Chalet Hotels (NSE:CHALET) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the Chalet Hotels Limited Q2 FY 'twenty seven Earnings Conference Call. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. With us, we have today mister Singh, MD and CEO and mister Nathan Kanda, CFO. I now hand the conference over to mister Singh. Thank you, and over to you, sir. Thank you, Rutuja, and a very good morning to everyone. Welcome to our quarter two FY 'twenty seven earnings conference call to discuss not only our performance this quarter, but also the larger industry trends that shaped it and guided our business strategy.

0:52 As always, we appreciate your queries, insights and suggestions, which help us stay the course as we strive towards creating long term value for our stakeholders. If I had to sum up this quarter in one word, it would be readiness. Our core assets are emerging from a period of planned disruption. Navi Mumbai has relaunched as Ativa Pulse and the porch at Powai is back in service. Construction at Cygnus II Powai and Taj at Delhi International Airport is as per schedule and expected to start contributing to our growth story soon. Our own brand, Athiva, is scaling. Also, our total pipeline now stands at 2,036 keys, about 60% of our current operating portfolio.

1:41 Today, I want to speak about how each of these positions Chalet for its next phase of growth. As committed, we have rebranded our Navi Mumbai business hotel from Four Points by Sheraton to Bathiva Pulse Navi Mumbai an autograph collection. We have also redefined the wellness offering at Ativa with the daily club, a dedicated 30,000 square foot floor for wellness and rejuvenation. As we have mentioned in our earlier conversations, we have invested close to INR 1,000,000,000 in this upgrade and are happy with the final product. I can now add that we are encouraged with the immediate response that Agiva Pulse has received from our patrons in the form of increased average daily rates and more importantly guest feedback, a validation for the brand and its offerings.

2:37 Now let me talk about the industry trend during the quarter and then move on to our performance. Quarter two has been a remarkable quarter for the Indian hospitality industry. On the one side, the industry continued to face global headwinds given the ongoing geopolitical situation in West Asia and the resulting increase in fuel prices, air fares as well as rationalization of flights on select routes. On the other hand, robust demand from MICE and domestic business led to very strong growth in certain micro markets. For example, New Delhi, where we are not operating today, but will be next year onwards delivered an extraordinary September on the back of the BRIC Summit as is evident from the publicly available industry and peer data.

3:27 This trend is in line with Chalet's strategy of big boxes in major business cities and thus provides further boost to our confidence as we continue to expand our footprint under our own and global brands. Quarter two witnessed year on year contraction in air traffic among major markets, while Delhi witnessed increased traffic, Mumbai, Bangalore and Hyderabad saw a decline. This is visible in the on ground market dynamics as well. Our business hotels in MMR, Hyderabad and Bangalore saw mixed trends through the quarter, while our leisure portfolio witnessed strong demand and delivered 34% RevPAR growth with a good mix of occupancy and ADR.

4:12 Among key business locations, MMR saw a weaker July due to heavy rains, but the business picked up in August and September on the back of large MICE events. Within MMR, JW Sahar continues to get its fair share of growth vis a vis its competition. Oahui continued to be impacted by construction activity at the Cygnus II Tower. The good news, however, is that as committed in our last call, the porch is back in service, restoring the direct entry to the banquets, enabling us to host large MICE and social business once again. Also, as the construction enters final stages now, we expect the business to start improving from this quarter. In an immediate win, we have signed a crew contract already of 20 rooms per day.

5:03 Just to remind you, we had lost about 100 rooms per day of crew business at Pawai due to the ongoing construction activity. Both Hyderabad and Bangalore witnessed reduced air traffic. However, Hyderabad saw a strong RevPAR growth driven by GCC and corporate demand. Bangalore witnessed moderate growth as the market is more foreign tourist arrival dependent even as the new keys we started even as the new keys that we put in the market have started to get absorbed. Pune market continues to grow at a healthy pace on the back of strong demand from corporates as well as retail. With that context about the macro environment for the overall industry and our micro markets, let me now talk about our performance for this quarter.

5:55 Like I mentioned in quarter one, I would highlight again that our consolidated year on year financials are not comparable as we had booked income from our non core business I. E. Phase one of our Kormangala residential project in quarter two FY twenty twenty six with no corresponding handover in quarter two FY twenty twenty seven. The Phase two is ready to handover and we shall be commencing the handover process soon. The revenue shall be booked in half two of FY 'twenty seven, so do expect a spike in our performance. So for the purpose of this call, we shall be discussing financials for our core business segments only, hospitality and commercial real estate, excluding residential business.

6:41 Our core business grew by 11% year on year to 5,110 million with EBITDA of INR 2,274 million, up 13% year on year. Importantly, EBITDA margin improved by 110 bps to 45%. Let me now touch upon the Hospitality business performance. RevPAR increased 7.2% year on year, largely driven by 11.3% growth in ADR. Compared to business hotels, resorts did better this quarter with 34% RevPAR growth. All three resorts delivered strong growth as we move towards stabilization with resort occupancies on a blended basis at 41.2% against 32.6 last year.

7:31 Hospitality revenue grew 8% year on year, while EBITDA stood at million, up 11% year on year, reflecting 110 bps improvement in EBITDA margin on the back of resilient pricing dynamics, efficiency measures and better performance by our resort properties. On to commercial real estate business. Our September 26 run rate for renters reached INR 300,000,000, marginally higher than June 26, with occupancies at 91%. The commissioning of Cygnus II with approximately 1,000,000 square foot of leasable area at our Powai Complex in FY twenty seventwenty eight will bring a major growth milestone for this business.

