The Indian Hotels Company Limited — Q1 FY26 earnings call

Call held 17 Jul 2025

Management summary

Indian Hotels Co continued its strong performance in Q1 FY26, achieving record revenue and EBITDA growth despite industry headwinds and geopolitical tensions. The company saw significant expansion in its portfolio, robust growth in management fees and new businesses, and maintained strong brand recognition. Strategic capital allocation and digital initiatives are underway, with a positive outlook for the remainder of the year.

Highlights

  • Consolidated revenue grew 32% year-on-year to INR2,102 crores.

  • Consolidated EBITDA grew 29% year-on-year to INR637 crores, yielding EBITDA margin of 30.3%.

  • Taj is rated again as world's strongest hotel brand (4th time) and India's strongest brand across all sectors (5th time) by Brand Finance.

  • 12 hotels signed and 6 hotels opened in Q1 FY26, expanding the portfolio to near 400-plus hotels.

  • Management fees grew 17% from INR114 crores last year to INR133 crores, and the new businesses vertical (Ginger, Qmin, amã Stays & Trails, Tree of Life) showed strong growth of 27% year-on-year.

  • Gross cash reserves of over INR3,050 crores support reinvestment in capex and greenfield projects.

  • Loyalty members crossed 11 million, with app revenue growing 46% and points earning revenue growing 17% to INR545 crores.

Concerns

  • The Indian hospitality sector faced multiple headwinds in Q1, including geopolitical tensions, airspace closures, and disrupted flight routes, leading to numerous hotel cancellations.

  • An additional impact of change in payroll increment cycle (from July 1 to April 1) affected hotel segment margins.

  • Two major assets, Taj Palace in Delhi and Fort Aguada in Goa, are undergoing significant renovations, impacting RevPAR calculations for the quarter.

  • July had a high base effect due to five auspicious wedding dates last year, potentially affecting YoY comparisons for Q2.

Key financials

  1. Consolidated Revenue ₹2,102 Cr +32%YoY
  2. Consolidated EBITDA ₹637 Cr +29%YoY
  3. Consolidated EBITDA Margin 30.3%
  4. Consolidated PAT ₹296 Cr +19%YoY
  5. Hotel Segment Revenue Growth — +14%YoY
  6. Hotel Segment EBITDA Growth — +15%YoY
  7. Hotel Segment Margin Expansion 30 bps
  8. Standalone Revenue ₹1,099 Cr +13%YoY
  9. Standalone EBITDA Margin 38%
  10. Standalone PAT Margin 22.2%
  11. Management Fees ₹133 Cr +17%YoY
  12. New Businesses Vertical Growth — +27%YoY
  13. Domestic Hotels RevPAR Growth (like-for-like) — +11%YoY
  14. Owned International Hotels RevPAR Growth — +13%YoY
  15. US Hotels RevPAR Growth — +18%YoY
  16. Loyalty App Revenue Growth — +46%YoY
  17. Points Earning Revenue ₹545 Cr +17%YoY
  18. Payroll Increment Impact ₹11 Cr

What they filed

Q1 FY27: revenue up 14.6%, net profit up 18.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,826 2,533 2,425 2,041 2,041 +12%2,842 +12%2,765 +14%2,339 +15%
EBITDA501 962 857 576 570 +14%1,076 +12%973 +14%673 +17%
Net profit583 633 563 329 318 −45%954 +51%645 +15%391 +19%
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.

Capital allocation

high confidence
  • Capex ₹1,200 Cr
    • Assets under construction, renovations, expansions
    • Strong digital initiatives (SAP, new ERP system)
    We expect to invest INR1,200 crores in FY '25-'26 for assets under construction, renovations, expansions, and very importantly, strong digital initiatives, which we have shared in other investor meetings and calls, be it with SAP or be it the new ERP system. (Puneet Chhatwal, Page 3)
  • Debt Debt disclosed
    As you know, we don't have -- we are net debt positive. And we have a good amount of cash, but we need cash for the construction of Sea Rock, which we call Bandstand now. (Puneet Chhatwal, Page 9)
  • M&A Under construction hotel near Kolkata Airport Acquisition · Announced

    Strengthening Ginger brand's presence in key airports, potential for asset platform creation.

    Asset purchased by Tata Group, to be operated as a revenue-based lease under Ginger brand.

