Samhi Hotels - Turnaround with Tailwinds

• 4800+ Rooms across 31 Hotels

• Owns the properties - Refurbishes, renovates and then lets out the hotel to big hotel brands to manage it

• Samhi doesn’t manage or operate the hotels itself

• Passes on the management fees and retains the F&B and rental incomes

• 75% is room rental; 25% from F&B

• Hotels / Brands:

  • Courtyard by Marriott
  • Fairfield by Marriott
  • Sheraton by Marriott
  • Renaissance by Marriott
  • IHG
  • Hyatt Place
  • Hyatt Regency
  • Holiday Inn

• Owned by Samhi and managed by Marriott / IHG / Hyatt (charges mgmt. fees to Samhi)

• 90% of their revenues come from Tier-1 cities

• Hotel traffic tends to be higher in these cities

• ARRs are higher in these cities

• Good geographical diversification protecting it from unforeseen situations in a certain city / region

• Focuses a lot on office space absorption, which is on the rise (lot of scope in cities like Bangalore, Mumbai, etc.)

• Commercial activity has picked up and expected to stay robust going forward

• Air passenger traffic remains strong, showing good travel demand

• Demand is not a problem as per management

• Creating supply takes time and that provides companies like Samhi with high pricing power – driving up the ARR, Occupancy and therefore, the RevPar

• Good time to play the upcycle until the supply comes in and demand starts peaking in a few years

• Three categories of hotels:

  • Upper Upscale – ARR – 9300+ (43% of Revenues)
  • Upper Midscale – ARR – 5700+ (42% of Revenues)
  • Midscale – ARR – 3700+ (15% of Revenues)
    

• Remains a debt heavy company, but most of the IPO proceeds have been used to pay off the debt (900Cr used for debt reduction) – finance cost has fallen

• Management expects the growth in profitability to aid in debt reduction going forward

• RevPAR is on the rise, growing at 20% YoY in the recent quarter

• EBITDA margins at 32%

• ACIC Hotel Chain acquired. Being managed by Samhi as of now, will be passed on to Marriot to manage by Q1 or Q2 FY25

• 962 rooms in ACIC Portfolio; 22% of the revenues as of now

• As all these rooms become operational and occupied, EBITDA margins are expected to touch 40%+ (8-10% improvement)

• Being a primarily business hotel model, occupancy on weekdays is better for Samhi compared to weekends (78-80% on Tue, Wed and Thu; 64-67% for Sat-Sun)

• Weekend occupancy is also expected to improve in FY25-FY26 as per mgmt.

• Not acquiring too many new hotels; major focus is on increasing revenues from existing hotels through renovation and refurbishment

• Made provision for lease cancellation issue of around 7Cr

• Finance cost has come down from 132Cr to 65Cr; expected to come down further as they deleverage

• Samhi is pursuing a long term lease arrangement (which will be tied to revenues)

• Will become a completely asset light model - reducing depreciation and help margins further

• Expecting strong H2 performance in FY25 with new inventory boosts

• Looking to turning profitable by Q1FY25

Risks:

• Extremely cyclical sector
• Company has a lot of debt
• Yet to turn profitable

Disc: Invested

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