Royal Orchid Hotels Limited

Royal Orchid Hotels Ltd. reported a strong Q4 FY25 with revenues of ₹92.34 crores, marking a 12% year-on-year increase, and EBITDA of ₹25.52 crores, up 7%. For the full fiscal year 2025, the company achieved revenues of ₹343 crores, a 10% growth over the previous year, and a PAT of ₹47.5 crores. Full-year EBITDA grew 2% to ₹96.8 crores, with PBT rising 5.5% year-on-year. The Q4 PAT decline was attributed to a ₹2.6 crores lease renewal and a ₹6 crores deferred tax credit from the prior year.

The company added 14 hotels and 963 rooms in FY25, bringing its total portfolio to 115 hotels and 9,583 keys across 78+ destinations. Royal Orchid Hotels has set an ambitious Vision 2030 target to expand to 345 hotels and over 20,000 keys, aiming for a sustained Return on Capital Employed (ROCE) of 25%+. This growth strategy is underpinned by brand clarity, an asset-light approach, and operational efficiency.

The flagship ICONIQA hotel in Mumbai, an upscale lifestyle 5-star property near the international airport, was launched and completed in just under 12 months, significantly faster than the industry standard of 18-24 months. This hotel features 291 rooms, multiple F&B outlets, and innovative amenities like in-room dry cleaning closets. ICONIQA is projected to contribute ₹75 crores in revenue for the 9 months of FY25 and ₹100 crores for the full FY26, with an ADR target of ₹9,000.

Royal Orchid is implementing a new brand architecture with brands like Regenta Zed at the budget end and ICONIQA at the premium end. This strategy aims to cater to specific target audiences as the market matures. The company plans to grow these brands through various models, from asset-light franchises (e.g., Regenta Z, targeting 50-80 hotels quickly) to more involved management contracts, leveraging a common loyalty program and sales team for synergy.

Significant investments have been made in future-forward technologies, including AI-based guest chatbots, AI-edited wedding video solutions, and AI-enabled revenue dashboards for smarter operations. The Regenta Rewards loyalty program, launched six months ago with an investment of ₹57 lakhs, has already registered half a million users and shows 14-18% repeat usage. The platform is designed to scale with AI and aims to reduce customer acquisition costs by year-end.

The investment in ICONIQA Mumbai totaled ₹55 crores, comprising a ₹40 crores refundable deposit and ₹15 crores for operational setup. Management expects the hotel to be profitable from Q1 itself and anticipates recovering the ₹15 crores investment within the second year. The company's growth strategy emphasizes prudent investment, viewing brand development as an asset rather than just an expense, and focusing on a strong return on invested capital.

While the company's core DNA is not solely F&B, weddings are a significant focus, contributing to a healthy F&B revenue ratio. For FY25, room revenue stood at ₹182 crores, and F&B revenue at ₹125 crores, resulting in a decent 60:40 room to F&B mix. The strategy for premium properties like ICONIQA includes multiple F&B outlets, bars, and unique offerings like a rooftop day club to attract both business and leisure guests and drive repeat visits.