Leela Palaces Hotels & Resorts Limited — Q3 FY26 earnings call

Call held 16 Jan 2026

Management summary

Leela Palaces Hotels & Resorts Limited delivered strong Q3 FY26 results, marked by robust revenue and EBITDA growth, and significant PAT expansion. The company continued to outperform the luxury industry with strong RevPAR and ADR growth, driven by strategic asset enhancements and F&B initiatives. Capital allocation focused on asset-light expansion and debt optimization, while management expressed confidence in sustained double-digit growth and market leadership.

Highlights

  • Operating revenues grew 21% YoY to ₹457 crores in Q3 FY26.

  • Operating EBITDA grew 23% YoY to ₹238 crores in Q3 FY26, with margins at 52% (61 bps improvement).

  • PAT increased significantly from ₹56 crores in Q3 FY25 to ₹148 crores in Q3 FY26.

  • RevPAR grew 20% YoY in Q3 FY26, supported by a strong 17% uplift in ADR.

  • Interest rate on term loans reduced from 9.1% to 8.25%.

Concerns

  • A one-time expense of ₹5-6 crores was incurred in Q3 FY26, impacting reported margins slightly.

Key financials

2 periods

Q3 FY26

  • Operating Revenues
    ₹457 Cr
    YoY +21%
  • Operating EBITDA
    ₹238 Cr
    YoY +23%
  • EBITDA Margin
    52%
  • PAT
    ₹148 Cr
    YoY +164%
  • RevPAR Growth
    —
    YoY +20%
  • ADR Growth
    —
    YoY +17%
  • F&B Revenue Growth
    —
    YoY +29%

9M FY26

  • Operating Revenues
    ₹1,043 Cr
    YoY +16%
  • Operating EBITDA
    ₹477 Cr
    YoY +22%
  • EBITDA Margin
    46%
  • RevPAR
    ₹15,626
    YoY +18%
  • Occupancy
    68%

What they filed

Q1 FY27: revenue up 9.7%, net profit up 74.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue87 99 112 93 102 +17%124 +25%119 +6%102 +10%
EBITDA43 45 54 43 53 +23%61 +36%63 +17%50 +16%
Net profit-2 10 36 35 73 +3750%77 +670%91 +153%61 +74%
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 Capex disclosed
    • Asset management initiatives (e.g., Jaipur repositioning, F&B upgrades) ₹450 Cr
    • Total equity investment and future CAPEX for Dubai asset $70 Mn
    • Net capital outlay for Mumbai BKC, Dubai, and Jaisalmer hotels ₹1,650 Cr
    In this quarter, we have continued our progress on strategic capital efficient growth. We have closed the Dubai transaction and now own 25% equity stake in the asset with an upcoming management contract. As a reminder, our total equity investment, including the upfront investment and the future CAPEX that we plan to do, is USD 70 million. This is expected to be fully recovered in 2 to 3 years through sale of our brand-new residences, making this effectively an asset-light investment. Furthermore, the 25% equity stake and the HMA contract is expected to generate Rs 180 crores in stabilized earnings. ... These luxury hotels will contribute to nearly Rs 340 crores of stabilized earnings on an attributable basis with a net capital outlay of only Rs 1,650 crores, making this extremely accretive. ... My first question relates to the growth investments. There was a sort of capital outlay for certain asset management initiatives outlined in the RHP that was roughly about Rs 450 crores odd which includes expansion of certain rooms, upgradation of amenities and some solar parks. What is the status on that Rs 430 crores if that's being spent, and how much of that is still remaining? ... The CAPEX that we had in the prospectus for our value drivers that already been invested, majority of it. If you see a lot of our value drivers are already operational. The Arq in Bengaluru is already operational. Delhi is getting operational in March. Chennai will get operational in April. So, most of the CAPEX has already been invested. The new restaurant in Jaipur has come in operation. Delhi, we have the conservatory which is coming in the next quarter, plus the new five rooms at Udaipur are already operational. Spa in Jaipur is operational. So, almost all the CAPEX has been spent and almost 10% is remaining that we will spend in this quarter, Sumit.
  • Debt Gross ₹1,400 Cr · Net ₹750 Cr Cost 8.3%
    • Rate reset Interest rate reduced from 9.1% to 8.25%
    During the period we further renegotiated our term loans with our bankers bringing down the interest rate from 9.1% to 8.25%. ... If I tell you on the debt position, we are right now at Rs 1,400 crores of gross debt and cash, we have around Rs 600 crores to 700 crores of cash sitting with us. So, that's the gross and net debt position.
  • M&A Dubai Asset Acquisition · Closed · Consideration ₹[object Object] (equity stake)

