Espire Hospitality Ltd Management Discussions

MANAGEMENT DISCUSSION & ANALYSIS

EHL is very much endeavour to establish its footprints in the Hotel Industry to provide ultra-luxury and guest friendly stay at its hotels and resorts

This Management Discussion and Analysis ("MDA") Report presents an overview of the operational and financial performance of the Company. It also discusses the opportunities, Espire Hospitalitys strategy and important initiatives taken by it during the year.

Industry structure & developments

Global Economics

The International Monetary Fund (IMF) in its April,2024 edition of Work Economic Outlook mentioned that Global growth is projected to be in line with the April 2024 World Economic Outlook (WEO) forecast, at 3.2 percent in 2024 and 3.3 percent in 2025. Services inflation is holding up progress on disinflation, which is complicating monetary policy normalization. Upside risks to inflation have thus increased, raising the prospect of higher for even longer interest rates, in the context of escalating trade tensions and increased policy uncertainty. The policy mix should thus be sequenced carefully to achieve price stability and replenish diminished buffers.

IMF Analyzed that growth is expected to raise from 1.6 % in 2023 to 1.7 % in 2024 and 1.8% in 2025 ,however the same shall be offset by the modest slowdown in emerging market and developing economics from 4.3 % in 2023 to 4.2 % in both 2024 and 2025.

IMF further forecasted that for global growth five years from now at 3.1 percent is at its lowest in decades. Global inflation is forecast to decline steadily, from 6.8 percent in 2023 to 5.9 percent in 2024 and 4.5 percent in 2025,

The International Monetary Fund (IMF) has upgraded Indias gross domestic product (GDP) in the FY2024-25 by 20 basis points to 7 percent. The IMF has revised upward its forecast from the previous estimate of 6.8 percent in April.

The IMFs latest ‘World Economic Outlook report indicates that

Indias economic growth forecast for the current year has also been raised to 7.0 percent. The development has come in the backdrop of notable rise in consumption prospects, especially in rural areas.

With this, India continues to maintain its position as the fastest-growing economy among emerging markets and developing economies.

The IMF report stated that The forecast for growth in emerging markets and developing economies has been revised upward; this increase is powered by stronger activity in Asia, particularly China and India. The forecast for growth in India has also been revised upward to 7 per cent this year, reflecting carryover from upward revisions to growth in 2023 and improved prospects for private consumption, particularly in rural areas.

Hospitality Sector

Global Scenario

In 2023, the total contribution of travel and tourism to the global gross domestic product (GDP) was roughly four percent lower than in 2019, the year before the COVID-19 pandemic. Overall, the contribution of travel and tourism to the global GDP amounted to 9.9 trillion U.S. dollars in 2023. This figure was predicted to reach an estimated 11.1 trillion U.S. dollars in 2024, exceeding pre-pandemic levels.

In 2023, the number of travel and tourism jobs worldwide experienced a sharp annual increase, but was still slightly below pre-pandemic levels. Meanwhile, total travel and tourism spending worldwide followed a similar trend.

After sinking in 2020 to the lowest point recorded since 1989, the number of international tourist arrivals worldwide bounced back in 2022, then rose further in 2023. That said, it remained below the peak of nearly 1.5 billion reported in 2019. Both before and after the impact of the health crisis, Europe remained the global region with the highest number of international tourist arrivals.

Indian Scenario

Drawing upon world-class healthcare amenities and traditional healing practices, medical tourism and wellness retreats entice 21% of international travelers.

*The travel market in India is projected to reach US$ 125 billion by FY27 from an estimated US$ 75 billion in FY20.

*International tourist arrivals are expected to reach 30.5 million by 2028.

*According to WTTC, over the next decade, Indias Travel & Tourisms GDP is expected to grow at an average of 7.1% annually.

In the 2024 interim Budget, Finance Minister Ms. Nirmala Sitharaman allocated Rs. 2,449.62 crore (US$ 294.8 million) to the tourism sector, a 44.7% increase from the previous fiscal year.

*The Ministry of Tourism launched the Swadesh Darshan Scheme to develop theme-based tourist circuits, sanctioning 76 projects. Upgraded to Swadesh Darshan 2.0 (SD2.0).

*The Prime Minister, Mr. Narendra Modi inaugurates and unveils 52 tourism sector projects valued at over Rs. 1,400 crore (US$ 168.5 million) under the Swadesh Darshan and PRASHAD Scheme.

