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Royal Orchid Hotels

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Chairman's Speech (Royal Orchid Hotels) Year : Mar '16

Dear Shareholders,

I am indeed delighted to share that fiscal year 2016 has been a great year with steady growth backed by an improving economic scenario. Our team''s incessant efforts to strive for premium quality services and a growing loyal customer base has helped us to expand our footprint to 6 new cities, adding 9 new hotels and 496 no of room keys.

The Travel and Tourism sector contributed 7.5% to India''s GDP and is the third largest foreign exchange earner for the country in 2015. Government has taken various steps to attract domestic and international tourists through schemes which includes Swadesh Darshan” - an integrated development plan of theme-based circuits, Prasad” to boost pilgrimage tourism and e-VISA facilities. The domestic and international spending on travel and tourism combined is expected to reach Rs 11,060 billion by 2024, according to India Brand Equity Foundation. With a growing disposable income amongst the middle class and their changing life style has led tothe growth in domestictourism.

Our strategy of Asset Light Model” generated free cash flow in financial year 2016 which helped us prepay some amount of our debt. The new hotels that we added during the financial year 2016 are operated under Management

Contracts business model. We added 496 no of keys in FY16 compared to 409 no of keys added in FY15. The growing demand for rooms by leisure and business travelers has led to increase in our occupancy rate and average room rate compared to previous years.

We registered 8% growth in top line from Rs 151 crore in FY15 to Rs 163 crore in FY16. EBITDA numbers witnessed growth by 6.68% in FY16 compared to FY15. Company''s net profit has remained under pressure but we foresee a promising year in terms of business & profitability in FY 17. The optimism arises on account of some of the renovated properties getting ready for business and addition of more rooms and services in some of the properties. This year we plan to have management contract with six more properties for 400 rooms and aims to coverall major cities taking the total to 41 properties with 3,000 rooms. The expansion of keys through asset light model will generate healthy revenue and bring down costs substantially which will impact directly to our bottom line.

I would like to thank all our shareholders, employees, travel partners in believing in us and being a part of our journey so far. We promise to remain committed to deliver outstanding results of our company through focus and execution and build enhanced value for all our shareholders.

Source : Dion Global Solutions Limited
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