    One such opportunity that was closed during the quarter is an under construction hotel near the Kolkata Airport that was jointly evaluated by IHCL and the Tata Group. The asset has been purchased by the Tata Group and on completion, will be operated as a revenue-based lease under the Ginger brand. Over time, this could potentially lead to the creation of an asset platform, which could become a big strategic enabler for IHCL. (Puneet Chhatwal, Page 5)
  • Liquidity Cash ₹3,050 Cr Gross cash reserves enable reinvestment in brand and revenue-enhancing capex.
    Our balance sheet continues to be healthy with gross cash reserves of over INR3,050 crores. This is enabling us to reinvest in brand and revenue-enhancing capex through upgradation expansions as well as investment in new greenfield projects. (Puneet Chhatwal, Page 3)

Guidance & targets

Portfolio

  • Total hotels portfolio Portfolio · July 2025 · High confidence 400-plus hotels
    we are nearing the milestone of 400-plus hotels portfolio. We remain confident of achieving this milestone during this month itself. (Puneet Chhatwal, Page 4)

    — Puneet Chhatwal

  • Total hotels portfolio Portfolio · by 2030 · High confidence 700 hotels
    our guidance under Accelerate 2030 is to have 700 hotels portfolio by 2030. (Puneet Chhatwal, Page 4)

    — Puneet Chhatwal

  • New hotel openings Portfolio · full year · High confidence 30-plus new hotels
    We are well on track to achieve our committed target of opening 30-plus new hotels. (Puneet Chhatwal, Page 5)

    — Puneet Chhatwal

Revenue

  • Airline catering business top line growth Revenue · full year · High confidence 20%
    I can't be more direct than this when I use the word extremely confident of delivering on double-digit growth for the hotel segment for the year. And despite all the turbulences in the airline sector, we still feel very confident about delivering 20% top line growth in the airline catering business for the year. (Puneet Chhatwal, Page 5)

    — Puneet Chhatwal

Capex

  • Investment Capex · FY26 · High confidence INR1,200 crores
    We expect to invest INR1,200 crores in FY '25-'26 for assets under construction, renovations, expansions, and very importantly, strong digital initiatives (Puneet Chhatwal, Page 3)

    — Puneet Chhatwal

  • Investment range Capex · next 2-3 years · Medium confidence INR1,000-1,500 crores
    I think INR1,200-odd crores this year, give and take, let's say, 10% here in both sides. And I think it's going to play out in the range of INR1,000 crores to INR1,500 crores over the next 2, 3 years. (Ankur Dalwani, Page 15)

    — Ankur Dalwani

RevPAR

  • Long-term RevPAR growth RevPAR · next 2-3 years · Medium confidence high single digit
    In our existing hotels, we've guided towards a long-term RevPAR of high single digit. (Ankur Dalwani, Page 19)

    — Ankur Dalwani

Talent

  • Youth skilling Talent · by 2030 · High confidence 100,000 youth
    Since 2020, we have trained over 31,000 youth and are well on track to reach our goal of skilling 100,000 youth by 2030. (Puneet Chhatwal, Page 5)

    — Puneet Chhatwal

Market context

  • Overall revenue growth Revenue · full year · High confidence double-digit
    As we have guided earlier that overall for the year, we remain confident of achieving double-digit revenue growth driven by continued momentum in MICE activity and high-profile diplomatic visits. (Puneet Chhatwal, Page 4)

    — Puneet Chhatwal

  • Overall revenue growth Revenue · Q2 · High confidence double-digit
    Basically, you want me to confirm to you that we'll have a double-digit growth in Q2 also, right? (Puneet Chhatwal, Page 11)

    — Puneet Chhatwal

  • RevPAR growth RevPAR · Q2 · Medium confidence strong
    And if I can add, then the momentum on the RevPAR, like it will be similar? Like can we have a strong RevPAR also coming? (Shaleen Kumar, Page 11) ... The sector is going through a good phase. Demand remains strong. (Puneet Chhatwal, Page 11)

    — Puneet Chhatwal

What to watch in Q2 FY26

Achievement of 400-plus hotels portfolio milestone

next quarter (July 2025)
Current Nearing milestone
Target Achieved

Why it matters

Indicates progress towards Accelerate 2030 targets and portfolio expansion strategy.