    Strategic capital efficient growth, asset-light investment, generate stabilized earnings

    Expected to generate Rs 180 crores in stabilized earnings, investment to be recovered in 2-3 years through villa sales.

    We have closed the Dubai transaction and now own 25% equity stake in the asset with an upcoming management contract. As a reminder, our total equity investment, including the upfront investment and the future CAPEX that we plan to do, is USD 70 million. This is expected to be fully recovered in 2 to 3 years through sale of our brand-new residences, making this effectively an asset-light investment. Furthermore, the 25% equity stake and the HMA contract is expected to generate Rs 180 crores in stabilized earnings.
  • M&A Jaisalmer Hotel Management agreement · Signed

    Enhance existing Rajasthan circuit, contribute to stabilized earnings

    Expected to generate Rs 6 odd crores in stabilized fees per year.

    We are also pleased to announce that we have signed a management agreement for a marquee 80-key luxury hotel in Jaisalmer. This hotel is scheduled to become operational by the end of this calendar year and will enhance our existing Rajasthan circuit. ... And the fees, if you look at a trend, we are looking at close to Rs 6 odd crores in a stabilized year.
  • Liquidity Cash ₹650 Cr
    cash, we have around Rs 600 crores to 700 crores of cash sitting with us.

Guidance & targets

Profitability

  • EBITDA Growth Profitability · FY26 · High confidence mid-to-high teens
    Driven by the strong performance in the first nine months of the financial year, we are well positioned to exceed our earlier guidance of mid-to-high teens EBITDA growth for FY26.

    — Anuraag Bhatnagar

  • EBITDA Growth Profitability · next two-three years · High confidence mid-to-high teen
    Looking ahead, we reiterate our confidence in sustaining mid-to-high teen EBITDA growth over the next two-three years, driven by ADR and occupancy expansion, new F&B and spa outlets, launch of our members-only club ARQ in three new cities, and cost optimization initiatives.

    — Anuraag Bhatnagar

  • EBITDA Profitability · FY30 · High confidence ₹2,000 crores
    Over the long term, we reaffirm our EBITDA target of Rs 2,000 crores by FY30 through a combination of same-store growth and expansion.

    — Anuraag Bhatnagar

Revenue

  • ADR and RevPAR Growth Revenue · Q4 FY26 · High confidence double-digit growth
    Just to add, we are looking for a double-digit growth, at least in the ADR and RevPAR in the quarter one of this year.

    — Ravi Shankar

  • ADR Growth Revenue · year-on-year · High confidence 9% to 10%
    With the assets and the service culture, the NPS scores that we have, the distribution system, we do target 9% to 10% of ADR growth year-on-year. That's our target.

    — Ravi Shankar

Occupancy

  • BKC Property Occupancy Occupancy · second stabilized year · High confidence 80%
    The number that we are seeing, this will be in the second stabilized year, that number you are speaking on, we will be able to achieve in our second stabilized year occupancy of 80%.

    — Ravi Shankar

Earnings

  • Dubai Stabilized Earnings Earnings · stabilized · High confidence ₹180 crores
    Furthermore, the 25% equity stake and the HMA contract is expected to generate Rs 180 crores in stabilized earnings.

    — Anuraag Bhatnagar

Fees

  • Jaisalmer Stabilized Fees Fees · stabilized year · High confidence ₹6 odd crores
    And the fees, if you look at a trend, we are looking at close to Rs 6 odd crores in a stabilized year.

    — Anuraag Bhatnagar

What to watch in Q4 FY26

Dubai Hotel Operational Transition & Rebranding

By 2028
Current Current operator until Dec 2026; planned upgrade in 2027.
Target Leela rebranding in 2028; management fees start.

