‘Royal Orchid’s Ebitda will grow by 20% this fiscal’: Amit Jaiswal

The first quarter of 2019-20 hasn’t been good, but our company’s topline and Ebitda grew and we will perform better in the third and fourth quarters, says Amit Jaiswal, chief financial officer, Royal Orchid Hotels. In an interview with Swati Khandelwal, Jaiswal said, “Hotel industry has always been kept in the higher tax bracket under GST and the tax rate is almost double when compared with the neighbouring countries.”

What is your expectation about the occupancy rates during the September to December period?

The first quarter hasn’t been too good for the industry; however, our company has shown growth in the topline as well as Ebitda. It seems that other industries are improving, and it makes me feel that the third and the fourth quarters will be good for the entire hotel industry, including us. Following the trends, it seems that October onwards the industry will start performing well. The third and fourth quarters are better for the hotel industry generally.

You have opened three new properties in Chandigarh, Chennai and Kullu Manali in the recent past. What is the average room rate (ARR) and occupancy rate there? 

We have an ARR of Rs 3,600 in these three hotels. Interestingly, it is likely to register a growth of 7-8%. Our company is running at an occupancy level of around 70%, which went down by 3-3.50% in the first quarter. We hope that the occupancy level will reach 75% mark in the balance six months. 

You are planning to open new hotels in Goa and Karnataka in the next two months. What is the expected occupancy rate for these hotels?

Even in the first quarter, irrespective of the decline, the Goa market has performed well. Its occupancy level stood at around 90% in the first quarter and is at the same levels in the second quarter. So we are not worried about the Goa hotel. In fact, every leisure hotel is doing good in India at present. The issues are related to corporate and business hotels.

What is your margin expectation for the entire fiscal 2020?

Ebitda is the main criterion, which stood at around Rs 49 crore in the last financial year and I hope we will touch an Ebitda of around Rs 60 crore. Ebitda growth of almost 20% is possible, however, it grew by just 10% in the first quarter, but will recover in the third and fourth quarters. So, we have an Ebitda target of 20% for the fiscal.

What is your capital expenditure size for this fiscal and how many more hotels are you planning to open this fiscal?

We have nine hotels in our pipeline, which will be opened within this financial year. We don’t have any additional capex for managed hotels, but we have a plan to sign two lease hotels, which will need an expenditure of Rs 7-8 crore. It’s not capex, but we are supposed to pay a lease deposit and we are trying for the same. The addition of two leased hotels will have an impact on our topline growth in the next financial year.

Are you facing tough competition from hotel aggregators such as Oyo?

As far as Oyo Rooms are concerned, then it is not a real competition in the hotel industry, because you can’t provide any service guarantee in Oyo rooms. Generally, they are functional in the low-end business and primarily budget hotels are available in its ambit.

—Zee Media Newsroom