8:20 Let me now talk about our live projects. Two major projects that are nearing completion are Cygnus II Tower at Powai and Taj at Delhi International Airport. Both the projects are important in multiple ways, not only will they drive our growth next year, but will also help us build a stronger portfolio overall. For Cygnus II provide, we remain on track for substantial completion by FY twenty seventeen and for Taj, we expect to launch the entire inventory in early FY twenty twenty eight. The property is on track for previous announced time lines. However, we are closely monitoring the recent developments on GAP restrictions in the National Capital Region to reassess the completion date.

9:08 The Ritz Carlton at Hyderabad and Hyatt Regency at Airoli, both are being developed by Mindspace and are on schedule. All other key projects are on track as per our earnings presentations that we have published. Before I hand over to Nitin, who will take you through the financial details for the quarter, I want to reemphasize on two points, the industry outlook and how Chalet is gearing up. Half one has reinforced that what we said always about India, that India continues to have the supply being outpaced by demand and the mice and domestic demand would continue to fuel growth. The industry in last six months has grown despite a difficult geopolitical backdrop and that gives us the confidence to invest ahead of the cycle.

9:59 We are doing this on two fronts. First, Ativa with Khandala and Navi Mumbai operational and approximately 900 keys already in the pipeline across five properties and four locations, Ativa is en route to become a 1,200 key portfolio, Being named most promising experiential hotel brand at today's Travelers Award 2026 is an early validation of our efforts on this front. Second, our broader pipeline of 2,036 keys we play to us proven strength, efficient big boxes, fast execution, best in class asset management and deep partnerships with global brands. Together, these put us on track for a portfolio of 5,500 keys and beyond within the next five years with a strong leisure and geographic mix.

10:52 We will fund this growth from our hospitality cash flows and stable commercial real estate annuity business as our recent credit rating upgrade to end AA or AA reflects. Disciplined execution and capital allocation remain our guardrails. With that, now I'll hand over to Nitin. Thank you, Chetran, and good morning to everyone on the call. I'm pleased to walk you through our financial performance for the quarter and half year ended 09/30/2026 and also provide a perspective on key financial and performance drivers, balance sheet strength and capital allocation. As mentioned by Shwitank, we shall discuss financials for our four business segments only, which is hospitality and CRE, excluding the residential business, to make them comparable year on year.

11:50 For the quarter ended 09/30/2026, excluding the residential segment, revenue grew 11% year on year to INR 5,110 million, while EBITDA increased 13% year on year to INR 2,274 million. EBITDA margins expanded by 110 basis points to 45%, driven by strong performance by leisure assets, higher annuity income and efficiency measures. Our net profit after tax for the quarter stood at $200,163,000,000. 168 units of Phase II of Kora Mangla residential project is near completion. The RADAR date for handover is December 26.

12:35 We shall begin handover soon and subsequently book the revenue in quarter three financial year 'twenty seven. As mentioned earlier, the commercial space of approximately 160,000 square feet is under construction and shall be leased once completed. Target for that is FY 'twenty eight. Since we have not done unit handover, revenue booked during the quarter reflects only the CAM charges. For the half year ended 09/30/2026, excluding the Residential segment, revenue grew 10% year on year to thousand $250,000,000 while EBITDA increased 14% year on year to 4,674 million EBITDA margins expanded by 170 basis points to 46%.

13:25 Net profit after tax stood at 3,024 million. I would want to highlight that during the quarter, we have decided to exercise the option available under Section two zero six of the Income Tax Act '25, which provides us with benefits of concessional tax regime at tax rate of 25.17% in lieu of regular corporate tax of 34.94%. Accordingly, we have remeasured the net deferred tax liabilities as of 04/01/2026 and resulting a tax credit of $1,125,000,000 dollars Hence, tax expense for the quarter and six months ended 09/30/2026 is not comparable with other reported periods.

14:12 Please refer to our LODR disclosures in this regard. Let me now cover the Hospitality segment. For the quarter, our blended ADRs grew 11.3% year on year. This reflects our leadership position and pricing power in these markets. Non MMR occupancy was strong. MMR was subdued because of ongoing construction activity at our Hawaii property, which Switank has already covered in detail. Our blended RevPAR grew 7.2% year on year, leading to total hospitality revenue of INR 4,115 million, a year on year growth of 8%, with EBITDA of INR $1,691,000,000, up 11% year on year. EBITDA margin for the quarter stood at 41%, higher by 110 basis points.

15:03 Our EBITDA margins are a function of our efficiency and strong asset management practices. Over the past few quarters, the margins were optically soft due to new additions and leisure assets operating below critical occupancy. This has reversed in H1 as per our commitment. Margins in our city hotels have remained steady, while our leisure portfolio and new additions have led to this improvement as they start to stabilize. Our continuous efforts towards enhancing efficiency is also helping towards this purpose. I would highlight here that we were able to take quick action to mitigate the cost pressures due to West Asia war and deliver higher margins. We remain focused on maintaining cost efficient operating structures, project productivity and exercising disciplined asset level cost control as the portfolio scales.

