Analysis Taj Hotel

The Indian Hotels Company Limited Analyst Meet Results for the Half Year ended September 30, 2012 November 6, 2012 1 Disclaimer These presentations contain forward-looking statements within the meaning of applicable securities laws. Similarly, statements that describe our business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements Forward-looking statements are not guarantees of future performance and involve risks and uncertainties and other factors that may cause actual results to differ materially from those anticipated at the time the forward-looking statements are made.Future results, performance and achievements may be affected by general economic conditions, regulatory environment, business and financing conditions, foreign exchange fluctuations, cyclicality and operating risks associated with the hospitality industry and other circumstances and uncertainties. Although we believe the expectations reflected in such forward looking stat ements are based upon reasonable assumptions, we can give no assurance that our expectations will be attained or that results will not materially differ.We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise Please visit our communications corporate website www. tajhotels. com for previous investor 2 Presenter Panel Raymond Bickson – Managing Director & CEO Anil P Goel – Executive Director – Finance Abhijit Mukerji – Executive Director – Hotel Operations Deepa Harris – Senior Vice President – Sales & Marketing 3 Outline of Presentation Industry Trends New Inventory Sales & Marketing Initiatives Financial Results Industry Trends 5 International Tourist Arrivals 2012 International tourist arrivals worldwide grew by 5% in the first 6 months of 2012 to 467 million international travelers, consolidating the growth trend that started in 2010. International Tourist Arrivals were up in all regions of the world, with advances and emerging economy destinations growing at about the same pace. First 6 months of the year typically account for 45% of the tourist arrivals since most of the Northern Hemisphere performs much better in the second half which is its peak season.Source : UN WTO 6 Global Hotel Performance January – September 2012 Americas and Middle East showed a moderate growth in Key Performance Indicators over last year Asia Pacific market saw an overall moderate growth in occupancy and ADR for most of the first 9 months of 2012 In the Indian subcontinent, both rates and occupancies lagged behind last year, owing mostly to increased supply and resulting in an overall RevPAR 13% below last year Source : STR Global 7 Foreign Tourist Arrivals in India 2012 vs 2011 Foreign Tourist Arrivals in India (In Lakhs) 8 7 6 5 4 3Jan Feb Mar Apr May 2011 June July 2102 August Sept Oct Nov Dec April-Sep :+3. 4% Jan- Sep :+5. 9% growth over last year Growth in Tourist Arrivals in India has slowed down and increased to 2. 6 mn travelers in April – Sep 2012 which was a 3. 4% growth over 2011 vs 9. 3% growth in April – Sep 2011 over 2010. Growth for Jan-Sep 2012 was 5. 9% over 2011 against vs 9. 9% in Jan-Sep 2011 over 2010. The traditional source markets of US , UK and Western Europe continue to be the majority contributors to arrivals in India Source : Ministry of Tourism, Government of India 8India Hotel Performance – Key cities April to September 2012 April – September 12, % change in Market Scenario 70. 0% 61% 60. 0% 50. 0% 40. 0% 30. 0% 20. 0% 10. 0% 0. 