Chalet Hotels Limited — Q2 FY26 earnings call

Call held 5 Nov 2025

Management summary

Chalet Hotels reported a strong Q2 FY26, with significant revenue and EBITDA growth driven by both hospitality and commercial real estate segments. The company launched its new premium lifestyle brand, Athiva Hotels & Resorts, and declared its maiden interim dividend. Despite some weather-related disruptions and new inventory ramp-up impacting occupancy, management remains optimistic for a robust second half, supported by strategic capital allocation and ongoing development projects.

Highlights

  • Consolidated Revenue surged 94% YoY to INR7.4 billion.

  • Consolidated EBITDA grew 98% YoY to INR3.1 billion, with margins expanding by 75 bps to 41.4%.

  • Hospitality revenue grew 13% YoY to INR3.8 billion, driven by 16% growth in average room rates (ADR).

  • Hospitality EBITDA grew 10% to INR1.5 billion, with occupancy at 67% (down 7 percentage points YoY).

  • Commercial Real Estate revenue rose 76% YoY to INR738 million, with EBITDA growing 88% to INR607 million (82.3% margin).

  • Interim dividend of INR1 per share declared, reflecting commitment to shareholder value.

  • Net debt stood at INR20.9 billion, with average cost of finance at 7.62% (contracted by 38 bps QoQ).

  • Launched new premium lifestyle brand, Athiva Hotels & Resorts, with 5 additional properties identified for transition.

Key financials

  1. Consolidated Revenue 7.4 Bn +94%YoY
  2. Consolidated EBITDA 3.1 Bn +98%YoY
  3. Consolidated EBITDA Margin 41.4%
  4. Core Revenue (ex-residential) 4.6 Bn +20%YoY
  5. Core EBITDA (ex-residential) 2 Bn +25%YoY
  6. Core EBITDA Margin (ex-residential) 43.4%

What they filed

Q1 FY27: revenue down 42.8%, net profit down 57.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue377 458 522 895 735 +95%582 +27%558 +7%512 −43%
EBITDA150 205 241 357 299 +99%265 +29%266 +10%234 −34%
Net profit-139 97 124 203 155 +212%124 +28%163 +31%86 −58%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

SegmentRevenueEBITDAOccupancyEBITDA Margin
Hospitality Segment3.8 Bn1.5 Bn67%40%
Commercial Real Estate Business738 Bn607 Bn77%82.3%
Residential Project (Vivarea)————

Capital allocation

high confidence
  • Capex ₹6.6 Bn this quarter · ₹25 Bn (next 3 years) planned primarily funded through our internal accruals
    • Development of 2 Goa properties, DIAL pending work, The Dukes, Hyatt in Airoli
    • Finishing Phase 4 commercial in Powai
    • Refurbishment for all other hotels
    Under our current strategy, we have planned capex of INR25 billion over the next 3 years, primarily funded through our internal accruals. The company's balance sheet continues to provide the financial muscle necessary to pursue potential strategic opportunities in the future. (Page 5) ...capital work in progress and the assets pending operationalization amounted to INR6.6 billion at the close of the quarter. (Page 5) ...this is spread through 2 of the Goa properties, the DIAL pending work, which we are doing, The Dukes, which probably will be handing over in the coming quarter and the Hyatt in Airoli. (Page 14) ...we will be finishing the Phase 4 commercial in Powai by next year, and there is a refurbishment for all the other hotels. (Page 16)
  • Debt Net ₹20.9 Bn Cost 7.6%
    • Repayment Repaid preference share capital from promoters ₹2 Bn
    • Repayment Promoters' earlier ICD also paid off in earlier 2 quarters
    • New borrowing Maiden issuance of commercial paper at 6.1% coupon, rated A1+ by CRISIL ₹1 Bn
    On net debt, our net debt stood at INR20.9 billion with the average cost of finance contracting by 38 bps quarter-on-quarter to 7.62%. (Page 6)
  • Dividend ₹1/share (interim)
    Marking another key milestone in our growth journey, I'm pleased to share that the Board has declared an interim dividend of INR1 per share. (Page 5)
  • Liquidity Cash ₹2.9 Bn Maintained a healthy liquidity position.
    We maintained a healthy liquidity position of INR2.9 billion at the end of the quarter. (Page 6)

Guidance & targets

Capacity

  • Opening of Delhi Airport Hotel Capacity · H1 FY27 · High confidence H1 FY27
    construction at our upcoming Delhi Airport hotel is progressing on schedule with the opening expected in the first half of next financial year.

