 | « Back to article | Print this article |
Revenue from convenience fees has grown at a compound annual rate of 85 per cent for multiplex chain operator Inox Leisure and 58 per cent for PVR.
Income from convenience fees, a charge taken from customers when they book their tickets over a digital platform, has grown at a rapid pace for multiplex chains in the past four years as the share of online ticket sales has grown steadily.
It assumes significance as advertising revenue growth has been weak.
Data analysed by SBICap Securities show revenue from convenience fees has grown at a compound annual rate of 85 per cent for multiplex chain operator Inox Leisure and 58 per cent for PVR.
Anshul Agrawal, analyst with SBICap, noted: “PVR’s convenience fees have grown four times in the last three years and now accounts for four per cent of its total revenue.
"PVR has been steadfastly growing its online ticket sales, not only to gain from convenience fees but to also improve margins by reducing operational costs (employee expenses, etc).”
PVR’s income from convenience fees was Rs 33 crore in 2015-16 and Rs 130 crore in 2018-19.
At Inox, it grew in this period from Rs 8 crore to Rs 50 crore.
This has come on the back of growth in online ticketing.
Sidhharth Jain, director of Inox Leisure, said: “Almost half our tickets are sold online and this has been growing at a steady pace.
"We expect that to keep growing.”
Three years earlier, the proportion was around 30 per cent (little less than a third), he added.
Cinepolis, another major multiplex chain operator, says in metropolitican cities, the share of online ticket booking is 80-85 per cent.
Devang Sampat, its deputy chief executive, says: “There is a behavioural change in the way people book tickets.
"Five years ago, online ticketing was only 15 per cent of our overall ticket booking. Now, it is 55 per cent.”
Which means onvenience fees are becoming a significant source of revenue.
Ad revenue growth has seen some weakness with the general economic slowdown.
Financial services entity Nirmal Bang, for example, noted in its review of Inox Leisure’s second quarter (Q2) results that ad revenue had grown 5 per cent year-on-year, from 18 per cent in the first quarter (Q1).
“Ad revenue per screen stood at Rs 27 lakh in Q2 versus Rs 28 lakh in Q2 of FY19.
"There has been tightening of spending from the automobile, real estate, banking & financial services and government customers,” went its analysis.
Inox's management, however, indicated the slowdown had come mostly in volume, since it had not compromised much on pricing.
It expects ad revenue to pick up in the second half of the financial year.
As for PVR, data shows that from the March 2018 quarter to the September 2019 one, ad revenue per screen was stagnant at Rs 12 lakh (with a spike to Rs 15 lakh in the December 2018 quarter).