15:59 Turning to the commercial real estate business. This segment continues to provide high margin, stable cash flows. The monthly rental exit run rate in September 26 stood at INR 300,000,000, marginally higher than INR $290,000,000 for June 26. Revenue for the quarter stood at INR $9.00 1,000,000, up 22% year on year, driven by higher occupancy. EBITDA stood at INR $750,000,000, up 23% year on year with an EBITDA margin of 83%, up 95 bps versus quarter two FY 'twenty six. Current portfolio committed is at approximately 91%. We have just closed an LOI for the entire remaining space at Bangalore.

16:45 With this LOI, our occupancy on available leasable area stands at 95. Also, there are multiple ongoing discussions for Signals one point. With these, we expect monthly rentals to scale up further to INR $320,000,000 by March 27. Commissioning of Signals two at Powai will lead to a step change in growth towards FY 'twenty eight onwards. Another key aspect of CRE business is how it helps our cash flows and balance sheet. The current yearly rentals potentially give us a leverage advantage of 25,000,000,000 eligibility for LRD. Lease rentals also help us in debt servicing as it stands today, effectively freeing up our hotel assets to generate cash, which could then be fully utilized for execution of our announced pipeline as well as any value accretive acquisition.

17:43 Now let me talk about some balance sheet, debt and capital allocation. During the quarter, we received credit rating upgrade from India ratings. Our long term facilities are now rated as AA versus AA minus, reflects the strength of our treasury practices, leverage mix, cash flows and overall balance sheet. Our net debt has remained stable over last seven quarters despite heavy CapEx, multiple acquisitions and repayment of preference capital, highlighting the strong cash flow generation from the underlying business. As of September 26, our net debt stood at INR 21,000,000,000, approximately INR 14,000,000,000 of this allocable to assets under construction or not operationalized yet.

18:32 Two major projects included are Cygnus Tower II at Hawaii and Taj at Delhi International Airport. Commissioning of these two assets shall significantly aid growth in coming years. We continue to maintain a comfortable liquidity position. The average cost of finance remained broadly stable at 7.47% as of September 26 versus 7.41% as of June 26. Looking ahead, we have outlined a planned CapEx of approximately INR 34,000,000,000 to INR 36,000,000,000 over FY 'twenty seven to FY 'twenty nine across our hospitality and commercial real estate portfolio. The change in CapEx guidance is due to addition of two Ativa properties at Hyderabad and Puna.

19:19 The guidance includes committed investments and importantly is expected to be largely funded through internal accruals, underscoring our focus on maintaining balance sheet discipline. Overall, our balance sheet continues to provide adequate headroom and financial flexibility to pursue strategic opportunities as they arise. As Switong mentioned in his opening remarks, we expect to have an operational portfolio of 5,500 keys and beyond in five years, that means 75% to 80% capacity addition. In this context, I want to highlight that execution of large greenfield and brownfield projects is one of our key strengths. We not only build at lowest cost turnkey cost in the industry, but also build for efficiency to ensure high EBITDA margins once the asset is operational.

20:12 The expansion and rebranding of Duke's Rickety to Ativa and the repurposing and expansion of our Bangalore assets are some examples of this execution progress. Another example is Taj at Delhi International Airport. We are delivering a luxury hotel of three eighty keys in less than four years at a critical location like Delhi International Airport. Moreover, all our acquisitions, whether it's Nootel Puna or Western Himalayas or any other asset, all have performed quite well and in line with our business case. While speaking of growth, I would highlight that our balance sheet is aligned with our road map ahead. Strong operating cash flows from hospitality business are complemented by stable inflows from CRE business.

20:59 This enables us to execute the announced pipeline and look to grow beyond, including value accretive inorganic opportunities. To summarize, quarter two delivered a 13% EBITDA growth in our core business with credit rating upgrade, while our pipeline expansion and execution remained on track. Given the long term growth opportunity and our readiness to capitalize on the same, we are excited as we look ahead and continue to create long term value for all our stakeholders. With that, I would like to open the floor for questions. Thank you. Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch tone telephone.

21:46 If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use answers while asking a question. Given we have a long Q and A queue, please limit your questions to two per participants. Please ask your questions together. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from the line of Deepak Saha from Ashika Institutional Equity. Please go ahead. I'm sorry to interrupt you, Mr. Shahab, but there is a lot of participants from your background. Can you please check? We are unable to hear you. Is it audible now, better?

22:38 So So my first question is when we look at the number, 7% kind of a number versus 10% kind of revenue, but F and B and other segment is kind of in a large. So just talking from next couple of quarters and H2 point of view, if you can share some color how the F and B would and other segment would pick up versus room revenue? Because room revenue is still the divergence between RevPAR and room revenue continues. So just three parts from H2 point of view. One is the divergence between RevPAR and room revenue that buoyancy remains and how essentially we are looking forward for FNV and other revenue to pick up. This is first part of the question. Thank you. Hello. Hi. Sorry, I'm not sure we picked up all parts of your query, but I think there were two parts. One was to do with is the room revenue growing in line with the RevPAR growth?

