EIH — Q3 FY25 earnings call

Call held 14 Feb 2025

Management summary

EIH delivered a robust Q3 FY25, characterized by significant RevPAR outperformance in its premium Oberoi brand. While occupancy remained stable at high levels, growth was primarily driven by strong Average Room Rate (ARR) increases, which management believes still has substantial upside compared to international peers. The company is aggressively expanding its footprint with 19 properties in the pipeline, shifting towards a mix of owned and managed assets to drive long-term profitability.

Highlights

  • Consolidated PAT increased by 21% YoY, driven by strong international and subsidiary performance.

  • Group RevPAR (owned and managed) grew by 17% YoY, outperforming the industry average of 14-16%.

  • The Oberoi brand segment saw exceptional RevPAR growth of 22% YoY.

  • Occupancy levels remained healthy at 79-80%, consistent with the previous year.

  • Standalone revenue grew 11% on a like-to-like basis, excluding the impact of the Oberoi Grand Calcutta renovation.

  • Expansion pipeline consists of 19 properties, including 13 hotels and 3 luxury boats/cruisers.

  • Invested ₹241 crores in the London asset and approximately ₹200 crores in the new hotel pipeline during the period.

Concerns

  • Wildflower Hall Property Loss

Key financials

  1. Consolidated Revenue Growth 8% +8%YoY
  2. Consolidated PAT Growth 21% +21%YoY
  3. Standalone PAT Growth 18% +18%YoY
  4. Group RevPAR Growth 17% +17%YoY
  5. Group Occupancy 79.5% 0%YoY
  6. Standalone EBITDA Growth 7% +7%YoY

What they filed

Q1 FY27: revenue up 15.6%, net profit up 252.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue521 695 728 519 530 +2%779 +12%809 +11%600 +16%
EBITDA152 303 306 141 135 −11%324 +7%288 −6%149 +6%
Net profit114 220 332 36 103 −10%199 −10%200 −40%127 +253%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Oberoi Hotels
    22% RevPAR Growth
  • Trident Hotels
    15% RevPAR Growth
  • International Hotels
    20% RevPAR Growth

Guidance & targets

Capacity

  • New Property Pipeline Capacity · Future years · High confidence 19 properties
    So overall, if I look at the summary, we're going to add 13 hotels, 3 Trident hotels and will also add 3 Luxury Boats & Nile Cruiser.

    — Mr. Vineet Kapur, CFO

  • Oberoi Grand Reopening Capacity · by August 2026 · Medium confidence 18 months
    Yeah. So, Oberoi Grand should open in about 18 months.

    — Mr. Vikram Oberoi, MD & CEO

  • Oberoi Rajgarh Operations Capacity · FY26 · Medium confidence August
    So, hopefully in and around August.

    — Mr. Vikram Oberoi, MD & CEO

Other

  • New Management Contracts Other · Next week · High confidence 2 contracts
    And a press release will be coming out next week on two further management contracts that have been signed since our last presentation to you.

    — Mr. Vikram Oberoi, MD & CEO

Risks & concerns

  • Wildflower Hall Property Loss

    high

    Reports suggest the property may be auctioned by the government post-March; management refused to comment.

    Analyst deflected

  • Renovation-led Revenue Loss

    medium

    The closure of Oberoi Grand Calcutta and floor renovations at Trident Nariman Point impacted Q3 growth rates.

    Management acknowledged

  • Price Sensitivity in Corporate Segment

    medium

    Management noted that corporate segments are more price-sensitive than MICE or leisure, requiring careful yield management.

    Management acknowledged

Areas of evasion (3)

  • Wildflower Hall legal/auction status
  • Specific room count shut for renovation in Q3/Q4
  • Market valuation of owned land

Q&A highlights

2 direct, 1 evasive
Reconciliation of RevPAR vs Revenue Growth Direct
But the Grand has been closed for renovation... if you exclude [it], then our revenue growth is 11%... So what you're seeing is the Grand effect on the numbers.

Explains why headline revenue growth (8%) lagged behind strong RevPAR growth (17%).

Asked by Andrey Purushottam

Price Elasticity of Demand Direct
If I look at rate increases... it would seem to suggest that it is fairly inelastic because we have been able to increase price while maintain occupancy.

Confirms management's confidence in their ability to continue driving ADR without sacrificing volume in the luxury segment.

Asked by Abhay Kaitan

Wildflower Hall Legal Status Evasive
I really don't want to comment on Wildflower Hall. I think what is available in the public domain is all I would like to restrict my answer to.

Highlights a significant ongoing legal/regulatory risk regarding a key property that management is unwilling to discuss.

Asked by Harshal Sedhia

2 min read 5 chapters

Detailed narrative

Premium Brand Outperformance

EIH's core strength remains its premium positioning, with the Oberoi brand delivering a 22% RevPAR growth in Q3 FY25. This significantly outpaced the broader industry growth of 14-16%. Management emphasized that this growth was primarily driven by Average Room Rate (ARR) improvements rather than occupancy gains, as the group already operates at high occupancy levels of 79-80%.

Expansion Strategy and Pipeline

The company has a robust pipeline of 19 properties, including 13 hotels and 3 luxury boats. Of these, 11 will be managed properties, signaling a strategic shift towards a more asset-light management contract model to complement their owned portfolio. Key upcoming milestones include the opening of Oberoi Rajgarh around August and the reopening of the renovated Oberoi Grand Calcutta in approximately 18 months.

Renovation and One-time Impacts

Q3 results were tempered by the temporary closure of the Oberoi Grand in Calcutta for renovation, which reduced standalone revenue growth from a potential 11% to 6%. Additionally, the renovation of five floors at Trident Nariman Point led to asset discards and temporary capacity reduction. Management noted that excluding these impacts, the underlying operational performance remains very strong.

International and Subsidiary Performance

International operations saw a 20% RevPAR growth, benefiting from the stabilization of travel following the previous year's impact from the Israel conflict. The flight services segment also performed 'incredibly well' with significant margin improvements, driven by increased domestic and international flight frequencies in India, although specific revenue numbers for this segment are not currently disclosed.

Capital Allocation and Liquidity

EIH maintains a strong cash position, which is being deployed into high-priority projects. During the nine-month period, the company invested ₹241 crores in its London asset and approximately ₹200 crores in domestic pipeline projects like Tirupati, Rajgarh, and Gandikota. Management remains focused on driving high Return on Capital Employed (ROCE) through mixed-use developments in city locations like Hebbal.

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