Silver Pearl Hospitality & Luxury Spaces Ltd Management Discussions

ANNUAL OVERVIEW AND OUTLOOK

India will become the fourth largest economy in the world in 2025, surpassing Japan, according to the latest World Economic Outlook April 2025 edition of the International Monetary Fund. Indias nominal GDP for 2025 (FY26) is expected to be $4,187.017 billion, marginally more than the likely GDP of Japan which is estimated at $4,186.431 billion. Till 2024, India was the 5th largest economy in the world, but in the ongoing year it is expected to become the fourth largest, as per the latest IMF predictions. In the coming years, India is also likely to overtake Germany to become the third largest economy. By 2028, Indias GDP is estimated to be $5,584.476 billion, more than Germanys $5,251.928 billion. India will become a $5 trillion economy in 2027, with a GDP of $5,069.47 billion. IMF has adjusted Indias GDP growth forecast for 2025 to 6.2 in its report. This marks a reduction from the earlier projection of 6.5% that was published in the January outlook report. The downward adjustment in growth projections reflects heightened uncertainties stemming from US President Donald Trumps decisions on tariffs. The IMF report states: "For India, the growth outlook is relatively more stable at 6.2 percent in 2025, supported by private consumption, particularly in rural areas, but this rate is 0.3 percentage point lower than that the January 2025 WEO Update on account of higher levels of trade tensions and global uncertainty.

INDUSTRY OVERVIEW

The Hospitality Industry in India Market size is estimated at USD 281.83 billion in 2025, and is expected to reach USD 541.70 billion by 2030, at a CAGR of 13.96% during the forecast period (2025-2030). Indias hospitality sector has undergone significant transformation driven by favourable government policies and infrastructure development initiatives. The government has implemented several measures to boost investments, including allowing 100% FDI through the automatic route and offering five-year tax holidays for hotels located around UNESCO World Heritage sites. The Ministry has established the Hospitality Development and Promotion Board to streamline hotel project clearances and approvals. Additionally, the government has allocated INR 2 billion for developing tourist circuits at pilgrimage sites across the country, demonstrating its commitment to enhancing tourism infrastructure. These initiatives have positioned India among the top 100 countries globally for ease of doing business, particularly in the hospitality sector in India. The industry is witnessing a fundamental shift in ownership and operational models, with franchise and lease arrangements gaining prominence over traditional owned-hotel structures. Hotel chains are increasingly adopting asset-light strategies, focusing on management contracts rather than property ownership to drive revenue growth. This transformation is particularly evident in the organized hotel industry, where the consumer internet market is concentrated in urban and affluent cities. The trend has led to hotel conversions nearly doubling, with domestic hotel chains showing greater flexibility in terms of hotel size and maintaining a 65:35 ratio over international brands in conversion rates. Technology integration and personalization have become crucial differentiators in the hospitality sector in India. Data analytics and AI technologies are revolutionizing the supplier side of the hotel industry, enabling personalized recommendations and targeted promotions based on guest preferences and behaviour patterns. Hotels are increasingly investing in digital solutions for everything from booking systems to guest experience management, with many properties introducing advanced features such as mobile check-in, digital room keys, and AI-powered concierge services. This technological evolution has particularly benefited the online booking segment, with most reservations now originating from tier-1 and tier-2 cities. Consumer preferences have evolved significantly, with a growing emphasis on experiential travel and authentic local experiences. The tourism sector has emerged as a significant employment generator, currently accounting for 39 million jobs, representing 8% of the countrys total employment. Staycations have emerged as a prominent trend, with major hotel chains introducing specialized packages to cater to this growing demand. Properties are increasingly focusing on incorporating local cultural elements, sustainable practices, and unique experiences to differentiate their offerings. This shift has led to the development of various tourism themes, including nature, heritage, cultural, wellness, and MICE (Meetings, Incentives, Conferences, and Exhibitions) segments, each requiring specialized tourism and hospitality services and amenities.

OPPORTUNITIES & THREATS Opportunities

Economic Factors: Indias projected GDP growth of 6.8% in 2024 provides a solid foundation for hospitality growth. Rising disposable incomes and increasing middle-class consumers are driving demand across all segments.

Infrastructure Development: Expanding air connectivity, road networks, and hotel projects are laying the foundation for future growth. The development of major infrastructure projects like the Delhi-Mumbai Industrial Corridor will be key to unlocking new markets. Tourism Growth: The Indian governments efforts in promoting tourism through initiatives like Incredible India have been vital in driving both domestic and international tourism, resulting in increased demand for hospitality services. Government Support: The Indian governments efforts to improve ease of doing business, ease of visa access, and tax incentives for the hospitality sector have paved the way for further investment. Notably, the Pradhan Mantri Awas Yojana and the FDI policy offer significant support for international and domestic players looking to invest in the sector. Technology Integration: Technology continues to play a pivotal role in reshaping the hospitality landscape. AI-driven services, automation, data analytics for personalized experiences, and IoT-based smart rooms are expected to enhance both guest satisfaction and operational efficiencies.

Challenges

Supply Chain Constraints: Rising construction costs, regulatory hurdles, and labor shortages are factors that may impede rapid expansion, particularly in key urban markets. Price Sensitivity and Competition: Intense competition, especially in the midscale and budget segments, requires a balance between competitive pricing and maintaining service quality. Seasonality and Geographical Disparities: Seasonal demand fluctuations, along with demand disparities across different regions, may affect performance. Sustainability Challenges: The need for sustainable practices is becoming increasingly important, and hotels will have to adapt to environmental concerns, including energy and water conservation.

RISKS AND CONCERNS

Silver Pearl Hospitality & Luxury Spaces Limited (SPHLSL) has exposures in the business of hospitality. SPHLSL are exposed to specific risks that are particular to their respective businesses and the environments within which they operate, including market risk, competition risk, credit risk, demand risk, risk of spread of pandemic, human resource risk, operational risk, information security risks, regulatory risk and macro-economic risks. The level and degree of each risk varies depending upon the nature of activity undertaken by them.

HUMAN RESOURCE DEVELOPMENT

The Company recognizes that its success is deeply embedded in the success of its human capital. During 2024-25, the Company continued to strengthen its HR processes in line with its objective of creating an inspired workforce. The employee engagement initiatives included placing greater emphasis on learning and development, launching leadership development programme, introducing internal communication, providing opportunities to staff to seek inspirational roles through internal job postings, streamlining the Performance Management System, making the compensation structure more competitive and streamlining the performance-link rewards and incentives.

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

The provision of the Companies Act, 2013 relating to CSR Initiatives are not applicable to the Company.

COMPLIANCE

The Compliance function of the Company is responsible for independently ensuring that operating and business units comply with regulatory and internal guidelines. The Compliance Department of the Company continues to play a pivotal role in ensuring implementation of compliance functions in accordance with the directives issued by regulators, the Companys Board of Directors and the Companys Compliance Policy. The Audit Committee of the Board reviews the performance of the Compliance Department and the status of compliance with regulatory/internal guidelines on a periodic basis.