Ventive Hospitality Ltd - May 2025 Earnings Call Transcript Analysis

Earnings Call Transcript Analysis Report #

Financial Performance #

Key Financial Metrics #

• Q4 FY25 Consolidated Revenue: INR 717 crores, up 20% YoY.
  • Hospitality Revenue: INR 584 crores, up 26% YoY.
    • India Portfolio: INR 227 crores, up 25% YoY.
    • International (Maldives) Portfolio: INR 357 crores, up 27% YoY (includes Raaya consolidation).
  • Annuity Revenue: INR 125 crores, up 5% YoY.
• Q4 FY25 Consolidated EBITDA: INR 371 crores, up 23% YoY.
  • Consolidated EBITDA Margin: 52%.
  • India Hospitality EBITDA: INR 104 crores (adjusted growth of 33% YoY after one-offs).
  • India Hospitality EBITDA Margin: 46%.
  • Maldives EBITDA: INR 166 crores, up 33% YoY.
  • Maldives EBITDA Margin: 47%.
  • Annuity EBITDA: INR 111 crores, up 5% YoY.
• Full Year FY25 Consolidated Revenue: INR 2,160 crores, up 13% YoY.
  • Hospitality Revenue: INR 1,604 crores, up 17% YoY.
    • India Hotels: INR 742 crores, up 15% YoY.
    • International (Maldives) Revenue: INR 862 crores, up 18% YoY.
  • Annuity Revenue: INR 483 crores.
• Full Year FY25 Consolidated EBITDA: INR 1,012 crores, up 16% YoY (proforma basis).
  • Consolidated EBITDA Margin: 47%, up 130 bps YoY (proforma).
  • India Hospitality EBITDA: INR 273 crores, up 31% YoY.
  • India Hospitality EBITDA Margin: 37%, expanded by ~500 bps YoY.
  • International (Maldives) EBITDA: INR 280 crores, up 38% YoY.
  • International (Maldives) EBITDA Margin: 32%, expanded by ~500 bps YoY.
  • Annuity EBITDA: INR 437 crores.
• India ADR & Occupancy (Q4 FY25):
  • ADR: INR 12,571, up 16% YoY.
  • Occupancy: 71%, up 4% points.
  • RevPAR: INR 9,000 (approx.), up 24% YoY.
• India ADR & Occupancy (Full Year FY25):
  • ADR: INR 11,076, up 10% YoY.
  • Occupancy: 65.5%, up 4% points.
  • RevPAR: INR 7,256, up 18% YoY.
  • TRevPAR: INR 13,347, up 15% YoY.
• Maldives TRevPAR (Q4 FY25): Grew 5% on a same-store basis.
  • Raaya by Atmosphere (consolidated from Jan 1, 2025): Added INR 62 crores to Q4 revenues with 49% EBITDA margin (INR 30 crores EBITDA).
• Debt:
  • Consolidated Gross Debt: INR 2,306 crores (INR 1,340 cr Rupee, USD 113 mn / INR 965 cr USD).
  • Consolidated Cash Balance: INR 560 crores.
  • Net Debt: INR 1,745 crores.
  • Net Debt to EBITDA Ratio: 1.7.
  • Cost of Finance: 8.24% for Rupee loans, 7.7% for USD loans (as of Mar 31), with further 15 bps reduction post-March.

Comparison with Previous Periods #

• Significant YoY growth across revenue and EBITDA for both Q4 and Full Year.
• Margins improved significantly for both India and Maldives hospitality businesses.
• Proforma financials were used for comparison due to acquisitions in August 2024, ensuring like-for-like analysis.

Revised Guidance or Forecasts #

• No specific revenue or earnings guidance provided, as per company policy.
• Management expects “mid-teen RevPAR growth and high-teen EBITDA growth” for existing assets over the next five years.
• Target India portfolio margins: 42% in next 2-3 years (from current 37%).
• Target Maldives portfolio margins: 35-36% in next 2-3 years (from current 32%).

Areas of Growth or Decline #

• Growth: Strong growth in both India and Maldives hospitality segments, driven by ADR and occupancy improvements. MICE and weddings revenue up significantly in India (weddings +40% in Q4). Annuity business shows stable, moderate growth.
• Decline: No specific areas of decline highlighted, though Maldives TRevPAR including Raaya is lower in absolute terms due to Raaya’s lower price point.

Strategic Initiatives & Business Updates #

Major Strategic Announcements #

• Plan to double hotel room inventory to 4,000 keys over the next five years.
  • Breakdown of 2,000 new keys:
    • 367 keys: Announced pipeline (Varanasi, Sri Lanka, Aloft rebranding to AC by Marriott in Bangalore Whitefield).
    • 900 keys: ROFO assets (Navi Mumbai - JW & Moxy; Pune - two Moxys).
    • 300 keys: Branded villa projects (MOUs for two land parcels close to signing).
    • ~500 keys: Acquisitions.