We remain confident of achieving this milestone during this month itself. (Puneet Chhatwal, Page 4)

Risks & concerns

  • Geopolitical tensions and their impact on demand

    medium

    Q1 demand was impacted by India-Pakistan border tensions, Operation Sindoor, Pahalgam incident, Israel-Iran conflict, airspace closures, and flight disruptions leading to hotel cancellations.

    The Indian hospitality sector faced multiple headwinds in Q1. Demand was impacted by geopolitical tensions along the India-Pakistan border, following Operation Sindoor and the unfortunate incident in Pahalgam. The impact was further compounded by the Israel-Iran conflict, which led to partial airspace closures and disrupted flight routes, resulting in numerous hotel cancellations. (Puneet Chhatwal, Page 3)

    Management acknowledged

  • Talent crunch and shortage of qualified people in the hospitality sector

    medium

    Demand came back strong, but many people left the sector during COVID, leading to a shortage of qualified personnel.

    So yes, there is indeed some kind of shortage or crunch because the demand came back very strong. And a lot of people left the sector because the fear was inculcated that if you work in a hotel or you're exposed to people, you'll get COVID. So some people permanently left the sector. (Puneet Chhatwal, Page 20)

    Management acknowledged

  • Impact of payroll increment cycle change on margins

    low

    Change in payroll increment cycle from July 1 to April 1 had an additional impact on hotel segment margins in Q1.

    hotel segment margins were sustained at 31.4% for the quarter. This was despite an additional impact of change in payroll increment cycle, which we brought up from July 1 to April 1. (Puneet Chhatwal, Page 4)

    Management acknowledged

  • High base effect for July impacting Q2 YoY comparisons

    low

    July had five auspicious wedding dates last year, creating a high base for YoY comparisons in Q2.

    Looking ahead to the remaining year, despite base effect for July, which had five auspicious wedding dates last year, overall outlook for Q2 also remains robust. (Puneet Chhatwal, Page 4)

    Management acknowledged

Q&A highlights

8 direct
Impact of major renovations on RevPAR calculation Direct
for whenever the assets are out of operation for 6 months and above, basically, they are adjusted in RevPAR, and that has always been the case. So it's not a new sort of practice.

Clarifies the methodology for RevPAR calculation during significant asset renovations (Taj Palace Delhi, Fort Aguada Goa) and confirms it's a standard practice, not a one-off adjustment.

Asked by Binay

Outlook for Q2 growth and RevPAR momentum Direct
I can't be more direct than this when I use the word extremely confident of delivering on double-digit growth for the hotel segment for the year. And despite all the turbulences in the airline sector, we still feel very confident about delivering 20% top line growth in the airline catering business for the year.

Reaffirms strong double-digit growth guidance for the hotel segment and 20% top-line growth for airline catering for the full year, indicating confidence despite Q1 headwinds and July's high base.

Asked by Binay

Strategic partnership with Tata Sons for Ginger Kolkata Airport asset and asset platform creation Direct
if we could have a platform as we would not like to invest in everything ourselves. So instead of going with the third-party investors, if the deals have good fundamentals, why not keep it within the group.

Explains the rationale behind leveraging Tata Sons for asset ownership (capital-light for IHCL, revenue share) to mitigate development risks and accelerate growth, particularly for the Ginger brand in key locations.

Asked by Shaleen Kumar

Drivers of international portfolio's strong RevPAR growth, especially in the US and London Direct
the investments over the last few years we have undertaken in London. And also our undertaking this year, we are spending another between now and March of this financial year, something to the tune of almost GBP22 million in upgrading and increasing the size of our private membership club, the Chambers, renovating the meetings.

Provides specific investment details (GBP22 million in London) and market recovery (San Francisco) as key drivers for the strong international performance, which is currently outpacing domestic growth.

Asked by Karan Khanna

Outlook for MICE and social wedding segments in H2 FY26 Direct
But on the Slide 15, you will see we have outlined certain events that are happening between now and March. And whether it's Women's World Cup Cricket or the convention facilities on AI Impact Summit, etcetera, etcetera, they're all outlined on Slide 15. So we do see a very robust second half of the year.

Highlights specific demand drivers like major sporting events, conventions, and diplomatic visits that are expected to ensure a robust second half of the fiscal year, supporting continued growth.