23:32 And I think the second part of your query was where is F and B growth headed? I would proceed with that kind of a summary of what you you just said. So just on the F and B side, the thing that we wanted to point out is that we have grown on F and B at about 6.4 year on year. And whilst our outlets have done very well, we did have some setback, particularly on the mice and large group sites because in general, that's a segment that has not grown at the pace that we would expect. And actually, that particular segment has barely grown 4% for us. If if you were to look at the wedding scenario, the wedding scenario continues to stay strong and so it so it will be in the second half of the year as well. So that that...

24:28 That's a segment that doesn't concern us overall. So hence, just in summary, outlets did very well and grew significantly. Larger groups did not grow at a pace that we had expected it to grow. And hence, we didn't get an overall growth that we would have otherwise expected. With respect to room revenue versus RevPAR, our RevPAR growth for this quarter has been close to sorry, yes, close to 7.2% on a combined basis, whereas our rooms revenue has grown by about 9.7%. And that's fine because sometimes the inventory available the underlying inventory available also varies from one quarter to another same time last year versus this quarter. And therefore, the multiplier may not be exactly in line with the RevPAR percentage growth.

25:32 Have we answered your question? Yes. So basically, what I got a sense from each two points of view, you are saying that divergence between RevPAR and room revenue, where room revenue is going higher than RevPAR, that should continue, and SMB should also pick up given the mice and social that we have in the second part of the year. Is that a fair enough decision? Yes, that's correct. Sir, last okay. So the last question from my end. If we see Signet Tower 2 should be over by the end of the year, Ativa, Vashe is already running. Next year, on top of that, we have Q1 FY 'twenty eight from Taj, Delhi coming in. And Hyderabad and Bangalore already, you mentioned in your PPT, the spillover impact of West Asia prices in terms of limited FTA inflows have already started easing off. So given all these things on a base of FY 'twenty seven, high teen to kind of a 20% -plus kind of revenue growth for FY 'twenty eight.

26:29 I know you can't probably formally give an outlook. But directionally speaking, then isn't it still reasonable to assume that FY 'twenty eight would be significantly higher given all the levers that we have? That's my last question. Let me say it in one sentence, you're not wrong. If you can elaborate a bit, that will be helpful. No, so I think what you have absolutely understood what's going to happen over the next few quarters. With these two significant projects coming online, this... It should contribute minimum double digits to our revenue growth. And if our existing portfolio continues to grow the way we anticipate it to be, not expecting any of the impacts of the geopolitical setbacks that we had had from this year.

27:18 That's the minimum we would expect. Fair enough. Last part, just to remain shifting very quickly, FY 2019, three properties we have announced, almost six twenty five, 18% of the total owned rooms currently that we have. Then if you can share some time line within first half, second half, how those are lined up in FY 2029, those three properties, two Hyderabad, one with the two properties. Yes. Normally, we don't like to get to the exact quarter in terms of project deliveries. There are too many moving parts. All I can say is that we are in line to deliver it within the financial year. Let's get closer to the date and then make a comment on it, please. So,, may we request mister Sahar to please rejoin the queue? We have other participants waiting for the turn. Thank you. Ladies and gentlemen, we request you to please limit your questions to two per participant.

28:09 Next question is from the line of Samit Sinha from Macquarie. A couple of questions. One is in terms of I mean, have heavy reliance on foreign travelers. And the news coming out of The U. S. Yesterday was basically tells us that potentially things could stabilize, maybe that area could become less volatile. So maybe foreign travelers start to come back, increase the travel to India. Can you give us a sense of first, is that reasoning correct? And the second is, how much do you think I know that I think anecdotally, I've heard that last November, December, things are starting to stabilize and travelers are starting to come back, but then the war happened and so things slowed down. Can you give us a sense of are you already seeing some of that for different reasons? Or what can we expect over the next year? Because the domestic traffic is good and foreign travelers come back, I think it sets up very well for a strong couple of years.

29:09 And my second is, you obviously have a very heavy pipeline for fiscal 'twenty nine and operational perspective, and especially because half of those that pipeline is gonna be your own brand, so there's a higher level of scrutiny, higher level of accountability. So just wanted to kind of qualitatively understand how you're set up to kind of handle that delivery. Thank you. Yes, sure. Believe me, we have been holding our breath on the U. S. Midterm elections as well. And, thankfully, what's come through is the best of a bad situation. So we are very happy with what's happened there. Hopefully, the position will stabilize as we speak. And and with with that, if you... If I were to just sort of dissect what happened last year when things went south or in the last two quarters when things went south in The Middle East, the impacts were in two fronts. One was just that The U. S. Centric companies decided to go a bit more conservative on the travel side.

30:14 And the second, the fact that there was all these connections largely almost 50% of these connections were through The Middle East, and nobody wanted to touch a very volatile market on the way over to India. So so we need actually both these situations to sort of calm down. Thankfully, the two seem interlinked, and therefore, we do expect to calm down. And and the good thing is that the green shoots of that are already visible. Hyderabad is clearly picking up and and coming back online with the expected trends with the GCC's leg business going. What's... What has happened in Bangalore, unfortunately, is that we have missed the high season of large business that we we used to get for for project related travel, but it... But all is not lost. The business seems to be picking back up, and our growth in Bangalore is coming back online.

31:10 Unfortunately, with Bangalore, what had also happened, just to remind you, is that we had re... Released the additional rooms during the period as we went... As the Middle East crisis started. So our stabilization therefore took us slightly longer than what we had anticipated. But now with that additional 130 room inventory, we are in a good shape to take full advantage of that. If we look at our... At the business on books for quarter three, it is a very clear positive, and we are looking at a very decent growth. And in quarter four, the wedding dates are also higher, so we do expect weddings to be strong, and so do we expect the large mice groups to start to return with the situation improving in The US. So overall, all looking good, very good for half two of the year.