New Products, Services, or Markets Discussed #

• Raaya by Atmosphere (Maldives): Newly opened all-inclusive resort, consolidated from Jan 1, 2025. Named “Best New Opening by Travel Time Awards.” Operating at TRevPAR of ~INR 35,000.
• Branded Villa Projects: Planned addition of ~300 keys.
• Moxy Brand: Introduction through ROFO assets in Navi Mumbai and Pune.
• AC by Marriott: Rebranding of Aloft ORR in Bangalore Whitefield.
• Focus on MICE and Weddings: Drove weekend occupancy in India to 65% in Q4. Indian hotels hosted over 200 MICE events, contributing 20% of hotel revenues.

Significant Operational Changes #

• Channel Strategy Shift:
  • India: 40% of business from non-commissionable distribution and web channels (up from 31% last year).
  • Maldives: Strategy shift towards direct digital platforms from wholesale channels (currently 60% wholesale).
• Dynamic Revenue Management: Implemented in India to drive ADR growth.
• Cost Management: Prudent cost management contributing to margin expansion.

Ongoing or Completed Projects #

• Raaya by Atmosphere: Consolidated in Q4 FY25.
• ROFO Assets: Initial stage of evaluation for transfer to Ventive, expected at “warm shell stage at fair market value” in 2.5 to 3 years.
• Pipeline Projects (367 keys): Varanasi, Sri Lanka, AC by Marriott Bangalore.

Market & Competitive Landscape #

Insights about Industry Trends #

• Strong demand in Indian hospitality, with industry RevPAR growing at 18% in Q4 (Ventive grew 24%).
• All-inclusive concept in Maldives is a “fastest growing concepts in leisure travel consumption patterns.”
• Half-board and full-board concepts gaining traction in luxury leisure.
• Importance of F&B and banquets.

Competitive Positioning Statements #

• Positions them amongst the top four listed hospitality companies in the country.
• Consolidated EBITDA margin for the quarter was 52%, one of the highest in industry.
• RevPar growing at a standout 24% in Q4 to almost INR 9,000, while the industry grew at 18%.
• Have one of the highest revenue per key in India, and EBITDA per key in India is also one of the highest in the industry.
• Dominance in Pune luxury market.

Market Challenges or Opportunities Mentioned #

• Opportunities:
  • Strong structural demand and limited supply in chosen markets (especially Pune luxury).
  • Growth from MICE and weddings.
  • Pune market: Growth driven by GCCs, manufacturing, limited new luxury supply, office space expansion, Navi Mumbai Airport connectivity.
  • Maldives: Diversified customer profile, strong demand during peak seasons, strategic market diversification.
  • Leveraging loyalty programs for off-season business in Maldives.
• Challenges:
  • Seasonality (India).
  • Maldives cost structure.

Comments about Market Share or Positioning #

• Positioned as a premium player.
• Flagship properties stood out with stellar operating metrics in Q4.
• Strong presence in Pune with significant control over luxury inventory.

Risk Factors & Challenges #

Concerns or Challenges Acknowledged by Management #

• Seasonality: H1 will be softer compared to H2 due to seasonality.
• Global Uncertainties/Geopolitical Tensions: Some cancellations due to airline disruptions and geopolitical tensions, but management feels this was short-lived.
• Raaya Ramp-up: Maldives resorts, especially new ones like Raaya, take time to ramp up.
• Maldives Operating Costs: Higher fixed costs due to the “one island, one resort” concept.

Regulatory Issues Mentioned #

• Promoter holding dilution.

Statements about Market Uncertainties #

• Management expressed confidence that current global uncertainties would resolve before peak seasons.
• Impact of U.S. tariffs on Maldives demand was queried; management stated U.S. is only 3% of Maldives inbound and the market is diversified.

Forward-Looking Statements #

Outlook and Future Projections #

• Aim to double hotel room inventory to 4,000 keys in the next five years.
• Expect “mid-teen RevPAR growth and high-teen EBITDA growth” for existing assets over the next five years.
• Existing properties to contribute INR 1,000 crores in additional revenue over 5 years, with new keys adding another INR 1,000 crores, doubling revenue from INR 2,000 to INR 4,000 crores.
• Organic EBITDA growth from INR 1,000 crores to ~INR 1,700 crores from existing assets.
• India portfolio occupancy to stabilize at 70-75% with 10% ADR growth.
• Maldives portfolio occupancy to stabilize at ~65% with 10% TRevPAR growth.
• Pune market expected to continue strong growth due to demand drivers and limited luxury supply.
• Easter shift to April will help Q1 FY26 performance in Maldives.

Commitments or Targets Set by Management #

• Target India portfolio margins: 42% in next 2-3 years.
• Target Maldives portfolio margins: 35-36% in next 2-3 years.
• Fund expansion primarily through internal accruals.
• Maintain a healthy net debt to EBITDA ratio.

Planned Investments or Strategic Priorities #

• Capex of ~INR 5,000 crores over next five years for room expansion.
• Focus on greenfield, brownfield, and acquisitions.
• Development of ROFO assets (Navi Mumbai, Pune).
• Investment in branded villa projects.
• Continued efforts to shift channel mix towards direct/digital.

Sentiment about Future Performance #

• Growth ambition remains unchanged.
• Management is confident that global uncertainties will resolve before peak seasons.