The Indian Hotels Company Limited — Q3 FY25 earnings call

Call held 17 Jan 2025

Management summary

Indian Hotels Co reported a record-breaking Q3 FY25, with consolidated revenue growing 29% to INR 2,592 crores and EBITDA crossing INR 1,000 crores for the first time. PAT reached an all-time high of INR 582 crores, driven by strong RevPAR growth of 13% and strategic initiatives. The company continued its aggressive expansion, signing 20 and opening 8 new hotels in the quarter, while new businesses like Ginger and Qmin showed significant growth and margin improvement.

Highlights

  • For the very first time in history, the quarterly EBITDA of IHCL crossed INR 1,000 crores.

  • IHCL delivered record performance in Q3 with 29% revenue growth and 80 basis points margin expansion over the same period last year.

  • Our reported profit after tax stood at INR582 crores, highest ever quarterly PAT in IHCL's history.

  • IHCL delivered 13% consolidated RevPAR growth on a domestic like-for-like basis.

  • In Q3, we signed 20 hotels and opened 8 new hotels.

Concerns

  • London market is softer due to new supply, creating a double impact for the company.

  • San Francisco market was struggling due to labor strikes, though it is now improving.

Key financials

  1. Consolidated Revenue ₹2,592 Cr +29%YoY
  2. Consolidated EBITDA Margin 39.4%
  3. Consolidated PAT ₹582 Cr
  4. Consolidated RevPAR Growth 13%

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.

Segment breakdown

  • Hotel Segment
    16% Revenue Growth40.9% EBITDA Margin
  • Standalone Performance
    ₹1,517 Cr Revenue47.8% EBITDA Margin₹469 Cr PAT
  • New Businesses Vertical
    40% Revenue Growth
  • Ginger (Consolidated)
    ₹157 Cr Revenue45% EBITDA Margin
  • Qmin (GMV)
    ₹150 Cr GMV

Capital allocation

medium confidence
  • M&A Tree of Life Acquisition · Completed

    Added to the new businesses portfolio

    As of this month, we have also completed the acquisition of Tree of Life, which will get added to the new businesses portfolio.

Guidance & targets

Revenue & Profitability

  • Q4 Performance Revenue & Profitability · Q4 FY25 · High confidence similar line as Q3
    we find that the Q4 is also expected to be in similar line as Q3, whether it comes on a top line growth or other metrics.

    — Puneet Chhatwal

Revenue

  • Overall Growth Revenue · FY25 · High confidence double-digit growth
    we are confident of definitely delivering on the double-digit growth that we have promised and guided the market on from the previous year.

    — Puneet Chhatwal

  • Domestic RevPAR Growth Revenue · Q4 FY25 · Medium confidence high single-digit to low double-digit
    I think the same trend which we saw in Q3 in terms of high single-digit to low double-digit kind of growth on RevPAR, which is what we did in Q3. That trend on the domestic market should hold up.

    — Ankur Dalwani

Capacity

  • Hotel Openings Capacity · FY25 · High confidence 25 hotels
    we are well on track to achieve our committed target of opening 25 hotels in the current financial year

    — Puneet Chhatwal

  • Hotel Openings Capacity · FY26 · High confidence 30 hotels
    which we have also guided would go up to 30 hotels as of the following financial year.

    — Puneet Chhatwal

Sustainability

  • Energy from Renewable Sources Sustainability · by 2030 · High confidence 50%
    IHCL now uses 37% energy from renewable sources... We have given the guidance of 50% as a source for renewable energy by 2030

    — Puneet Chhatwal

  • Recycled Water Use Sustainability · by 2030 · High confidence 100%
    recycles 48% of water... and 100% use of recycled water by then by 2030.

    — Puneet Chhatwal

Profitability

  • Ginger EBITDA Margin Profitability · Ongoing · Medium confidence north of 50%
    We have guided previously that we expect Lean Luxe and New Ginger's to keep performing at north of 50%.

    — Puneet Chhatwal

Customer Base

  • Tata Neu Loyalty Members Customer Base · very quickly · Medium confidence 10 million
    And we have 8 million, we expect to get to very quickly to 10 million once we have that it becomes the largest program.

    — Puneet Chhatwal

What to watch in Q4 FY25

Sea Rock Construction Commencement

H2 FY25
Current IOD received, CC pending, height approval partially received.
Target Construction commences.

Why it matters

Signals progress on a major project that will add significant capacity and revenue potential.

basically, we think that we have got very close so that construction could commence in the second half of this year.

Risks & concerns

  • Softness in London market due to new supply

    medium

    London market is softer with a lot of new supply, but IHCL is holding ground due to brand equity.

    Management acknowledged

  • Past struggles in San Francisco market (labor strike)

    low

    San Francisco market was impacted by labor strikes but is now settling down and improving.

    Management improving

Q&A highlights

7 direct
Standalone Occupancy vs. ARR Growth Direct
78% occupancy is very high. It is good that it has not gone down. If it's -- if we operate at 78 to 79 or 80, the only thing that happens is the rates will keep going up.

Clarifies management's strategy to prioritize ARR growth over pushing occupancy beyond optimal levels, indicating pricing power.

Asked by Meet Jain

Outlook for FY26 and Demand Sustainability Direct
the supply is not going to catch up that first with the demand. So even if demand softens a bit, still, it will continue to outpace supply.

Provides a positive long-term demand outlook, suggesting sustained growth even if there are minor demand fluctuations.