0% India Goa Mumbai Delhi Jaipur Bangalore Chennai Hyderabad Supply % change Demand % change 23% 20% 9% 4% 6% 32% 25% 32% 31% 26% 20% 49% 40% 33% 4% There has been overall a 23% increase in Supply in H1 compared to last year. Demand growth has been moderate at 20% in summers and expected to pick up in H2 and winters Source : STR Global 9 India Hotel Performance – Key cities April to September 2012 April – September 12, % change in performance 0% 5% 0% -5% -10% -15% -20% India Goa Mumbai Delhi Jaipur Bangalore Chennai Hyderabad Occ % change ADR (INR) % change -3% -5% -2% -4% -1% -5% -9% -11% -7% -8% -11% -3% -5% -5% 5% 1% The Demand – Supply mismatch has put a pressure on occupancies and Average rates compared to last year across all key metros Overall this has led to a 7% decrease in RevPAR in the Indian Hospitality Industry in the first half of the Financial year Source : STR Global 10 Occupancies – Year on Year Trend 56 54 59 58 58 55 56 61 52 58 62 54 51 46 46 65 Delhi India Bangalore Hyderabad Mumbai Chennai Jaipur H1 2011/12Source: STR Global Reports H1 2012/13 Lower occupancies across all cities except Goa 11 Goa ARRs –Year on Year Trend 7910 7606 7224 6559 5929 5648 6717 6198 5945 5765 5344 4778 4092 3645 4949 4980 Delhi Bangalore Hyderabad Mumbai H1 2011/12 S ource: STR Global Reports H1 2012/13 Rates lower across all cities barring Goa Chennai Jaipur India Goa 12 Rev PARs – Year on Year Trend 4700 4408 4185 3595 3323 3077 3771 3219 3653 3369 2882 2446 1898 1679 3059 3219 India Mumbai Chennai Jaipur Delhi Bangalore H1 2011/12 Source: STR Global Reports H1 2012/13 RevPAR lower across all cities barring GoaHyderabad Goa 13 New Inventory 14 Supply Pipeline As of September 2012 Asia Pacific the Growth Centre for Investments in the Industry No of Rooms in Pipeline September 2012 As Pac, 377397, 38% Americas, 363568, 36% MEA/Africa, 122942, 12% Europe, 141554, 14% The demand in Asia Pacific is supported by the growing supply coming into these countries from international brands and the largest pipeline worldwide The highest growth in As Pac region is in the Upscale segment The Americas continue to see a high active pipeline, here too mainly in the Upscale segment Source : STR Global 15Taj Group Inventory 112 99 103 107 115 62 66 76 82 8 8 16 Hotels Opened 2012/13 Hotel Taj Taj Palace Marrakech, Morocco (Soft Open) Vivanta by Taj Vivanta by Taj, Madikeri, Coorg Ginger Hotels Ginger Hotel Faridabad Ginger Hotel Vadapalani (Chennai) Ginger Hotel Andheri (Mumbai) Roots Corporation Ltd Roots Corporation Ltd Roots Corporation Ltd 91 79 116 Management Contract 62 Management Contract 161 Company Rooms Hotels Opened Till Date 2012/13 5 Hotels 509 Rooms 17 Taj Palace Marrakech, Morocco 18 Vivanta by Taj, Coorg 19 19 Upcoming Development – Balance of 2012/13Hotel Vivanta by Taj Vivanta by Taj, Gurgaon Gateway Gateway, Kolkata Gateway, Hubli Gateway OMR, Chennai Ginger Hotels Ginger Hotel Jaipur Ginger Hotel Kormangla (Bangalore) Ginger Hotel Noida (NCR) Ginger Hotel Amritsar Management Contract Management Contract Management Contract Roots Corporation Ltd 103 67 80 60 200 92 193 Management Contract 200 Company Rooms New Development in Pipeline 2012/13 New Hotels Opened Till Date 2012/13 8 Hotels 5 Hotels 995 Rooms 509 Rooms 1,504 Rooms 20 20 TOTAL DEVELOPEMNT FY 2012/13 13 Hotels Vivanta by Taj, Gurgaon 21The Gateway Hotel, Kolkata 22 The Gateway Hotel, Hubli 23 Upcoming Development– 2013/14 Hotel Taj Taj Airport Hotel, Terminal 1C, Mumbai Imperial Club by Taj, Tardeo, Mumbai Vivanta by Taj Vivanta by Taj, Dwarka Gateway Gateway, Hinjewadi, Pune Gateway, Raipur Gateway, Gondia Gateway, Faridabad Ginger Hotels (Six in Number) Management Contract Management Contract Benares Hotels Ltd Management Contract Roots Corporation Ltd 150 119 34 150 534 IHCL 250 Taj GVK Management Contract 275 9 Company Rooms New Development in Pipeline 2013/14 13 Hotels 1,521 Rooms 24Imperial Club by Taj, Tardeo, Mumbai 25 25 Vivanta by Taj, Dwarka 26 26 Sales and Marketing Initiatives 27 Strategy to Drive Incremental Revenues Surprises Campaign (Apr – Oct 2012) Tactical promotions campaign that is now launched every summer to address the seasonal drop in demand. Relaunched on 26th March 2012 for Summer 2012 Provides unique value proposition to customers with the following objectives – Drive SpendPAR – Drive Loyalty – Increase Capacity Utilization in lean months Campaign Programs – Flexi Credits – Suite Celebrations – Stay a Bit Longer 28Leisure focus – Domestic Dominance Taj Holidays – Summer, Monsoon, Winter Adopted a Destination led approach that we supported through an integrated marketing campaign. (Goa, Kerala, Indian Ocean, Small Palaces, Grand Palaces, Taj Safaris) Objective – tap the growing domestic holiday market in our lean season Advertising campaign was spread across pre-opening, summer and monsoon planks Interactive Roadshows in major feeder cities for travel trade and potential end users from the city 9 Leisure Focus – The High end Traveler Taj Hotels Resorts and Palaces Customer Outreach by Taj at Travel + Leisure Global Bazaar, New York , September 2012 Annual travel trade and consumer show organized by Travel + Leisure attended by over 5000 media, travel trade and consumers over 3 days in New York The innovative customer experience installation to communicate the Taj luxury positioning and service experience at the suites of the Taj Grand Palaces.Supported by promotional activity and editorial coverage Channel Outreach through Taj Travel Awards at Taj Mahal Delhi , July 2012 Instituted two years ago it is the only award ceremony initiated by a hotel group to acknowledge and felicitate the inbound DMCs in India for their support and contribution. This year’s event drew 200+ prominent DMCs and travel trade press from across the country for a splendid evening of Awards ceremony, sit-down silver service dinner and entertainment. 0 Driving Revenues Taj Hotels Resorts and Palaces Visibility Increased visibility through advertising campaign Enhanced focus on India Advertising in leading newspapers, general interest magazines, business magazines, lifestyle magazines and travel related magazines Driving Incremental Revenues from Corporates Winning back lost customer campaign Long stayer program for targeted accounts Channel based campaigns for Hit accounts 31Building the newest Brand Vivanta by Taj – Hotels & Resorts Launch of the signature Fuse 2. 0 Cocktails in an exclusive partnership with Diageo and Canali, August 2012 A Vivanta innovation launched in 3 key cities via a roadshow 6 signature cocktails each being a tribute to a Vivanta city Generated tremendous PR coverage and social media noise Brand Personification and Experiences Season 2 of both Divas of Rock and Urban Folk premiered at Vivanta Whitefield and Vivanta Begumpet Hyderabad.The Vivanta Motifs campaign went live across select media print, digital and social Awards & Accolades Vivanta by Taj is currently in the top 10 rank amongst 147 of the global pages on SocialBakers Analytics Vivanta Yeshwantpur Bangalore was ranked amongst the best 100 business hotels of 2012 by Wall paper UK Vi vanta Whitefield won the Emirates Leaf Design awards for the best commercial design world wide 2012 Vivanta Bekal voted the 8th best new spa destinations by Conde Nast India 32Enhancing the Brand Experiences The Gateway Hotels & Resorts The Gateway Hotel Residency Road Bangalore Relaunch, September 2012 Relaunched via a successful Customer and Media event Great PR Thrust, focus being revamped product post extensive renovations, the new lobby and spectacular F&B offerings Integrated marketing campaign Active Foods Campaign Extensive campaign marketing Gateway’s Active Food Conducted at all Coffee Shops with new menus, posters and tent cards across all hotels Supported by a media campaign (print, OOH, online and social) Contests in social media in the run up to the Olympics 3 Awards & Accolades Recognition in the Travel + Leisure Global Vision Awards for Leadership in Corporate Social Responsibility activities. The Awards recognize the outstanding efforts of individuals and org anizations that are working to preserve the world's natural and man-made treasures and contributing to building and sustaining livelihoods. Best Business Hotel Chain in India at the Business Traveler UK Awards 2012. Featured in Travel + Leisure World's Best Awards 2012 list of Top 100 hotels in the world and Top Resorts in Asia.Featured in the Travel + Leisure World's Best Awards 2012 