Asked by Karan Khanna

Reasons for the 30 bps increase in license fee growth in Q1 FY26 Direct
One is, of course, this also business model call in terms of organic growth on the Ginger side, which happens, which is largely a variable fee, but also in this quarter, there is a one-off in the numbers, which is about INR2 crores, INR2.5 crores of license fee, which was paid for a particular hotel, which was actually pertaining to past license fee, which was sort of under litigation and dispute that got paid in this quarter.

Clarifies that the higher license fee growth is a mix of organic growth from variable fees (Ginger) and a one-off settlement from a past litigation, providing transparency on a specific revenue line item.

Asked by Sumant Kumar

Outlook on the German market and the new Frankfurt property's profitability Direct
So it's 130-room property, which was very iconic in Frankfurt. And it's expected to open end of Jan. And there is enough Indian diaspora, Indian companies to give us the base business, and the rest, we'll get anyways. We have a full Germanic team out there.

Provides confidence in the Frankfurt market entry by highlighting the property's iconic status, strategic location, target customer base (Indian diaspora), and local operational team, along with complementary offerings like Chambers and Bombay Brasserie.

Asked by Achal Kumar

Impact of increased competition and new supply on ARR, particularly from new entrants Direct
In the last cycle. See, the last cycle, was limited to metros. India's landscape is changing. And in our opinion, more than 50% of the new supply is coming in Tier 2, Tier 3 or markets which don't even have any hotels at all. So that is the bigger difference on this occasion.

Addresses concerns about competitive pressure on ARR by explaining that new supply is largely directed towards underserved Tier 2/3 cities and new markets, rather than saturating existing metro markets, thus preserving pricing power.

Asked by Achal Kumar

2 min read 5 chapters

Detailed narrative

Q1 FY26 Performance and Industry Resilience

Indian Hotels Co delivered its 13th consecutive quarter of record performance in Q1 FY26, with consolidated revenue growing 32% YoY to INR2,102 crores and EBITDA increasing 29% YoY to INR637 crores, achieving a 30.3% margin. This was achieved despite significant industry headwinds, including geopolitical tensions, airspace closures, and hotel cancellations. The company's strong brand equity and diversified portfolio enabled it to outperform the industry, with hotel segment revenue and EBITDA growing 14% and 15% respectively, and standalone revenue up 13% to INR1,099 crores.

Brand Strength and Portfolio Expansion

Taj was recognized for the fifth time as India's strongest brand across all sectors and for the fourth time as the world's strongest hotel brand by Brand Finance. The company continued its aggressive portfolio expansion, signing 12 new hotels and opening 6 in Q1 FY26, bringing its total portfolio close to 400-plus hotels. IHCL is on track to achieve its Accelerate 2030 target of 700 hotels and expects to open over 30 new hotels this fiscal year, with momentum accelerating from September.

Growth in New Businesses and Management Fees

IHCL's new businesses vertical, comprising Ginger, Qmin, amã Stays & Trails, and Tree of Life, demonstrated robust growth of 27% YoY. Management fees, driven by a capital-light strategy, increased 17% from INR114 crores to INR133 crores, contributing positively to EBITDA. The company's loyalty program, Tata Neu, has seen significant traction, with membership exceeding 11 million and app revenue growing 46% YoY, underscoring the success of its digital initiatives.

Strategic Capital Allocation and International Focus

The company maintains a strong balance sheet with gross cash reserves exceeding INR3,050 crores, enabling planned investments of INR1,200 crores in FY26 for assets under construction, renovations, expansions, and digital initiatives. IHCL is exploring inorganic opportunities, including a new asset platform with Tata Group for Ginger brand expansion, such as the Kolkata Airport hotel. International hotels performed strongly, with US hotels seeing an 18% RevPAR growth, driven by investments in London and recovery in San Francisco.

Addressing Industry Challenges and Future Outlook

Management acknowledged Q1 headwinds but expressed confidence in achieving double-digit revenue growth for the full year, supported by MICE activity and diplomatic visits. The company is also targeting 20% top-line growth in its airline catering business. IHCL noted that new hotel supply is primarily directed towards Tier 2/3 cities and new markets, mitigating competitive pressure on average room rates (ARR) in key metros. The company is also addressing talent shortages through its Paathya initiative, having skilled over 31,000 youth towards a goal of 100,000 by 2030.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Consumer Services earnings calls