I am pleased to present our performance for the year ended 31 March 2018. This was a year of great learning for us. GST was implemented, which we believe will be hugely positive for our sector as it would enhance efficiencies and transparency coupled with a shift towards the organised hospitality segment.
However, the transition to the new GST environment slowed business for the first two quarters of the year under review. The Company also embarked on an important strategic decision to consolidate its portfolio to protect its brand. The Company exited two properties - The Byke Sunflower and The Byke Hidden Paradise — that were inconsistent with our focus on large properties and on properties enjoying multiple revenue sources. The Company encountered unfortunate operational issues at its Puri property within months of entering into a lease, following which we selected to vacate.
Despite these headwinds, the Company maintained its overall performance and protected its Balance Sheet, a validation of the robustness of its business model. Revenues increased 6.6% and profit after tax increased 12.5% during the year under review, which helped sustain the momentum of profitable growth. The Company reported an EBITDA of H69 cr, EBIDTA margin was an attractive 39% and return on equity was 21% in 2017-18.
MOMENTUM REMAINS POSITIVE
The principal message that I wish to send out to shareholders is that in a rapidly-growing company there will be years of consolidation of the kind we experienced in 2017-18. The consolidation in 2017-18 enhanced our strategic clarity, made it necessary to temporarily rationalise the number of our properties and strengthen our overall mix with the objective to reinforce business sustainability.
At The Byke, we believe that our business landscape is optimistic for some good reasons. In the last decade and a half, a new India has emerged: the country’s aspiring mid-income segment has got larger; there is a movement beyond saving to spending; a large proportion of the spending is extending beyond staples and necessities to impulse-driven products and experiences; travel is accounting for a higher proportion of the spending on experiences.
The new India is travelling more than ever. It is travelling more frequently on long weekends; it is taking more than one vacation a year; it is scouring the net for the best deals, it is making multi-month bookings m advance; it is focusing on value-for-money destinations and properties; it is leveraging the widening regional connectivity footprint to fly to locations rather than the conventional road cum rail approach. The result is that India’s travel and tourism sector has emerged as a faithful bottomline of India’s lifestyle revolution.
The Indian tourism opportunity is one of the largest in the world. India’s mid-income population of 600 million (Source: www.bbc.com) is potentially the largest mid-income segment in any country. As incomes, aspirations, choices and connectivity grow, we believe that India’s travel and tourism sector would grow faster than ever, catching up with lost time.
At The Byke, we are prepared for this sectoral rebound. We are spread across 13 properties in nine locations; we believe that these locations provide a long-term relevance, future-proofing our presence. We continue to expand into locations we believe are suited for aspiring travellers.
What makes The Byke different is our decision to remain asset-light; we have largely acquired these properties on lease; we will selectively grow our chartering business to the extent our Balance Sheet can support; we intend to extend to the asset-free business of property management. We believe that the combination of low fixed costs, low operational costs, low debt, robust agent engagement and growing revenues will continue to generate high surpluses available for reinvestment — the basis of our business sustainability.
SENSE OF OPTIMISM
At The Byke, we are optimistic of our prospects starting 2018-19. During the last year, hotel occupancies across the country recorded a nine-year high, touching over 67%, which lays the ground for an increase in room tariffs. This round of tariffs increase could be secular, extending across tiers and geographies, raising the level of water for the entire sector. At The Byke, we believe that an increase in realisations could well be complemented with enhanced occupancy across our properties, strengthening our overall performance during the current financial year.
At our company, we believe that from this point onwards, we will continue to do what we have always done — acquire more properties on lease, continue our chartering business and enter the business of project management.
We continue to remain optimistic that in a largely under-penetrated country in terms of organised hospitality chains, we will double the number of leased properties in three years, enhancing value for all our shareholders.