Detailed Narrative
Strong FY26 Performance Despite Q4 Headwinds
Chalet Hotels achieved a milestone year in FY26, with consolidated revenue crossing INR25 billion and EBITDA exceeding INR10 billion. Ex-residential revenue grew 18% YoY to INR20,741 million, and EBITDA increased 21% YoY to INR9,573 million, with margins improving by 97 bps to 46.2%. However, Q4 FY26 saw a 3% YoY decline in RevPAR, primarily due to a 7.7 percentage point drop in occupancy, influenced by Mumbai's underperformance and geopolitical tensions in West Asia.
Hospitality Segment Dynamics and Challenges
For FY26, hospitality revenue grew 14% YoY to INR17,311 million, with EBITDA up 12% to INR7,603 million. Q4 hospitality revenue grew 3% YoY to INR4,740 million, but EBITDA margin declined by 102 bps to 47.4%, attributed to portfolio mix and the early stabilization stage of resort assets, which had an average occupancy of around 43% for the year. The Mumbai market specifically saw ADR growth of only 0-2% and occupancy decline of 0-2 percentage points in Q4, contrasting with India's overall ADR growth of 6-8%.
Robust Commercial Real Estate Growth and Outlook
The Commercial Real Estate (CRE) segment continued its strong performance, with FY26 revenue growing 55% YoY to INR3,061 million and EBITDA up 65% YoY to INR2,544 million, achieving an 83.1% EBITDA margin. For Q4, CRE revenue grew 37% YoY to INR847 million, with EBITDA up 42% to INR708 million. The monthly rental exit run rate reached INR280 million in March 2026 and is expected to scale up to INR300 million in FY27, with significant growth anticipated from the commissioning of CIGNUS II in FY28.
Strategic Pipeline Expansion and Acquisitions
Chalet Hotels expanded its pipeline by adding two major projects, increasing total key count to over 5,000 (3,389 operating + 1,655 pipeline). This includes the acquisition of Udaipur Resort for INR1,710 million (144 keys) and a new ultra-luxury 330-key Ritz-Carlton hotel in Hyderabad, with a fit-out cost of INR5,600 million, expected to launch by FY28-29. The company also plans to launch 70 rooms at the Taj project at Delhi International Airport by Q4 FY27.
Disciplined Capital Allocation and Strong Balance Sheet
Over the last two years, Chalet deployed INR19 billion towards growth capex and acquisitions, with INR15 billion funded through internal accruals. Net debt reduced from INR25 billion in March 2024 to INR19 billion in March 2026, and the average cost of finance remained stable at 7.48%. The company has outlined a planned capex of INR30 billion for FY27-29, largely to be funded by internal accruals, maintaining a cash buffer of around INR4 billion.
Sustainability Achievements
Chalet Hotels demonstrated strong commitment to sustainability, with its corporate sustainability assessment score by Dow Jones Sustainability Index jumping from 67 to 82, placing it second globally among hospitality peers. The company also increased its green energy consumption to 65%, highlighting its focus on sustainable growth.
Market Outlook and Demand Drivers
Management expressed confidence in the domestic hospitality sector's strength, driven by rising disposable incomes, improved infrastructure, and a favorable demand-supply gap. While Q4 saw a dip in foreign tourist arrivals due to geopolitical tensions (9,000 room nights lost in March), domestic leisure demand remains strong, and a recovery in international travel is expected as tensions subside, with April and May showing improved trends.