31:57 With respect to project delivery, we are very much in line to deliver our projects on time and on schedule to to cost and quality. The two biggest ones that we are releasing are at the end of this year and going into quarter one of next year, which is the dial in and Cygnus two. And both are likely to add a very significant growth to our revenue and EBITDA lines. So we are very excited with what's going to happen on that front as well. So improving macros, improving geopolitical situation, a strong India domestic story backed by a growth in our portfolio only bodes well for us. Got it. Thank you.

32:44 Thank you. Next question is from the line of Karan Karna from Abbott Capital. Please go ahead. Hi. Thanks, team, and congrats on the strong RevPAR performance in the results business. Firstly, just a clarification, Shweta and Nitin, you emphasized a lot on project deliveries and execution. But if I look at the current pipeline, so it appears there have been some changes in commissioning dates for both Varka, Goa and Hyatt Regency Versus last quarter, seems that the commissioning dates have changed for both, especially Varka, which has seen a slippage of two years. And also, if I look at Mindspace REIT, they've indicated two q f I twenty nine and one q f I thirty for its and agency building completion respectively. While your timelines are f I twenty nine and '30. So just curious to understand if without completion will happen in such a short period for both these assets.

33:37 No, sir. Let me talk about the second part. Sorry. Second part of your question first. You know, deliveries with... Along with Mindspace is... You don't necessarily need to see the completion date for... From Mindspace side Because as these buildings... Sorry. Sorry. One second. Sorry. Apologies. As these buildings go up, we enter the fit out... What fit out very early. Even as we have... You know, just to give you an example with dial, as we were on 2nd Floor of the building, we were already in the basement stinkering around and putting in the MVP. So, you know, the the two parts practically run-in parallel, and therefore, the gap between building completion and actual hotel opening is not necessary as long as you would imagine, particularly when they are if if they are worked worked out in series. So a lot of work goes on in parallel.

34:38 Terms of VARTA in terms of VARTA, you know, we have always said that Goa is notoriously hard to sort of work at work even we knew that. Whilst we had taken ambitious targets to sort of complete the project, we did account internally for a delay in approvals, and we have met with exactly that. Now that it's two years since we acquired Varka and we have still not started pouring concrete is indeed disappointing, but it's not for lack of effort. The good thing is that we have started to... We the good thing is that we have now started to make some baby steps in that direction, and we should be starting construction in Varkas definitely in the in quarter four of this financial year. That's the that's how it looks like at this point in time.

35:29 The other thing that I would like to point out is that it's only a g plus one structure, so we should go really fast in executing this project and and taking it to up... To operations. So that that is something that I would point out for Varka. In terms of IROLI, I think we should just be... We are all heaving a huge sigh of relief. It was a project that was stuck for five to six years. So I think a delay of a quarter here, there is something that does not worry us. But having said that, again, once again in the Iroli, we will enter. Unfortunately, in Iroli, it's not just one the entire building is not just the hotel, it's also commercial. And the hotel only starts from 25th To 26th Floor. So we have to wait for the building to get to that point. But as the building comes up above that floor, we will certainly enter into the public area and start working from there. So we'll try to mitigate some of these time losses as much as possible.

36:26 So overall, not worried and very much in line with the timelines that we had promised to deliver. Sure. And secondly and lastly, just on MMR, we have seen a few quarters of RevPAR underperforming, you spoke about FY 'twenty eight, but how should we think about third quarter and fourth quarter in terms of the growth rates here now that the construction activity is largely done at Pavai? Should we start seeing a sequential improvement in terms of the RevPAR performance here? And how does the MICE calendar look like for Pavai specifically now that the ports expansion is completely behind us? No. It's... So Pavai is exactly as to be expected. In fact, we also... I also said in my opening statement that, you know, some of the crew that we had lost nearly 100 rooms per day, out of that 20 is already back. So you can you can starting... You can start to see that some of the business that we had lost in particularly in Powai is coming back. And I would not say that we have underperformed in Sahar in particular.

37:29 We continue to get our fair share against the competition. We are exactly where we are vis a vis the competition as we as earlier. So it may look like a lower growth overall, but that is because our base is very high. So I won't read too much into it. The good news is that with the ATEVA Pulse coming online and now fully operational under autograph collection, we expect that to ramp up very quickly. And Khandala, Adeeva Khandala, which also is part of our MMR portfolio is entering very strong phase of ramp up and we expect a good growth coming from there as well. So overall, MMR will come back online and and even grow stronger from where it was earlier. Great. Thank you, and happy Diwali to everybody.

38:16 Happy Diwali to you too. Thank you. Ladies and gentlemen, we request you to please limit your question to one per participant. Next question is from the line of Abhay Khetan from Axis Capital. Please go ahead. Yes. Hi. Thank you for the opportunity. Just a couple of quick ones from my end. Firstly, on the resort side, we have seen very strong improvement, particularly in a seasonally weak quarter for leisure. So if you can point out which properties have led to this sort of an occupancy expansion, I think that would be useful. And the second thing is on the charged property. So earlier, I thought it was supposed to be a part of it was supposed to come within this financial year and the rest in FY 'twenty eight. But now in the presentation, everything is pointing towards FY 'twenty eight. So has that changed or are we expecting opening now?

