As hotel occupancy rates improve following increased domestic travel, Apeejay Surrendra-run THE Park hotels is looking to turn profitable for FY21. Improved cash flows have put the focus back on expansion plans, through own and managed properties.

Kolkata-based Apeejay Surrendra Park Hotels Ltd (ASPHL) runs four brands under ‘THE Park’ name. This includes the eponymous one, and the others ‘THE Park Collection’, ‘Zone by THE Park’ and the recently launched ‘Zone Connect’. The Group also owns the heritage eatery and QSR chain of Flurys.

According to Vijay Dewan, Managing Director, ASPHL, occupancies are up at 87 per cent for December, with leisure travel and staycations driving numbers. The segment accounts for 60 per cent of bookings. Corporate travel, that is recovering with domestic flight counts going up, account for 30 per cent occupancies. The remaining 10 per cent bookings are through flight crews and others. Properties in Delhi, Kolkata and Goa have seen the highest traction.

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In the pre-Covid-19 period, corporate bookings were driving numbers accounting for 60 per cent occupancies.

“The booking trends have reversed in favour of domestic travel and staycations now. Recoveries have been steady. In October, there was 66 per cent occupancy, while it improved to 77 per cent in November. Hopefully, the trends will sustain with domestic air travel normalising and corporate bookings coming back,” Dewan told BusinessLine .

Occupancies apart, food and beverage segments ― restaurant dining services ― have picked up substantially.

Turning EBITDA positive

According to him, the hotel chain will turn profitable ― earnings before interest, depreciation, amortisation and interest (EBITDA) positive ― in the December quarter, banking on the recoveries and cost-cutting measures.

“We will see a near 5-percentage-point increase in margins. For FY21 full year, we will be EBITDA positive, despite losses in the first six months,” he said, adding that it will be “only around FY23” that numbers will be back at pre-Covid-19 levels.

Expansion plans

However, ASPHL will not hold back on expansion plans.

Around ₹250 crore will be spent for setting up the 200-room Pune property, an own-property. Construction will start next fiscal.

The asset light model (managed properties) will also be explored. Nearly 178 keys will be added “soon”, across places like Port Blair, Goa, Coimbatore and some heritage sites (palace hotels) in Leh and Punjab, across existing brands. The own-to-managed property ratio, at present, stands at 57 to 43, which over the next few years will change to 60-40, in favour of managed ones.

“The board will take a call on external funding, if required. We did file for a draft red herring prospectus, and it remains valid,” Dewan said, adding debt recast was done. “With cash flows improving, I think, there will be no issues in servicing debt or funding expansion plans,” he maintained.