segment at differentpoints in their lifecycles.
The robust show by our flagship brand Taj was complemented effectivelyby brands like Vivanta and Ginger.
We repositioned Ginger and forayed into the segment of plantationtrails and stays with the launch of Ama Trails & Stays the first branded product inIndia's homestay market.
In April 2019 we rolled out our new brand SeleQtions which throughits portfolio of niche hotels offers specialised experiences to guests.
With this reimagined brandscape we augmented our development pipelinesignificantly. Our new signings spanned London Dubai Makkah New Delhi and Kathmandu.During the year we retained the landmark Taj Mahal Hotel New Delhi renewed ourlong-term agreement for the legendary Taj Lake Palace Udaipur and won the bid for TheConnaught in Lutyens'. Delhi.
In April 2019 we took management control of the famed 207-key Cidadede Goa.
FY 2018-19 was a year of outperformance for our Company.
Our proactive asset management combined with all-round efforts toimprove efficiencies resulted in significant margin expansion and higher value forstakeholders.
AN ASPIRATIONAL ENTERPRISE
Yes that is what we are at our core and we are re-structuringre-engineering and re-imagining our portfolio in line with our pivotal Aspiration 2022strategy. We are embracing a culture of operational excellence to achieve high marginscontinuously. Our endeavour is to maximise value creation for all our stakeholders.
At the same time sustainability remains a prerequisite for ouroperations wherever we do business. Our teams work behind the scenes to ensure resourceefficiency.
The Tata Group's core values underpin the way we do business. Inclusionand business responsibility are embedded in our DNA; and we are proud to carry forward thebeacon of community service. We promote livelihood (by facilitating skills training)support our neighbourhoods (by retaining their heritage and maintaining tourist sites) anddrive societal welfare (through the Taj Welfare Trust and our charity activities). We havealso inculcated best practices like procuring local and sustainable materials toaccomplish higher benchmarks in our facility management.
The aim of shaping our common future is the basis of all ourinitiatives towards environmental stewardship social responsibility and businessperformance. Overall we are focussing on our core priorities deepening synergy betweeninternal teams and external collaborators and multiplying positive impact.
Before I conclude I must thank our go-getters because we are only asgood as our people and all our patrons investors and other stakeholders for theircontinued guidance and support.
Best Regards Puneet Chhatwal
Managing Director and CEO