39:07 And the second part to that is now that we are so close to the opening of Taj, what sort of ARR and RevPAR are we expecting for the first year? That's our entire business plan in one question. Anyways, so let's look at our reserve properties. Yes, we have indeed grown by nearly 34% year on year in the last quarter. And it is a tale of two parts. One is clearly in the Western in Rishikesh or Western Himalaya as we like to call it, we have seen a very strong rebound. And that rebound has come, A, from the fact that business in general on the domestic resort market side has picked up. But more importantly, our new leadership team that we employed there at the end of last year has come into play and therefore the focus has increased quite dramatically there. In fact, growth in that resort would be upward of 50%, 55% against last year without sort of giving away the exact numbers.

40:10 Whilst we were growing in the resort in the Himalayas, we were also growing in we have a steady rate of growth in the revenue as we are stabilizing in Khandala. And then that brings to the last resort that we have, which is the Marriott in Aravoli. Marriott in Aravoli has actually not grown that much, but it has been steady. And the second half of the year is very strong there. So at the end of this year, financial year once again overall for the resort will be in very good shape. Coming to Taj, you do see we have changed the number as what from what we had earlier indicated. That does not mean our intent is has has been less in any case. We had indicated 70 rooms opening in the last quarter of this financial year.

40:59 We have unfortunately had a setback with the GAAP measures in Delhi. And fortunately, all of us, I think, who have joined the call, most of us are in a relatively cleaner environment. But if you are part of Delhi right now with an AQI of 400, I think you'd be more bothered about breathing clean air than construction activity going on. But having said that, with that also in play, our intent continues to be to deliver to what we had said. And it's a very small impact overall because we had only expected these 70 rooms to come in the second half of the quarter. So even if we were to slip into the first quarter next year, we will use this time to bring in more inventory than we had promised. So we had promised 70.

41:48 At this stage, if we get that little bit of extra time, I'm sure we'll easily double that inventory that we'll bring to the market. So there wouldn't be an overall in any way an overall loss to investor coming out of this delayed potential delay that we are facing in Delhi. Thank you. Next question is from the line of Jinesh Joshi from PL Capital. Please go ahead. Thanks for the opportunity. Sir, my first question is with respect to our gross debt, which increased by about 400 crores when I compare it with March 26. And if I heard you right, you also mentioned on the call that our CapEx guidance has increased to about 3,400 crores to INR 3,600 crores over the next three years, which I think earlier was at about INR 3,000 crores.

42:44 While you have highlighted that a large part of this CapEx will be funded by internal approvals, given the fact that in 1H, we have seen an increase come through and our overall guidance has also increased. How to think about leverage from here on? What can be the steady number where it can settle maybe say next in next one to two years? Hi, Jinesh. Nitin here. So there are two things. One, you asked a question about cost from a gross debt perspective. What I would request you to also look at the liquidity, which is there as on the closing date. There certain are certain cities which we took, which are still which we took as of the last date. So my net debt, if I see from the last three quarters has been more or less stable between INR 1,900 crores to INR 2,100 crores.

43:41 That's number one. The second question on the capital allocation and the increased guidance. The guidance has been increased because in the last quarter, if you remember, there were two assets which we added and then we announced. So... But we still maintain the same fact that our internal accruals are stronger enough. With a little bit tweaking on the leverage, we'll be able to meet our, you know, capital commitments. I would like to add, Chaitank here again, just to add, just be rest assured that none of the increase in CapEx guidance is coming out of a cost increase in any of our projects. We are very much along the lines of what we had budgeted, and we have had literally no change on the cost to complete for any of the projects, just for clarity.

44:34 Understood. And sir, my second question is with respect to MMR. We highlighted that in second half, we might see an improvement come through in RevPAR. But if I have to specifically look at occupancy, think we're looking to three reasons that were impacting us. One was flat international demand and second was the construction at Huawei that you highlighted also the renovation, which was ongoing at Navi Mumbai. I think even in the previous quarter, you had mentioned that the non key work at Huawei is more or less over, and the renovation at Navi Gumbai is also complete as we have stated in our presentation. But if I look at our occupancy that continues to remain in that band of about mid-60s.

45:20 So just wanted to kind of get some sense. Is the recovery, which, say, for example, in a steady state was in the mid seventies linked largely to international demand, which has been relatively flat due to the Middle East crisis? And in that context, how should we think about the recovery in occupancy to come through in second half, given the fact that our ADR in MMR was quite decent in this quarter? Hi, Dinesh. This is Gaurav, the Chief Operating Officer here. I thought let me add a little bit of flavor to what you just asked. During the last quarter one by, we've seen the disruptions through foreign travel, which we touched upon, which has continued to impact the MMR region. Shratank in his earlier opening remarks did mention about some of the changes that is coming through, particularly in nature, the ramp up of our Ativa Pulse in Mumbai with the fact that there is a proposed change of the airport movement that is happening from the old Terminal 1 to the new Navi Mumbai Terminal that has just been launched and a lot of traffic which is going to move there. We believe that Navi Mumbai property will see a good uptake from the movement taking shape there. At the same time, with Pauai, we've already touched on the fact that we've had considerable construction that has been going on, which is now towards the back end of its journey and we've been announcing the Cygnus completion also coming in the coming quarter.

