IMPROVING INDUSTRY PROSPECTS

The global travel and tourism industry continued to see encouraging momentum during FY 2018-19. Interestingly, 2019 marks a decade since the US travel and tourism industry recovered from the depths of economic recession. The recovery coincided with the economic resurgence in emerging markets, translating to a historic growth in travel demand, felt by segments across the travel industry**.

India’s travel and tourism sector witnessed healthy growth during the year with the Government’s focus on making the country an attractive tourist destination with advanced communication facilities and digital conveniences. Technology and digital innovation have immensely benefitted the travel and hospitality industry in a very short period of time.

Occupancy levels stood robust at 65.3% in 2018 highest in the past 10-years at all-India level*. Favourable demand-supply dynamics aided an upswing in average room rates (ARR) as well as revenue per available room (RevPAR). Global travellers are increasingly demanding more personalised, exclusive and authentic experiences from luxury hotels.

Wellness and sustainability are two emerging dimensions in this segment with our patrons looking for holistic experiences that include nutrition and yoga. Customers are increasingly preferring hotels that have embedded eco-friendly practices in their operations.

In parallel, demand is growing rapidly in the midscale and upscale segments. Leading hospitality players like us are well poised to benefit from these trends, given that we offer a full-suite of hospitality services to our guests.

A YEAR OF OUTPERFORMANCE

The industry momentum is reflected in our performance for the year gone by. I am pleased with the progress in the first year of Aspiration 2022, our five-year business strategy. On a consolidated basis, our revenues stood at `4,595 Crores and grew by 10% over the previous year. Similarly, our EBITDA margin saw an expansion of 229 basis points to 19.9%. This is the second year in a row that we have achieved positive profit after tax of `287 Crores. This metric has also grown rapidly by 184% over FY 2017-18. The net debt to equity ratio has improved to 0.37 and the net debt to EBITDA has declined to 2.11. There is significant room to deleverage our book further. We aim to reduce our net debt to EBITDA levels to less than 2 over the short term. International business, which forms 15% of our operational inventory, witnessed a healthy turnaround owing to an encouraging performance of hotels in USA and the UK. This performance was an outcome of solid execution of our strategies during the year the year.

We have revisited and refreshed our brandscape to cater to diverse, high growth and relevant market segments. We have designed a multi-product, multi-segment brandscape to provide a unique value proposition to each customer segment at different points in their lifecycles.

The robust show by our flagship brand Taj was complemented effectively by brands like Vivanta and Ginger. We repositioned Ginger and forayed into the segment of plantation trails and stays with the launch of Amã Trails & Stays, the first branded product in India’s homestay market. In April 2019, we rolled out our new brand SeleQtions, which through its portfolio of niche hotels offers specialised experiences to guests.

With this reimagined brandscape, we augmented our development pipeline significantly. Our new signings spanned London, Dubai, Makkah, New Delhi and Kathmandu. During the year, we retained the landmark Taj Mahal Hotel, New Delhi, renewed our long-term agreement for the legendary Taj Lake Palace, Udaipur and won the bid for The Connaught in Lutyens’ Delhi. In April 2019, we took management control of the famed 207-key Cidade de Goa.

FY 2018-19 was a year of outperformance for our Company. Our proactive asset management combined with all-round efforts to improve efficiencies resulted in significant margin expansion and higher value for stakeholders.

AN ASPIRATIONAL ENTERPRISE

Yes, that is what we are at our core and we are re-structuring, re-engineering and re-imagining our portfolio in line with our pivotal Aspiration 2022 strategy. We are embracing a culture of operational excellence to achieve high margins continuously. Our endeavour is to maximise value creation for all our stakeholders.

At the same time, sustainability remains a prerequisite for our operations wherever we do business. Our teams work behind the scenes to ensure resource efficiency.

The Tata Group’s core values underpin the way we do business. Inclusion and business responsibility are embedded in our DNA; and we are proud to carry forward the beacon of community service. We promote livelihood (by facilitating skills training), support our neighbourhoods (by retaining their heritage and maintaining tourist sites) and drive societal welfare (through the Taj Welfare Trust and our charity activities). We have also inculcated best practices like procuring local and sustainable materials to accomplish higher benchmarks in our facility management.

The aim of shaping our common future is the basis of all our initiatives towards environmental stewardship, social responsibility and business performance. Overall, we are focussing on our core priorities, deepening synergy between internal teams and external collaborators, and multiplying positive impact.

Before I conclude, I must thank our go-getters, because we are only as good as our people and all our patrons, investors and other stakeholders for their continued guidance and support.

Best Regards
Puneet Chhatwal
Managing Director and CEO

*(Source: STR Horwath India Hotel Market Review 2018 report).

**(Source: Deloitte)