list of Top City Hotels in Asia Amongst the Top 10 hotels in the world by Expedia. com's Insiders' Select based on consistent delivery of values, competitive pricing and impeccable customer service. Honoured as ‘Most Inspirational Eco Lodge of the Year’ at the 2012 Tour Operators for Tigers (TOFT) Wildlife Tourism Awards Ranked #1 Overseas Leisure Hotels in Asia and the Indian Subcontinent, Conde Nast Traveller UK Readers' Travel Awards 2012 34 Standalone Financial Performance Six Months ended September 30, 2012 35 Profit and Loss Account H1 2012/13 /Crores Net Sales/Income from Operations Other Operating Income Total Income a. Consumption of Raw Materials b. Employee Benefits Expense c. License Fees d. Fuel, Power and Light e. Depreciation and Amortisation Expense f. Other Expenditure Total Expenditure Profit/ (Loss) from operations before Other Income, Finance Costs and Exceptional Items Other Income Profit/ (Loss) before Finance Costs and Exceptional Items Finance Costs Profit/ (Loss) after Finance Costs but before Exceptional Items Exceptional items Profit/ (Loss) before tax Provision for Taxes Profit/ (Loss) After Tax 2012/13 775. 8 775. 48 73. 05 240. 22 51. 97 79. 41 63. 08 244. 62 752. 35 23. 13 33. 23 56. 36 53. 23 3. 13 (6. 70) (3. 57) (1. 24) (2. 33) 2011/12 727. 10 727. 10 64. 69 226. 91 44. 01 65. 43 55. 50 219. 77 676. 31 50. 79 35. 47 86. 26 50. 08 36. 18 9. 81 45. 99 16. 33 29. 66 % Change 7 7 (13) (6) (18) (21) (14) (11) (11) (54) (6) (35) (6) (91) – 36 Turnover H1 2012/13 ` crores Room sales F&B sales Other Income Management Fees 2012/13 354. 76 317. 80 52. 88 50. 04 2011/12 343. 89 287. 65 49. 55 46. 01 % Change 3 10 7 9Total Income Non – Operating Income Total Income including Other Income 775. 48 33. 23 808. 71 727. 10 35. 47 762. 57 7 (6) 6 Room revenue growth driven by 3% increase in average daily rooms sold including capacity increase Higher F&B sales due to increase in restaurant sales and banqueting business Management fee linked to higher turnover and profitability of non IHCL hotels 37 Expenditure Raw Materials Cost – ` 73. 05 crores Increase in line with 10% higher F&B revenue and commodity input cost increase Staff Cost – ` 240. 2 Crores Increase due to launch of new hotel in Bangalore, wage settlements, annual increments etc. License Fees – ` 51. 97 crores Increase on account of higher turnover of licensed properties Fuel, Power & Light – ` 79. 41 crores Higher on account of increase in rates and new capacity 38 Expenditure Depreciation & Amortisation – ` 63. 08 cro res Higher due to opening of new hotel in Bangalore and renovations in select hotels Other Expenditure – ` 244. 62 crores Increase in variable costs linked to business, full period cost of new hotel in Bangalore & higher A&P spendsFinance Costs – ` 53. 23 crores Increase due to ECBs taken to retire debt in Company’s offshore subsidiary 39 Exceptional Items Expense of ` (6. 7) crores in the current year against an income of ` 9. 8 crores in the previous year `/ Crores Particulars Income/(Expense) on surrender of a project (Net off accumulated capital expenditure) Exchange gain/(loss) Total 2012/13 (6. 7) (6. 7) 2011/12 10. 6 (0. 8) 9. 8 40 Statement of Assets & Liabilities September 30, 2012 ` / CroresShareholders’ Funds Non- Current Liabilities Long-term borrowings Long Term Provisions Other Long Term Liabilities/ Deferred Tax Liabilities Current Liabilities Short Term borrowings Other Current Liabilities Trade Payables/Short-term provisions Equity and Li abilities Non-current Assets Fixed Assets Non-current investments Long Term loans and advances Other non-current assets Current Assets Current Investments Short term loans and advances Other currents assets/ cash & bank/ inventories/ trade receivables Assets 71. 28 112. 50 229. 51 7614. 34 71. 87 227. 05 7363. 8 2066. 91 3622. 19 1495. 19 16. 76 2068. 36 3622. 19 1346. 93 27. 58 247. 52 406. 77 168. 88 7614. 34 122. 57 789. 58 280. 08 7363. 98 2287. 24 78. 20 757. 17 2039. 94 95. 93 668. 