Asked by Prateek Kumar

Pricing Power and RevPAR Growth Sustainability Direct
the pricing today is actually not sufficient to attract greenfield sort of capacity land acquisition... on a dollar per room night basis, we continue to be lower than even what we were 15 years back or 16 years back.

Indicates that current high pricing is still below historical peaks in real terms and not yet sufficient to trigger significant new supply, supporting continued RevPAR growth.

Asked by Achal Kumar

Sea Rock Project Update Partial
We have received one of the most important permission, which is called IOD, Intimation Of Disapproval. We have received that. Now the last permission that is left is the CC, which is the Commencement Certificate... basically, we think that we have got very close so that construction could commence in the second half of this year.

Provides a concrete timeline and progress update on a long-pending, high-value project, indicating potential future revenue streams.

Asked by Shaleen Kumar

US and UK Subsidiary Performance Outlook Direct
San Francisco, which was struggling as a city... It seems that it has settled down now, and things will start improving... London is -- has a double impact for us. One, the market is a bit softer, as we have all read. There is a lot of new supply that has gone into London. We've still been able to hold ground because we have very strong brand equity.

Gives a nuanced view of international market conditions, highlighting both challenges (London supply, past SF issues) and resilience due to brand strength.

Asked by Rahul Jain

Vivanta Portfolio Churning and Operational Rooms Decline Direct
We have had two hotels where a lot of investment has gone in and they have been upgraded to Taj. One is Surajkund the other Srinagar... And also properties like Devi Ratan in Jaipur, I might say, although it was not Vivanta, it was in the right Selections.

Explains the apparent decline in Vivanta rooms as a strategic upgrade of properties to the higher-tier Taj brand, indicating portfolio premiumization.

Asked by Amit Kadam

"Other Fees" of INR 10 Crores Direct
this other fee is basically pertains to it's also operating fee, which is basically coming from brand free... we had announced a branded residence project, so we're starting to earn fee on that as well as technical fee, which we have earned from new signings.

Clarifies a new revenue stream from brand fees, technical fees, and branded residence projects, indicating diversification of income.

Asked by Amit Kadam

Loyalty Program Growth and Repeat Customers Direct
And we have 8 million, we expect to get to very quickly to 10 million once we have that it becomes the largest program. It's a very strong program on the domestic front.

Highlights the significant scale and growth of the loyalty program, which is a key driver for repeat business and revenue contribution (40% of enterprise revenue).

Asked by Achal Kumar

2 min read 7 chapters

Detailed narrative

Record Financial Performance in Q3 FY25

Indian Hotels Co achieved its highest ever quarterly EBITDA, crossing INR 1,000 crores, and a record PAT of INR 582 crores. Consolidated revenue grew by 29% year-on-year to INR 2,592 crores, with EBITDA margin expanding by 80 basis points to 39.4%. The hotel segment alone saw 16% revenue growth and a 230 basis point EBITDA margin expansion to 40.9%.

Strong RevPAR Growth and Premium Positioning

The company reported a 13% consolidated RevPAR growth on a domestic like-for-like basis, maintaining a 78% premium over the industry average in the Indian market. Management emphasized prioritizing ARR growth over pushing occupancy beyond optimal levels (78-80%), indicating strong pricing power and a focus on revenue quality. This strategy is supported by the belief that current pricing is still below historical peaks in real terms and not yet sufficient to trigger significant new supply.

Aggressive Expansion and Portfolio Growth

IHCL continued its robust expansion, signing 20 new hotels and opening 8 in Q3 FY25. For the current financial year (April-December), 55 hotels have been signed and 20 opened, contributing to a total portfolio of 360 hotels and an industry-leading pipeline of 123 hotels as of December 31, 2024. The company targets opening 25 hotels in FY25 and 30 in FY26, demonstrating a clear growth trajectory.

New Businesses Momentum and Diversification

The new businesses vertical, including Reimagined Ginger, Qmin, and amã Stays & Trails, delivered a 40% top-line growth in Q3. Ginger's consolidated revenue grew 43% year-on-year to INR 157 crores, with EBITDA margin expanding by 200 basis points to 45%. Qmin's Gross Merchandise Value (GMV) crossed INR 150 crores, and amã Stays & Trails reached 250 bungalows in its portfolio, highlighting successful diversification efforts.

Digital Transformation and Sustainability Initiatives

IHCL is committed to digital transformation, launching redesigned websites for Taj Hotels and amã Stays & Trails, with Ginger and Vivanta sites to follow. The Tata Neu loyalty platform now boasts 8 million members, contributing 40% to enterprise revenue. On sustainability, IHCL uses 37% renewable energy and recycles 48% of water, targeting 50% renewable energy and 100% recycled water by 2030.

Strategic Asset Management and Key Project Updates

The company continues to invest in asset management, including renovations at properties like Taj Mansingh and Holiday Village, and strategic upgrades of Vivanta hotels to the Taj brand, explaining a decline in Vivanta rooms. The long-pending Sea Rock project received the Intimation Of Disapproval (IOD) and is awaiting the Commencement Certificate (CC), with construction expected to begin in the second half of the year.

International Market Performance and Outlook

The international consolidated portfolio reported double-digit revenue growth, driven by strong performance at The Pierre in New York. While San Francisco's market is improving after past labor strikes, London faces softness due to new supply. However, IHCL expects to hold its ground in London due to strong brand equity and ongoing asset upgrades, maintaining a positive outlook for its international operations.

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