    — Shwetank Singh

  • Completion of Cignus 2 (Westin Powai Lake) Capacity · Q4 FY27 · High confidence Q4 FY27
    Our second commercial tower - Cignus 2 at Westin Powai Lake is also on track for completion in Q4 FY27.

    — Shwetank Singh

  • Construction commencement for Varca, Goa property Capacity · Q4 FY26 · Medium confidence Q4 FY26
    For our property in Varca, Goa, we still await the final approvals and aim to commence construction in Q4 of the current financial year.

    — Shwetank Singh

  • Full impact of Khandala 147 rooms Capacity · Q4 FY26 · High confidence Full impact
    Yes, Q4 will have the full impact.

    — Shwetank Singh

  • Navi Mumbai Hotel Rooms Capacity · High confidence Over 270-odd rooms
    we have a substantial inventory coming up. I think it's over 270-odd rooms that we are expecting to come in that hotel.

    — Shwetank Singh

Profitability

  • Athiva (Dukes Retreat) Occupancy and Margins Profitability · 3 to 4 quarters · Medium confidence Mid-60s occupancy, high margins
    We do expect that in about 3 to 4 quarters time, it would have reached stable occupancies of the mid-60s, and the margins should be high.

    — Sanjay Sethi

Occupancy

  • Overall Occupancy Levels Occupancy · Second half of the year · Medium confidence Back to past levels, robust and strong
    I can assure you that the second half is going to be robust and strong, and we should be back to the occupancies that we've been delivering in the past.

    — Sanjay Sethi

Revenue

  • Commercial Real Estate Monthly Rental Run Rate (Cignus 1) Revenue · Exit of March · High confidence INR30 crores per month

    From INR24.5 crores per month today

    From my earlier statement, exit of March, we are still expected to exit at INR30 crores per month rental. Currently, it is at INR24.5 crores per month.

    — Nitin Khanna

Approvals

  • Airoli Project Approvals Approvals · Next 2 to 3 months · Medium confidence Come through
    we expect over the next 2 months to 3 months for Airoli approvals to come through.

    — Shwetank Singh

Bookings

  • Wedding Season Bookings Bookings · Q3 and Q4 · High confidence Extremely buoyant / Strong bookings
    The coming quarter, which is quarter 3, is looking extremely buoyant with that. We see very good signs at the moment with strong bookings in our books. And even Q4 seems to be pacing extremely well with that.

    — Gaurav Singh

What to watch in Q3 FY26

Delhi Airport hotel opening

H1 FY27
Current Under construction, progressing on schedule
Target Opening in H1 FY27

Why it matters

Significant new asset, will contribute to revenue and market presence.

construction at our upcoming Delhi Airport hotel is progressing on schedule with the opening expected in the first half of next financial year.

Risks & concerns

  • Geopolitical tensions and tariff wars impacting travel sentiment

    medium

    Uncertainty from tariff wars and geopolitical tensions, especially in the Middle East, affected travel sentiment.

    Management acknowledged

  • Weather-related disruptions impacting resorts and occupancy

    medium

    Long spells of heavy rainfall and adverse weather conditions, particularly in the North, impacted travel patterns and resort occupancy.

    Management acknowledged

  • Impact of new inventory and competition on occupancy and banquet business

    medium

    Gradual ramp-up of newly added inventory (e.g., Bengaluru Marriott) and new supply in markets (e.g., Sahar) led to occupancy dips and increased competition in banquet business.