07 September 30, 2012 3668. 56 March 31, 2012 3367. 81 41 Consolidated Financial Performance Six Months ended September 30, 2012 42 Major Taj Group companies Subsidiaries Indian Piem Hotels Ltd Taj SATS Air Catering Ltd Tifco Holdings Ltd [Investment Company] Benares Hotels Ltd Inditravel Pvt Ltd United Hotels Ltd Roots Corporation Ltd Overseas International Hotel Management Services, Inc.St James Court Hotel Ltd IHMS (Australia) Pty Ltd Taj International Hotels (HK) Ltd [Investment Company] Samsara Properties Ltd [Investment Company] Others 43 Associates Oriental Hotels Ltd Lanka Island Resorts Ltd TAL Lanka Hotel PLC Others Joint Ventures Taj GVK Hotels & Resorts Ltd Taj Madras Flight Kitchen Pvt Ltd Taj Kerala Hotels & Resorts Ltd Taj Karnataka Hotels & Resorts Ltd Taj Safaris Ltd TAL Hotels & Resorts Ltd [Investment Company] Others Consolidated Financial Results H1 2012/13 Consolidated results show a loss of ` (91) crores against a loss of ` (70) crores.Key factors influencing the consolidated results are listed below: Domestic Portfolio – Lower profit from operations, lower dividend income & foreign exchange translation loss on borrowings – Previous period had an exceptional gain on account of interest income on surrender of a project International Portfolio – Samsara Properties Limited debt fully retired through equity funding from IHCL – Despite growth in turnover, US hotels continue to face challenges 44 Consolidated Financials H1 2012/13 `/ Crores Net Sales/Income from Operations Other Operating Income Total Income a. Consumption of Raw Materials b.Employee Benefits Expense c. License Fees d. Fuel, Power and Light e. Depreciation and Amortisation Expense f. Other Expenditure Total Expenditure Profit/ (Loss) from operations before Other Income, Finance Costs and Exceptional Items Other Income Profit/ (Loss) before Finance Costs and Exceptional Items Finance Costs Profit/ (Loss) after Finance Costs but before Exceptional Items Exceptional item Profit/ (Loss) before tax Less: Provision for Taxes Less: Minority Interest in Subsidiaries Add:Share of Profit(Loss) in Associates Profit( Loss) after Tax 2012/13 1666. 37 1666. 37 177. 56 629. 05 84. 04 143. 30 145. 2 492. 55 1671. 62 (5. 25) 35. 03 29. 78 81. 76 (51. 98) 1. 28 (50. 70) 8. 71 (24. 67) (6. 77) (90. 85) 2011/12 1455. 50 1455. 50 160. 72 540. 84 66. 73 117. 27 129. 29 417. 68 1432. 53 22. 97 39. 81 62. 78 110. 45 (47. 67) 4. 26 (43. 41) 27. 05 (10. 56) 10. 69 (70. 33) % Change 14 14 (10) (16) (26) (22) (12) (18) (17) (123) (12) (53) 26 (9) (70) (17) 68 (134) (163) (29) 45 Consolidation Snapshot `/Crores Revenue 2012/13 IHCL Standalone Subsidiaries Joint Ventures Associates Total Less/(Add): Inter Company Eliminations Consolidated Performance 1716. 7 50. 3 1666. 4 1498. 5 43. 0 1455. 5 775. 5 862. 1 79. 1Profit after tax & Minority Interest 2012/13 (2. 3) (43. 7) (8. 6) (6. 8) (61. 4) 29. 5 (90. 9) 2011/12 727. 1 701. 1 70. 3 2011/12 29. 7 (80. 0) (4. 2) 10. 7 (43. 8) 26. 5 (70. 3) 46 Treasury Liquidity raised/ committed Received ` 373 crores in June, 2012 on conversion of warrants by Tata Sons Ltd Raised ` 200 crores by issuing low coupon unsecured NCDs Funds Utilized Repayment of ECB in April, 2012 – $ 30 million Repayment of Fixed Deposits between April to October, 2012 – ` 285 crores 47 International Hotels Occupancy (%) Hotel Name H1 2012/13 H1 2011/12 ARR ($) H1 2012/13 H1 2011/12 RevPAR ($) H1 2012/13 H1 2011/12The Pierre, New York 63 67 620 571 391 382 Taj Boston 74 71 296 287 218 202 Campton Place, San Francisco 79 75 290 287 229 216 St. James Court, London 88 85 318 299 278 253 Blue, Sydney 75 76 221 230 165 176 48 Overview of Taj Group – H1 Particulars Number of hotels 2012/13 115 2011/12 110 2010/11 107 2009/10 103 Rooms Inventory 13,887 13,237 12,795 12,243 Total Revenue – ` / crores 2,288 2,069 1,822 1,603 Total Revenue denote arithmetic aggregate of turnover of all hotels/units irrespective of ownership, including Management Contracts 49 Thank you 50