Why it matters

This is a significant new asset, and its successful transition and rebranding are key to realizing its projected stabilized earnings contribution.

The current operator will be managing the hotel till December'26 or so for this year, foresee within this year. We have a planned upgrade in 2027. And we start operating the hotel from 2027. And we should be rebranding the hotel as the Leela in 2028 and we start earning management fees.

Risks & concerns

  • Sustainability of high Average Room Rates (ARR)

    medium

    Analyst questioned if current high ARRs (Rs 38,000+) could be sustained given demand-supply dynamics. Management asserted confidence due to underserved luxury market, brand strength, and inelastic luxury demand.

    Analyst downplayed

  • Talent sourcing challenges due to industry pipeline

    low

    Analyst raised concerns about potential talent shortages. Management highlighted strong internal talent development, high retention rates (82%), and successful recruitment programs, indicating no significant challenge.

    Analyst downplayed

Q&A highlights

8 direct
Demand trends across cities and luxury segment resilience Direct
From our perspective and basis the data that we have, we see the continuation of high double-digit demand across all the segments and across all the cities, both in city hotels as well as leisure destinations. ... luxury consumption is relatively inelastic versus other sectors and other segments and we expect this trend to continue.

Management provided a confident outlook on demand across all segments and cities, emphasizing the inelastic nature of luxury consumption, which countered the analyst's observation of mixed city-level data.

Asked by Binay from Morgan Stanley

Sustainability of F&B revenue growth and management fees Direct
And on F&B Binay, we have opened two new restaurants in this quarter, which will further give us results across the next 12 months and forward as well. ... Jamavar, that I mentioned, a new restaurant in Leela Palace, Jaipur, has seen a 40% growth. ... Most of managed hotels did a double-digit ADR and RevPAR growth.

Management detailed the drivers of the strong F&B growth, including new restaurant openings and successful repositioning, providing a clear rationale for its sustainability and clarifying HMA fee growth.

Asked by Binay from Morgan Stanley

Roadmap and financial milestones for the Dubai hotel transition Direct
The current operator will be managing the hotel till December'26 or so for this year, foresee within this year. We have a planned upgrade in 2027. And we start operating the hotel from 2027. And we should be rebranding the hotel as the Leela in 2028 and we start earning management fees. ... The progress on that is already initiated and I would say that this will happen over the next 2 or 3 years.

Management provided a detailed timeline for the Dubai asset's transition, including rebranding, operational start, and villa sales, which are critical for realizing its financial impact.

Asked by Murtuza Arsiwala from Kotak

Balance sheet capacity and preference for acquisitions Direct
If there are good deals available, which we are evaluating, which has good return metrics, yield on cost and ROE as per our benchmark, then we would be keen to invest, with a high ROCE if the deal justifies the economics.

Management confirmed its continued appetite for acquisitions if deals meet specific financial criteria, indicating potential future M&A activity and confidence in its balance sheet strength.

Asked by Achal Kumar from HSBC

Sustainability of high ARR growth Direct
The iconic nature of our hotels, the build quality of our assets, and the market dominance that we have, gives us a huge competitive advantage as we have seen, as you mentioned yourself, to be able to command a pricing power. ... luxury is relatively inelastic compared to other segments in the sector.

Management justified the sustainability of high ARR growth by highlighting the underserved luxury market, the company's strong brand positioning, and the inelastic demand for luxury experiences.

Asked by Achal Kumar from HSBC

Outlook for Q4 FY26 Direct
Q4 also we will have a great quarter, Jan to March. And if I tell you, we will be looking at a double-digit growth on both ADR and the RevPAR side. ... Typically, historically, if you look at the trend, Q4 is even stronger in absolutes than Q3.

Management provided positive short-term guidance for Q4 FY26, expecting double-digit growth in both ADR and RevPAR, aligning with historical trends of Q4 being a strong quarter.

Asked by Achal Kumar from HSBC

Talent sourcing challenges given industry pipeline Direct
Not really. We recently launched our fourth batch of our management training Leela Leadership Development Program. For 35 positions that we have in the Company, we have received more than 1350 applicants, eligible applicants and qualified applicants. And we see that across every position that comes up.

