The Byke Hospitality Ltd Management Discussions.


The last few years have seen the Indian economy go from strength to strength. Having emerged as the fastest growing major economy in the world, India is expected to be one of the top three economic powers of the world over the next 10-15 years.

Indias GDP is estimated to have increased 7.2 per cent in 2017-18 and 7 per cent in 2018-19. The numbers are backed by solid bulwarks of progress: inflation that is in check, private consumption at an all-time high, the booming Services sector, India retaining its position as the third largest start-up base in the world, and many more macro and micro indicators.

Indias demographic advantage, which global economic watchers have been talking about for nearly a decade, is beginning to shine through. It is expected that Indias labour force will touch 160-170 million by 2020, based on a range of pan-India factors, according to a study by ASSOCHAM and Thought Arbitrage Research Institute.


Just as the Indian economy in general, the performance and overall horizon of the Indian Tourism and Hospitality sector has been a positive one. In fact, the sector has emerged as one of the key drivers of growth among the Services sector.

The Indian Tourism and Hospitality sector has huge growth potential, with some estimates predicting a double-digit growth arch on the back of proactive government schemes and higher budgetary allocation. Tourism in India has significant potential considering the rich cultural and historical heritage, variety in ecology, terrains, and places of natural beauty spread across the country.

The sector has the dual advantage of adding to the countrys GDP significantly as well as being a large employment generator. In 2018, FEEs from Tourism increased 4.70% year-on-year to USD 28.59 billion. FEEs during January 2019 was USD 2.55 billion. Indias growing middle class and increasing disposable incomes continues to support the growth of local and foreign tourism.

The Tourism and Hospitality sector accounted for 8% of the total employment opportunities generated in India. The number is expected to rise by 2% per annum to 52.3 million jobs by 2028.

(With inputs from IBEF, ASSOCHAM, Yes Bank, and TARI)


The Byke Hospitality Limited is an established hospitality brand addressing Indias mid-market segment. The Company which earlier had leased properties across North and West has now catered to the South as well. The Companys restaurants and banquets serve only vegetarian food. The unique, asset-light approach has enhanced the Companys profitability around a low-equity capital. After carefully reviewing business viability, the chartering aspect of the business continue to see significant competitive pressure in terms of pricing and also volume within local geographies, so clearly making exit at the right time is one of the most vital decisions. The Company encountered unfortunate losses in its chartering business due to unsold inventories, which was a setback. However, it was an important lesson learned which led us to now focus on growth of our own brand value. So clearly Byke as a brand is continuing to be in a state of evolution as in the industry and as a business.

Owned and Leased Business

TUnder this business segment the company operates 19 properties of which 2 properties are owned and 17 properties are on Long term lease under The Byke Brand. This Business contributed revenue of Rs. 146.76 crores during the year under review. Rooms generated Rs. 68.69 cr in revenues (around 47% of revenues from this segment); revenues from food and beverages (restaurants and bars) and events generated Rs. 78.07 cr in revenues (around 53% of O&L revenues). The Company generally manages properties around long-term operating leases (10-20 years). The refurbishment and rebranding is completed during the rent-free period of 3-6 months, followed by a focus on better management, marketing, and distribution capabilities across room sales and F&B/event revenues. In FY19, under this segment the company has 14 operational properties and 7 properties are expected to commence its operations in the current year. The Company concluded 4 new leases in Cochin, Ooty, Thane and Bhavnagar.

Project Management

The year in review was the first year the Company entered the business of project management, where it leveraged its understanding of hotel property management to advise prospective hotel owners on how to maximise room occupancy and operating efficiency. This vertical has potential for growth and the Company will be pursuing this avenue in the times to come as well.

• In less than 10 years, the World Travel and Tourism Council expects India to become the fourth largest Travel and Tourism economy.

• Tourism in the subcontinent generated more than USD 247 billion in 2018, up from USD 230 billion in 2017.

