Chalet Hotels

Chalet Hotels reported its best-ever quarter in Q3 FY25, with consolidated revenue growing 22% year-on-year to INR 4.6 billion. Consolidated EBITDA increased 23% year-on-year to INR 2.1 billion, achieving a strong EBITDA margin of 45.5%. The company's Profit After Tax (PAT) for the quarter was INR 965 million, marking a 37% year-on-year growth. For the nine months ended December 31, 2024, the consolidated EBITDA stood at INR 5.2 billion.

The Hospitality segment recorded a robust 17% year-on-year revenue growth, reaching INR 4 billion. Average Room Rates (ADR) surged 18% to almost INR 13,000, while occupancy remained stable at 70%. This resulted in a 16% increase in RevPAR to INR 9,000. On a like-to-like basis, excluding newly acquired hotels, RevPAR grew by 17% with 71% occupancy. The segment's EBITDA margin was 46.1%, attributed to effective cost control strategies.

The annuity portfolio demonstrated rapid growth, with revenue surging 92% year-on-year to INR 577 million. The segment achieved an EBITDA of INR 455 million, translating to an impressive 79% margin. Management noted significant leasing momentum, securing an additional 400,000 square feet in the quarter, and expects to reach the full potential of its commercial inventory within a couple of quarters, targeting an annualized exit run rate of INR 400 crores with 90% EBITDA flow-through.

In the residential real estate segment, Chalet maintained strong sales velocity and rates, selling 18 apartments in the quarter at an average rate of approximately INR 22,000 per square foot. The company has 50 unsold units, primarily in new towers, which are expected to be sold over the next few quarters. Overall collections for the nine months stood at INR 2.9 billion, with outstanding receivables of INR 4 billion as of December 31, 2024. Revenue recognition for 60-70 apartments in Koramangala is anticipated in Q4 FY25.

The phased opening of The Dukes Retreat continues, with 73 rooms, a restaurant, a bar, and a pool already operational, and full completion expected by end of Q1 FY26. Renovations at Four Points By Sheraton Navi Mumbai are progressing, targeting completion by July 2025. New inventory at Marriott Bengaluru is being released and will be fully operational by end of February/early March. The Taj at Terminal 3 Delhi International Airport is expected to open in Q2 FY27. New projects at Airoli, Varca, Goa, and Powai Cignus 2 are advancing as planned, with Powai Phase 2 having a balance capex of INR 600 crores for the next three quarters. The Kerala project (150-room hotel with convention center) is also moving forward, with an indicative capex of INR 1.4 crores per key.

Chalet Hotels spent INR 4.8 billion on capex and land acquisitions during the first nine months of FY25. The company has a current plan for capital expenditure of approximately INR 20 billion over the next three years, which will be largely funded through internal accruals. Net debt as of December 31, 2024, was INR 15.8 billion, with an average cost of finance at 8.53%, a 34 bps reduction from March '24. Management expects peak debt not to exceed INR 19-20 billion, demonstrating a comfortable balance sheet position.

The company remains optimistic about the next few years, citing robust corporate travel, a growing MICE segment, and vibrant leisure and wedding markets. The opening of new major airports in Mumbai and Delhi is expected to significantly boost passenger capacity and foreign travel. Management anticipates double-digit RevPAR growth for its existing portfolio and structural growth in 'new-age cities' like Bengaluru and Hyderabad, where supply remains muted. The total operating rooms are expected to reach close to 5,000 in a few quarters.