Management addressed concerns about talent sourcing, highlighting strong internal development programs and high applicant interest, suggesting that talent will not be a bottleneck despite industry growth.

Asked by Dipak Saha from Nirmal Bang Institutional Equities

Targeted occupancy rates for stable hotels Direct
In a city hotel, depends on the location, whether an airport hotel or CBD, generally, you tend to do 75% to 78% occupancy in a stabilized year. Resort should be in the right location; you do around 65% occupancy.

Management provided specific, quantifiable occupancy targets for different types of stable hotels (city vs. resort), offering clarity on operational expectations.

Asked by Nikhil from Kizuna Wealth

3 min read 7 chapters

Detailed narrative

Q3 FY26 Financial Performance Overview

Leela Palaces Hotels & Resorts Limited reported robust financial performance for Q3 FY26, with operating revenues growing 21% year-on-year to ₹457 crores. Operating EBITDA increased by 23% year-on-year to ₹238 crores, resulting in a strong EBITDA margin of 52%, an improvement of 61 basis points. The company's Profit After Tax (PAT) saw a significant jump, rising from ₹56 crores in Q3 FY25 to ₹148 crores in Q3 FY26, primarily driven by EBITDA expansion and reduced finance costs.

Luxury Market Outperformance and Strategic Positioning

The company continued to demonstrate strong outperformance in the luxury hospitality sector, with its market share increasing by 15 points between April and November 2025. RevPAR grew 20% year-on-year in Q3 FY26, supported by a 17% uplift in ADR, and its RevPAR premium over the luxury segment increased from 141 to 162. This sustained leadership is attributed to Leela's unique brand positioning, proprietary sales and distribution network, and consistent ability to attract high demand and price premium over competitors.

Strategic Expansion and Asset-Light Growth Initiatives

Leela Palaces is actively pursuing strategic capital-efficient growth. The Dubai transaction was closed, securing a 25% equity stake in the asset with a total investment of USD 70 million, projected to yield ₹180 crores in stabilized earnings. This investment is expected to be recovered within 2-3 years through the sale of residences. Additionally, a management agreement for an 80-key luxury hotel in Jaisalmer was signed, slated for operation by the end of calendar year 2026, contributing an estimated ₹6 crores in stabilized fees. The net capital outlay for these three new hotels (Mumbai BKC, Dubai, Jaisalmer) is ₹1,650 crores.

F&B and Guest Experience Enhancements

A key focus on food and beverage quality and guest experience drove a 29% year-on-year revenue growth in F&B, supported by a 17% increase in non-resident footfalls. The Leela Palace Jaipur underwent comprehensive repositioning, introducing new dining concepts like Aravali Dining Room and Peacock Lounge. Notably, Jamavar in Jaipur has already achieved 40% revenue growth since its relaunch in November '25, with other renovated restaurants like Le Cirque and The Qube also showing 40% and 27% growth respectively.

Capital Allocation and Debt Management

The company successfully renegotiated its term loans, reducing the interest rate from 9.1% to 8.25%, which is expected to enhance PAT. As of the reporting period, gross debt stood at ₹1,400 crores, with cash balances ranging from ₹600-700 crores, indicating a net debt of approximately ₹700-800 crores. Approximately 90% of the ₹450 crores allocated for asset management initiatives has been utilized, with the remaining 10% planned for expenditure in Q4 FY26.

Talent Management and ESG Focus

Leela Palaces maintains a strong emphasis on talent, reflected in an industry-leading Net Promoter Score (NPS) of 86 and an 82% retention rate for the nine months of FY26. The company was recognized as a great place to work and continues to invest in talent development programs, including its fourth batch of the Leela Leadership Development Program. ESG initiatives are integral to its strategy, with 65% of energy consumption sourced from green sources, contributing to a 3% year-on-year reduction in Q3 power costs.

Outlook and Future Growth Drivers

Management expressed confidence in achieving mid-to-high teen EBITDA growth for FY26 and over the next two-three years, with a long-term target of ₹2,000 crores EBITDA by FY30. This growth is anticipated from ADR and occupancy expansion, new F&B and spa outlets, and the launch of the members-only ARQ club in three new cities. The company expects double-digit growth in both ADR and RevPAR for Q4 FY26, which is historically a stronger quarter.

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