Indian Hotels: Analysis focused towards metrics for Survival

  • Annual Report is filled with the achievements of the past, & the future bright outlook. (Not convincing)
  • Will continue to re-imagine our multi-product, multi-segment brandscape to transform from a hotel business to a hospitality ecosystem. (Why is it the focus of the Annual Report? This is a once in a century type crisis.)
  • The travel and tourism industry accounts for 10% of the global GDP and generates 1 out of 10 jobs. In India, it is a significant contributor to GDP and also contributes 8.1% to the overall workforce. (This sector has to revive for economic recovery)
  • In order to drive asset-light growth, we have restructured our portfolio, with management contracts now accounting for 42%.
  • Proposed a dividend worth Rs 0.5/share. (?)
  • Hotels (operational + pipeline): 200 & Rooms: 25,168 [Operational, H:158  R:18,924]: Too Optimistic, the promoters have increased their stake this March.
  • Brand Value: $309million & Trademarks: 660
  • Employees: 33,797 (No layoffs expected but the Annual Employee cost is 725 crs)
  • Financials of a Hotel company: Asset Heavy business,
    • Long term economics are very bad (Avg ROCE of last 5 years <10%)
    • Significant net debt (Rs 1915 crs)  with high fixed cost could be a humongous problem as revenues for the next 2 years will remain negligible. (No mention of any fund raise or how bad the situation can get for them)
  • After 30 pages of how astounding their services are, a single page of how to deal with the crisis: Beware of management jargon + followed by very complex charts.
  • Followed by another 30 pages of beautiful landscapes & professional looking management with strong pedigree & experience.

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