    Management acknowledged

  • Transitory margin contraction due to new assets in ramp-up phase

    low

    Margin contraction in Q2 was due to the transitory impact of newly added assets and resorts in ramp-up, with associated payroll costs before full revenue actualization.

    Management acknowledged

  • Muted leasing activity in commercial real estate

    low

    Leasing activity was muted due to ongoing discussions with key accounts, with management prioritizing quality over pace in tenant selection.

    Management acknowledged

Q&A highlights

7 direct
Athiva rebranding impact on occupancy, ARR, and margins Direct
We do expect that in about 3 to 4 quarters time, it would have reached stable occupancies of the mid-60s, and the margins should be high. On the sales and marketing front, we don't expect any material change in this.

Clarifies the expected ramp-up and financial impact of the new brand, indicating stability within a year.

Asked by Vikas Ahuja

Occupancy recovery for new properties and medium-term steady-state levels Partial
I can assure you that the second half is going to be robust and strong, and we should be back to the occupancies that we've been delivering in the past. This is a 1 or 2 quarter blip on account of new inventory addition.

Addresses concerns about recent occupancy dip due to new inventory and provides a positive outlook for recovery in the near term.

Asked by Vikas Ahuja

Commercial real estate lease revenues and full occupancy timeline for Cignus 1 Direct
From my earlier statement, exit of March, we are still expected to exit at INR30 crores per month rental. Currently, it is at INR24.5 crores per month.

Provides specific financial targets and timeline for the commercial segment's rental income, highlighting the gap to full potential.

Asked by Vikas Ahuja

Athiva brand strategy and potential for asset-light management contracts Direct
at the moment, we don't have any timeline in mind. I don't think it's imminent. But what we've done is we've created a springboard for an asset-light business at some point of time, sometime in the future.

Reveals long-term strategic optionality for the new brand beyond owned assets, suggesting future growth avenues.

Asked by Dipak Saha

Resort portfolio performance (Himalayas) and H2 outlook Direct
It was driven by... very adverse weather conditions, particularly in the Himalayas, we were 57% higher rainfall than long-term average... Second half of the year is very strong... we do expect it to be really strong, both on occupancy and ADR.

Explains the reasons for past underperformance in resorts and provides a strong positive outlook for the upcoming quarters.

Asked by Dipak Saha

Athiva brand positioning and comparable hotels Direct
we'll be akin to the Marriott within the Marriott portfolio, the Taj in the Taj portfolio, the Hyatt Regency in the Hyatt Regency portfolio, the Hilton in the Hilton portfolio. So that's our positioning, which is 5-star and 5-star Deluxe.

Provides clarity on the competitive positioning and target market for the new Athiva brand, benchmarking it against established luxury brands.

Asked by Abhay Khaitan

Airoli and Kerala project updates, including approval timelines Direct
on Airoli, there's been definite positive movement. The Supreme Court order has come through... we expect over the next 2 months to 3 months for Airoli approvals to come through... With respect to Trivandrum, the file is making its movement through the corridors of the government.

Gives specific updates and timelines for key development projects, indicating progress on previously stalled initiatives.

Asked by Vaibhav Muley

Margin contraction reasons (payroll, new rooms) and expected recovery Direct
this has been the real impact on the payroll because while the teams have been hired and they have been trained and then put on the job, we have not started to actualize revenues from these rooms... As we stabilize our occupancies... this payroll margin will fall back in place and so will the margins on the whole.

Explains the temporary nature of margin pressure due to new asset ramp-up and outlines the path to recovery as occupancies stabilize.