• India offers myriad options: 36 world heritage sites and 103 national parks, plus the Taj Mahal in Agra, Rajasthans hill forts, the holy city of Varanasi, and everything else in between the mountains of the Himalayas and the beaches of Goa.

• The jungles in India comprise tigers, elephants, and the last of Asias lions. No other country is better suited to take advantage of an adventure travel market expected to grow to USD 1.3 billion by 2023.


The Byke reported the following performance in FY19:

Revenues were Rs. 146.76crores from hotel business in FY19 and Company encountered loss of Rs. 14.27 crores form room chartering,

Overall EBITDA was Rs. 25 crores in FY19 and EBITDA from Hotel operations was Rs. 42 crores in FY19.

EBITDA margin was 17% in FY19 and EBITDA margin from Hotel operations was 29% in FY19.

PAT was Rs. 5 crores in FY19 and PAT margin was 3% during the year under review.


As on Mar 31, 2019, the Companys net worth stood at Rs. 184 crores, while total debt was Rs. 20 crores. The Company had cash and cash equivalents of Rs. 6.1 crores at the end of March 31, 2019.


With a sharp focus on improving guest experiences, driving efficiencies and adapting swiftly to emerging trends, we continue to sustain long-lasting associations with our customers, employees, suppliers and other stakeholders. We are present in carefully selected, high-potential markets and will continue to expand in the future. Given our prominent industry position and unwavering focus on refreshing and realigning our portfolio in sync with changing guest preferences, we are well poised to take Indian hospitality places.


Your Company operates in a highly competitive industry and success is dependent on our ability to compete on various factors such as attractiveness and quality of our offerings, quality of accommodation, food and beverage, location, service levels, and amenities, together with the brand reputation of our brand licensors. The Company faces the following risks:

• Competition: The hospitality sector presents immense growth opportunity thereby attracting strong from hotel majors. Your Company may also have to compete with any new hotel properties that commence operation in the markets in which it operates or intend to commence operations.

Mitigation: Byke is present in the mid-market segment which faces low competition from branded hotels. Byke has created a strong brand in this segment.

• Consumer Demand and General Economic Conditions Economic growth drives business and leisure travel as well as conferences, banquets and events which impact the success of our operations. In addition, the hotel industry and the demand for rooms is also affected by travel advisories, worldwide health concerns, geo-political developments, natural disasters in the region and inflation.

Mitigation: Byke has also increased focus on F&B/Restaurants/ Events revenue which has been growing at a faster rate than room revenue. Also, there has been a focus to steady increase in ARRs and occupancy levels by extensively improving its service standards.

• Seasonality and Cyclicality of Business: The hospitality industry is seasonal in nature. Our revenues are higher during the second half of each financial year as compared to first half of the financial year. Seasonality affects leisure travel and the MICE segment (meetings, incentives, conferences and events); however, business travel is generally more consistent throughout the year. Seasonality can be expected to cause quarterly fluctuations in our revenue, profit margins and earnings.

Mitigation: At Byke we also undertake regular activities towards Marketing and branding, Customer engagement and Dealer and partner engagement.

• Natural calamities: Any natural calamity in a region where Byke is present could adversely impact the business.

Mitigation: Byke has been rapidly expanding its portfolio across India. In the room chartering business, it is present in over 60 cities. Thus pan-India presence lowers the risk.Mitigation and Management Strategies:

Our risk management policy encompasses identification and evaluation of business risks. We implement mitigative steps to manage the same on a continuous basis. The Risk Management exercise is conducted annually with a periodic review. It involves internal participation, scanning of environment, objective setting, risk assessment, control activities, information & communication and monitoring.

This framework seeks to create transparency, minimise adverse impact on business objectives and enhance our competitive advantages. Our risk management committee guides this entire process.


The Byke Hospitality Limiteds Management believes in taking the environment and social responsibility sincerely, and aims to play an active role in contributing towards the society. It endeavours to integrate community development, social responsibility and environmental sustainability into its CSR strategy and formalise the integration of sustainability into its business practices.