46:52 Given all of those things, we have extremely positive trends coming out. I must also add that large mice on the whole has been restricted during the time of the West Asia crisis. Also the last quarter did not have major wedding dates. As we go into the festive season, we see that the wedding dates are coming back. Some reshoots of mice have been seen through the regions including MMR. Even last month, there was a large MICE event which happened in Mumbai, which was the fintech summit, which took place in the Geo Convention Center. And it saw MMR performed on the whole extremely well during the time, much like Delhi did during breaks. But that impact is largely towards the Central Mumbai region rather than the Sahar or airport region.

47:42 So those micro market differences that come about by large events such as this does impact our potential of growth, though on the whole with total rebound and the latest news of the U. S. Elections, midterm elections, which have just completed, I think we are on track for positivity in the future. Next question is from the line of Krishan Biyani from Illara Securities. Sir, on Varka, I think when we acquired that piece of land, it came with all approvals, and that was also one of the reason why we acquired it. And what kind of approvals are still pending?

48:33 And follow-up on Udaipur, there also, I think the plan is to start it post expansion of one of the remaining keys that we are thinking. And approvals are also pending. So how certain are we to start the Udaipur property by FY 'twenty nine? Okay. Let's talk about Varka first. You've asked a very dangerous question. Now get ready for a full lesson in approval. So in terms of Varka, we did have the approvals, but there is a particular rule in in Goa that says that if you are impacted by the CRZ line, then you have to go to the MOEF in Delhi.

49:18 Now that particular approval was not necessarily taken seriously by the previous owner, and we had to make it absolutely kosher for us to start construction. And therefore, we had to had to get that approval. We got the CRZ line approved, and then the file is now to move to MOEF in Delhi. And it's only that we can start construction. The rest of the things have been closed there. So we have made very good progress there and should start in the quarter four of next year. With respect to Udaipur, there are two parts to to the to the construction there. One part is to actually refurbish the existing rooms, and that part of the that part of the work has already started. In fact, we are very close to finishing our mock up room on-site.

50:07 So hence, our construction there is already started on the one forty one room base. There is a potential for expansion, but we will see how that goes. That's the piece that we are sort of holding up on, and therefore, we are holding on to the news of where exactly we are heading with that property. But having said that, just the refurbishment part of the existing property, which gives us one forty one rooms is not really a problem. We should be able to do that very quickly. Thank you. Next question is from the line of Achal Kumar from HSBC Securities. Please go ahead. Yeah. Hi. Thanks. So I wanted to understand, you know, how has been your experience since you converted four point by Charletown to achieve a pulse in terms of overall demand.

50:59 And I'm assuming that this hotel is no more using Marriott sales and distribution channel. So how did that make a difference? And of course, on that in that context, I also wanted to understand your strategy around branding. I mean, do you think it could be better to have a city hotels attached to the Marriott distribution channels and maybe the leisure to the Tiva? So any branding strategy you have? And I mean, any color on that would be helpful, please. Yes. No. So let me start by saying the assumption is not correct because we have actually tied up with Marriott. We continue to stay as a part of their portfolio because we part of an autograph collection, which allows us access to their distribution and loyalty program.

51:50 Hence that part of the business stays unchanged. What has changed is that we have refurbished it with very beautiful designs. We have invested INR100 crores in that property, and we have also upped its positioning from where it was. It used to be a four point chariot, and we have now converted it into an... A TiVa Pulse and Autograph Collection, which allows us to actually position it much higher than what it originally was. The demand has been brilliant. The guest feedback has been off the charts. We have been receiving great feedback. We have taken a lot of effort to create to create a a whole wellness and well-being program there. I said it as a part of our opening conversation as well. We have we have a 30,000 square foot floor, which gives full experience to our guests and even to walk ins, both from a spa perspective, longevity experience perspective.

52:46 We have sports there and we have an we have an ultra modern gym as well. So we have made a lot of effort to create a great experience for our guests there. And and and we are... From what we are hearing, we are we are we are hearing some fantastic views from our guests. In fact, if you are Mumbai based, I would urge you to go there and experience it for yourself. You can call up Deepak, and I think he'll help you book an experience for you and your family. Think... I I would I would strongly urge that you go there and experience it. In terms of our strategy, our strategy for whether or not to tie up with Marriott along with Ativa is actually more than it being leisure based or or city based is actually based on the fact that where is the customer coming from. And if the customer is largely domestically fed, then we will tend to stay on a stand alone without the soft landing.

53:45 If it is international market fed as was the case with Navin Mumbai, we will focus on tie ups with the likes of Marriott. Thank you. Next question is from the line of Vaibhav Murali from Haitong India Securities. Please go ahead. Hi. Thanks for your question. I had a two part question related to our execution strategy. Firstly, on occupancy, we have seen sharp expansion in occupancy in our resource portfolio, but occupancy still remains at a lower end at around 51%. And we have guided for occupancy to reach early sixties over the next few years. So what kind of initiatives are we implementing in our resorts portfolio, especially in Akiva and, of course, in Marriott as well in our...