India is geographically diverse and offers a variety of cultures that come with its own experiences, making it one of the leading countries in terms of international tourism expenditure.

*Airport enhancement and the spread of regional airports are opening new opportunities for business, and for drawing larger visits from tourists.

The countrys big coastline is dotted with attractive beaches.

FINANCIAL AND OPERATING PERFORMANCE

The Company, during financial year 2023-24, has achieved various milestones and was able to establish its name in the Hospitality Sector.

During the year the company was completed its luxurious hotel project at Jim Corbett and commenced its operations in the last week of March, 2024, thereby adding 57 rooms keys to its inventory.

The company was managed to take on lease one more property in the state of Rajasthan in the forest area of Sawaimadhopur at Ranthmbore, adding another 20 rooms keys to its inventory.

The company has recorded an overall growth of more than 41% in its hotel occupancy and approx. 38% in the total keys available with the company.

The company has already signed an agreement with Espire Resorts Private Limited for taking up its resort namely "FORTBARWARA", situated at Sawaimadhopur, Ranthambore.

FORT BARWARA is a beautiful 14th-century fort sensitively converted to become a Six Senses sanctuary of well-being. Originally owned by a Rajasthani Royal Family, it faces the Chauth ka Barwara Mandir temple. The significant conservation effort incorporates two palaces and two temples within the walled fort. The design of Six Senses resort in Rajasthan reinterprets the gracious and regal ambiance of a bygone era dating back 700 years.

Future Prospects

The company is in advanced negotiations for 20+ hotels across 14 destinations, translating to around 1,000 additional keys. The company is exploring new properties in vibrant locations such as Jaipur, Puri, Mumbai, Ahmedabad, Vrindavan and Varanasi.

Strategically, the company is in the advanced stages of finalizing a proposal to merge an associate company with a sizeable land bank at a prominent location, subject to necessary approvals from the Board and Shareholders in next few quarters .

Threats, Risks and Concerns

Espire Hospitality ‘s risk management framework consists of identification of risks, assessment of their nature, severity and potential impact and measures to mitigate them. This framework is in place for adequate and timely reporting and monitoring. Risks are reviewed periodically and updated to reflect the business environment and change in the size and scope of the Companys operations. The Company has a Risk Management Committee consisting of three Independent Directors.

Segment wise or product wise performance

The company deals in only one segment namely hotel and resorts, accordingly the requirements of Ind AS-108,are not applicable .

Internal Control Systems & their adequacy

The company has placed adequate and effective system of internal controls, which are wisely commensurate with the nature of business and its scale of operations. Reviews of the audit plans, significant audit findings, adequacy of internal controls, compliance with accounting standards including any changes in that is a regular course of action of the companys Audit committee.

The Statutory Auditors of the Company have also, in their report to members for the financial year ended on 31^st March 2024, confirmed the adequacy of internal control system of the Company.

Discussion on financial performance with respect to operational performance

The Financial Statement for the financial year ended on 31st March, 2024 have been prepared in compliance of the provisions of the Companies Act, 2013 and applicable Indian Accounting Standards issued by the Institute of Chartered Accountants of India (Ind AS). The Board of Directors accepts the integrity and objectives of these financial statements. During the year under report, your company has recorded revenue of Rs 3636.31 Lakhs in financial year 2023-24 as compared to Rs 1883.30 Lakhs in financial year 2022-23. The Company has incurred a net profit of Rs. 256.18 Lakhs as compared to net profit of Rs 22.21 Lakhs recorded in the last financial year.

Material Development in Human Resources

At ESPIRE HOSPITALITY, human resources are considered as the prime assets, they have been treated with utmost care are caution. Since hospitality sector is a purely depends on the guests experience, at most care is being provided to the staff for delivering their best.

A combination of a robust talent management strategy and a transparent performance management system, leading to an attractive long term compensation philosophy is employees to attract and retain the best talents . Friendly working environment, attractive remunerations, moral boosting activities, accommodation, transportation etc. are some of the measures the HUMAN RESOURCE team use to apply to strengthen the Human Resources in the organization

For & Behalf of the Board of Directors

Akhil Arora

Managing Director & CEO

Place:New Delhi

Date: 02nd September,2024