Chalet Hotels

Chalet Hotels achieved its strongest financial performance to date in FY25, culminating in a record-breaking Q4. Consolidated revenue for Q4 reached INR5.4 billion, a 27% YoY increase, with EBITDA at INR2.6 billion, up 36% YoY, and an EBITDA margin of 47.8%. The hospitality segment reported an ARR of INR14,345 (up 21% YoY) and RevPAR of INR10,909 (up 21% YoY) in Q4. For the full year, hospitality revenue stood at INR15.2 billion with an all-time high EBITDA of INR6.8 billion, reflecting robust demand and operational efficiencies.

The company continued its strategic expansion with the acquisition of The Westin Resort & Spa, Himalaya, for an enterprise value of INR5.3 billion in Q4, enhancing its presence in the leisure and wellness market. Further, the Board approved a definitive term sheet to acquire 15 acres of beachfront land in Bambolim, North Goa, for a new 170-room luxury hotel, marking its second project in Goa. Chalet aims to grow its total operating and pipeline keys to 5,000 in the next year or so, demonstrating an aggressive growth trajectory.

Progress was noted across various projects, including the operationalization of 121 additional rooms at Bengaluru Marriott Whitefield, bringing its total inventory to 512 rooms. The Dukes Retreat, Khandala, is nearing completion of its upgradation, expected by H1 FY26. However, the Airoli project faced an unexpected delay due to changes in NGT regulations, which now require central government clearances for projects within a 5 km radius of national parks, pushing its start by at least six months.

The rental and annuity segment demonstrated significant growth, with Q4 revenue jumping 75% to INR619 million and an EBITDA margin of 80%. The exit run rate for March '25 was INR21 million per month. In the residential portfolio, 92% of the Koramangala project inventory has been sold, with handovers and revenue recognition expected to commence in Q1 FY26, likely by July. The company anticipates reaching over 90% committed occupancy in its rental portfolio within the next 2-3 quarters.

Chalet Hotels deployed INR11 billion on capex and strategic acquisitions in FY25, the highest in a single year, and has budgeted INR23 billion for capex over the next three years, primarily funded by internal accruals. Net debt stood at INR19.9 billion as of March '25. The company successfully allotted INR750 million in NCDs at an 8.35% coupon rate and reduced its average cost of finance to 8.4% (down 47 bps YoY). Management is committed to maintaining a net debt to EBITDA ratio below 3.5x, ideally in the 3x range.

Management expressed confidence in achieving double-digit RevPAR growth, citing strong demand-supply dynamics. The company's strategy involves diversification across geographies (including Delhi, Rishikesh, Pune, and Goa), target audience segments (aiming for 20% leisure portfolio), and asset classes (residential and office for annuity income). This multi-pronged approach is designed to mitigate risks, leverage market tailwinds, and ensure sustainable, value-accretive growth.

The company acknowledged a volatile period in May due to geopolitical developments, which resulted in May month-to-date growth trending 12% over last year but 9% below internal targets. This situation led to some MICE segment cancellations, though many were pushed forward rather than fully cancelled. Management expressed optimism for a quick recovery if the situation stabilizes, noting that domestic travel has a shorter lead time and foreign travel, particularly from the US (60% of foreign guests), could benefit from improved trade conditions.