In pursuance of Section 135 of the Companies Act, 2013 the Company has put in place a formal CSR Policy. At the core, the endeavour is to evolve the eco-system the Company operates in. The Company believes in the concept of inclusive growth by reaching out and empowering the community. Some key CSR Initiatives undertaken by the Company during FY19 comprised:

• Health and community welfare: The heath programme is attributed to development of awareness and provides basic necessary health support, awareness development for improvement of hygiene and guidance. The Company is periodically engaged in blood donation, medical check-up camps and awareness building sessions in the areas of general health, natural remedies. The Company also provides basic amenities and infrastructure (water heaters, refrigerators, blankets and bed sheets) for the benefit of childrens homes and old-age homes.

• Education, skill development and livelihoods: The education programme are run through various pre-primary and primary schools across various areas and assisting them to enter the proper education system. The Company adopted rural schools and anganwadis and renovated their infrastructure. It provides educational material and amenities to underprivileged students. The Company distributed sewing machines to women to catalyse sustainable livelihoods.

• Environment: The Company planted more than 10,000 trees in Maharashtra, Goa, Rajasthan andHimachal Pradesh and responded to the Swachh Bharat Abhiyaan through cleanliness drives in the vicinity of its resorts. The Company has been and shall always remain committed to the wellbeing of its neighbouring communities, society, environment and the nation at large.


Our growing talent pool is instrumental in driving our strategies and enabling the business to stay ahead in a dynamic business scenario, where todays wow becomes tomorrows ordinary. We have created a culture that promotes team effectiveness and enables our colleagues to enhance the connect with all our stakeholders.

Your Company recognises that human resource is key to organisational success. Thus, the goal of the Human Resources (HR) department is to ensure that the employees are recruited, engaged, retained and motivated to contribute to the Companys growth and strategic mission. The HR department proactively engages with employees at all levels for this purpose.

Its vision is to create an environment of learning and superior performance in line with the Banks corporate values and aligning the personal aspirations of employees to business imperatives. The Companys average employee age of 36 represented a balance of experience and enthusiasm. In FY 2018-19, the company increased its employee strength to 700 from 632.

We have implemented various employee initiatives during the year which focuses on:

•Mindfulness training -Continuing the senior leadership teams emphasis on emotional intelligence, we conducted a session on mindfulness.

• Induction/orientation of new hires for acquaintance with the culture of the Bank

• Training on operational risk, audit, compliance and regulatory aspects for frontline staff

• People management, customer-centric, and compliance-based programmes for employees in leadership roles.

The Company has also initiated a comprehensive review of its reward and recognition framework.


Indias hotel industry is on an upswing on the back of robust prospects in the domestic tourism industry, increasing foreign tourist arrivals, improving forex inflows, high demand for air travel and muted supply growth. These factors corroborated by domestic macroeconomic data suggest the road ahead will bring higher revenues and margins for the hospitality industry in the country. Growth in upscale and budget hotels, in particular is expected to be buoyant with other segments too witnessing healthy momentum.

Our focus is on delivering the best at an optimum cost. We believe in affordability with quality so we will try to keep the cost low.


The large size and nature of the business demands the Company to maintain a proper internal control system. Efforts are made by the Management to maintain a sound financial and commercial practice capable of improving the efficiency of the operation and sustainability of the business. The systems provide for adequate checks and balances; adherence to applicable statutes, accounting policies and approval procedures; and for ensuring optimum use of available resources. The system are regularly reviewed and improved upon.

The Audit Committee of the Board of Directors, Statutory Auditors and the Business Heads are periodically apprised of the internal audit findings and corrective actions taken. Audit plays a key role in providing assurance to the Board of Directors. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee.


Statements in the Managements Discussion and Analysis report describing the Companys projection, estimates, expectations or predictions may be forward-looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that would make a difference to the Companys operations include demand supply conditions, raw material prices, change in governmental regulations, tax regimes, economic developments within the country and other factors such as litigation and labour negotiations.