54:33 Fund this occupancy further. And second part was related to our business portfolio where, again, occupancy in multiple assets has taken a hit because of some company specific issues. So, again, what kind of initiatives are you planning to implement over there to, again, recover the occupancy back especially in Huawei as well as in that? Yes. So we have always guided that 60%, anywhere between 6065% is our ideal scenario when it comes to a resort portfolio. We are sticking by that. There are two, three things that I would call into play before you sort of make up your mind on where we are with occupancy. With resorts, there is a clear seasonality. First half of the year is normally never as strong as the second half of the year when marriages kick in, when the social calendar kicks in. So what you're seeing as half one at 46.1% or quarter two is at 41.2% for the resort portfolio.

55:33 Please expect a sharp jump in that occupancy even organically. So that's the first thing. The second thing that I would say is that Ativa in Khandala is still in its actually just the first year of operation. And, you know, no matter how proud we are of the brand, we are still a relatively unknown brand. So it will take us some time to ramp up to the numbers that we are. We we expect to be. Good thing is that we are already starting to... We have already hit our fair share in the market and beyond for the weekends. The weekdays is something that we are working on, which is largely mice driven and social calendar driven. The social calendar piece also we have managed to sort of tie up on and and started to see a very good ramp up on. The MICE piece is something that we'll work on, and that that means more doors to be knocked, sales teams to perform better, and and it all takes a bit of time.

56:33 But even on that, the trend is very encouraging, and we are almost... On a blended basis, we are almost 80% of our fair share in the market already. So it's all going in the right direction. Please give us some time to sort of wrap up and wait for the best to come. Thank you. Next question is from the line of Karan Gandhar from Choice Institutional Equities. Next question is from the line of from Choice Institutional Equities. Please go ahead. Hi. Thank you for the opportunity. While most of my questions are answered, just one on the CRE business.

57:19 Monthly rental or rental run rate increased to 300,000,000 in September with occupancy at 91%. What is the scope to increase this run rate over the next twelve months excluding the Cygnus Tower 2? So thanks for your question, Keith. Currently, our occupation occupancy is around 91% on a weighted average basis. If I look at the current LOI, which we have signed, we are expecting close to INR 32 crores of exit in the month by March end. By the time when we start looking at Cygnus Tower two, which probably might start getting leased from quarter one onwards, I'm expecting once it is fully leased, my entire CRE portfolio will give us a rentals of top line of INR500 crores for the year.

58:15 Next question is from the line of Savit Senna from Macquarie. I just want to get into the impacted inventory, right? I think last quarter, you had said something like 20% of your inventory is impacted, meaning it's not necessarily available to rent out. Can you give us from now until year end how we should see that number decrease? No. Sorry. We didn't understand. Our inventory was always available to rent rent out. No. No. What what it meant is, you know, for something like Pauai. Right? Pauai was impacted because the construction was going on, so you had to probably shut off some rooms and you couldn't, you know, give it up. No. No. Sorry. Sorry. Sorry for butting in. No. No. We never shut down the rooms. The fact that we had a big construction happening within the campus of Hawaii was something that the guests were not very happy about. So we lost some crew business as a result. And also because the porch was not available to walk into the banquet, so we were impacted in in holding large mice events and some social events because nobody likes their, you know, marriage experiences, etcetera, to be impacted by the fact that they can't drive into the banquet hall. So that was the impact. We never shut down the rooms. The rooms were available. We just had to drop in occupancy because of these these factors.

59:43 All of which is now sorted, by the way. Got it. Thanks for the clarification. Thank you. Ladies and gentlemen, that would be your last question today, which is from the line of Waipur Mule from Haitong India Securities. Please go ahead. Hi. Thanks for the follow-up. Just on our commercial real estate fees, for Cygnus 2 Tower, you had mentioned you are exploring the entire Stata leasing out to a single tenant. Any update on that? And secondly, on the Bangalore Commercial Tower, when do you think by FY this asset would be operational? No. I think we... He never said that the area looking at only one tenant for the Tower 2 in Hawaii. What I meant was that the Tower 2 is ready for leasing in the next year.

1:00:34 You know, once it is completely leased, we are expecting the entire CRE portfolio to give us a rental of 500 crores for the entire year. And Understood. And with respect to Bangalore, we didn't understand your question. Was Bangalore inventory, it has been ready. In fact, with the current finding that Nitin mentioned, we will hit 100% occupancy in Bangalore. Not the commercial the commercial tower. Yeah. Yeah. The commercial tower in Bangalore has been ready for years. And and, actually, we were waiting for the last Kozhikode. Oh, the Kozhikode among the one. Sorry. My apologies. The is... Yes. You're right. That's around one lakh 60,000 square feet. We are expecting that to get completed by FY 'twenty eight.

1:01:22 And we might be looking at one single tenant, but we are, know, it is not something which is kind of binding. But, yes, the completion is expected by FY '28. Oh, so now we have understood it's actually... You must have heard Nitin speak about Kormangala going to a single tenant. And that is correct because that's barely 160,000 square foot. That is still our intention there. Understood. Okay. Thank you so much, Anubhav. Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to mister Singh for closing comments. As always, we appreciate your insightful suggestions and queries. We hope we have been able to respond to all your queries. In case you need any further clarifications or insights on our business, please do contact Deepak, and he shall be able to help you. Good day. Thank you, and happy Diwali to all of you.

1:02:20 Thank you very much. On behalf of Chalet Hotels Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.