Asked by Pratik Oza

3 min read 7 chapters

Detailed narrative

Launch of Athiva Hotels & Resorts and Brand Evolution

Chalet Hotels launched its new premium lifestyle brand, Athiva Hotels & Resorts, built on pillars of joy, wellness, and sustainability, marking an evolution towards an integrated brand-led hospitality platform. The iconic 'The Dukes Retreat' in Khandala has been relaunched as Athiva Resorts & Spa Khandala with 147 rooms. The company has identified five additional properties with 900 keys for transition into Athiva over the next few years. Management anticipates stable occupancies in the mid-60s and high margins for Athiva within 3-4 quarters, positioning it as a 5-star and 5-star Deluxe brand akin to Marriott, Taj, and Hyatt Regency.

Strong Q2 FY26 Consolidated Financial Performance

Chalet Hotels reported a robust Q2 FY26, with consolidated revenue surging 94% year-on-year to INR7.4 billion. Consolidated EBITDA grew by 98% year-on-year to INR3.1 billion, leading to a 75 basis points expansion in margins to 41.4%. Excluding the residential project, the core hospitality and commercial businesses demonstrated strong double-digit growth, with revenues up 20% year-on-year to INR4.6 billion and EBITDAs up 25% year-on-year to INR2 billion, achieving a robust margin of 43.4%.

Hospitality Segment Performance and Headwinds

The hospitality segment's revenue increased 13% year-on-year to INR3.8 billion, primarily driven by a 16% growth in average room rates (ADR) to INR12,170. However, occupancy declined by 7 percentage points year-on-year to 67%, resulting in a 5% RevPAR growth to INR8,115. This performance was impacted by disruptive weather conditions, particularly in the Himalayas, and the ramp-up of newly added inventory at Bengaluru Marriott Hotel and seasonal softness at Westin Resort & Spa Himalayas. Despite these challenges, segment EBITDA grew 10% to INR1.5 billion, with margins at 40%.

Robust Commercial Real Estate and Residential Project Contributions

The commercial real estate business demonstrated strong growth, with revenue rising 76% year-on-year to INR738 million and EBITDA growing 88% to INR607 million, achieving an impressive 82.3% EBITDA margin. Occupancy across the commercial portfolio stood at 77%, with committed occupancy at 79%, and a September exit run rate of INR245 million per month. The residential project, Vivarea in Bangalore, recognized INR2.8 billion in revenue from the sale of 55 apartments during the quarter at an average rate of INR21,300 per square foot. Cumulatively, 314 out of 321 units have been sold, generating INR1.3 billion in cash flows from collections this quarter.

Strategic Capital Allocation and Debt Management

Chalet Hotels plans a capex of INR25 billion over the next three years, primarily funded through internal accruals, with INR6.6 billion in capital work in progress and assets pending operationalization at quarter-end. The company's net debt stood at INR20.9 billion, and the average cost of finance contracted by 38 basis points quarter-on-quarter to 7.62%. INR2 billion of preference share capital from promoters was repaid, and INR1 billion was raised through a maiden commercial paper issuance at a 6.1% coupon. ICRA upgraded the credit ratings for Chalet Hotels from A+ to AA- stable for long-term credit, reflecting strong balance sheet and access to competitive capital.

Development Pipeline and Future Growth Initiatives

The Delhi Airport hotel construction is on schedule, with opening expected in H1 FY27. The second commercial tower, Cignus 2 at Westin Powai Lake, is on track for completion in Q4 FY27. For the Varca, Goa property, the company aims to commence construction in Q4 FY26, pending final approvals. The Airoli project has seen positive movement with Supreme Court orders, and approvals are expected within the next 2-3 months. The Navi Mumbai hotel is expected to have over 270 rooms, with management optimistic about the market's favorability.

ESG Initiatives and Shareholder Value Creation

Chalet Hotels launched its ESG initiative, 'Parivartan', and successfully achieved 100% electric vehicles and EV charging stations in all operating assets by September 2025, ahead of its target date. The company demonstrated its commitment to shareholder value by declaring its maiden interim dividend of INR1 per share. Management expressed strong optimism for a robust operating performance in the second half of the year, anticipating continued growth driven by festive and holiday seasons, increased domestic travel, and the commencement of the MICE season.

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