Pitch a hotel company in three minutes, using revenue per available room as the spine: room rate up 5%, occupancy from 70% to 74%, and 60% of costs fixed.

RevPAR rises 11%, and because 60% of costs are fixed, EBITDA rises about 26%, from Rs 450 crore to Rs 569 crore. A 5% rate rise adds Rs 54 crore with no extra cost, and four points of occupancy add Rs 65 crore after variable costs. At 18x this year the stock is 14.2x next year. The same leverage cuts the other way: occupancy back at 66% takes EBITDA down 14%.

Because it combines the two things a hotel sells, price and fullness, into one number. RevPARRevenue per available room: average room rate times occupancy, or room revenue divided by every room the hotel has, sold or not. is rate times occupancy: Rs 8,500 at 70% is Rs 5,950 per room per night. Rate and occupancy multiply, so 5% on rate and 5.7% on occupancy compound to an 11.0% rise in RevPAR. A hotel room is a train seat: once the train leaves, an empty seat earns nothing, so filling one more seat or charging a little more for each goes almost straight to the operator.

A higher rate costs nothing to deliver; a fuller hotel needs more housekeeping, laundry and breakfasts. In hotels, rate gains fall entirely to profit and occupancy gains fall almost straight to it: about 73% of the extra occupancy revenue survives variable costs. The rate rise adds Rs 54 crore of room revenue and the same Rs 54 crore of EBITDA. Occupancy adds Rs 89 crore of revenue, rooms plus food, and Rs 24 crore of variable cost, so Rs 65 crore reaches EBITDA.

Thesis in one line: little new supply is opening in Tessarine's cities, so rate and occupancy both rise, and fixed costs turn an 11% RevPAR gain into a 26% EBITDA gain. Numbers: RevPAR Rs 5,950 to Rs 6,604; EBITDA Rs 450 crore to Rs 569 crore. Valuation: 18x this year's EBITDA is 14.2x next year's, so the stock is cheaper than it looks if the RevPAR call is right. Risk: the same leverage works downward. If occupancy slipped to 66% at flat rates, EBITDA would fall to Rs 388 crore, down 14%. What would change your mind: new room supply announced in its top three cities, or corporate travel budgets cut.

Say the limit before the interviewer does. Fixed costs rarely stay perfectly flat: wage inflation of 6% on the fixed base would take about Rs 38 crore off next year's gain. The pitch survives that, which is exactly why you should say it.