Viceroy Hotels Q1 FY27 earnings call

Viceroy Hotels Limited reported a robust start to FY27, with revenue from operations growing 77% year-on-year to INR44.9 crores. EBITDA saw an even stronger increase of 144% to INR11.8 crores, leading to a 725 basis point expansion in EBITDA margin to 26.3%. The company also achieved a positive PAT of INR1.4 crores, a significant improvement from a loss of INR3 crores in the prior year. This performance reflects the benefits of ongoing asset enhancement initiatives, operational improvements, and growing demand across its hospitality portfolio.

Combined occupancy across Marriott and Courtyard hotels improved significantly to 76.25% in Q1 FY27 from 53.65% in Q1 FY26. Courtyard occupancy, in particular, normalized to 83.65% following the completion of Phase 1 renovation. While combined ADR saw a decline to INR6,107 from INR6,952, management attributed this to the full availability of rooms post-renovation and a strategic shift to lower-paying corporate groups to maintain footfall. Despite this, combined RevPAR increased by 24.85% to INR4,657, indicating overall revenue quality improvement.

The Marriott Executive Apartments segment continued to perform strongly, with room revenues reaching INR8.5 crores and F&B revenues at INR3.3 crores. MEA's ADR improved by 7.5% year-on-year to INR13,342, and occupancy rose to 94% from 83%. This translated into a RevPAR growth of 21.1% to INR12,519. Management highlighted MEA as an important strategic differentiator, seeing significant opportunities in the extended-stay accommodation segment, especially with global corporations expanding in Hyderabad.

The company reported a consolidated gross debt of INR259 crores and a net debt of INR220 crores, with a blended interest rate of 8.7%. Monthly debt repayments stand at INR3.25 crores, totaling INR39-40 crores annually, with long-term debts having a 12-year payback period. Management indicated a debt-equity ratio close to 1 and headroom to take on an additional INR100 crores in debt. The proposed INR107 crores rights issue is primarily aimed at debt repayment and keeping limits open for future expansion, including the Greenfield Courtyard Madhapur project, estimated at INR120-130 crores for 180-200 seats.

Phase 1 renovation at Courtyard is complete, while Phase 2, focusing on Marriott hotels, is expected to be finished by December of this financial year (Q3 FY27). The convention center at Marriott is currently offline for Phase 2 upgradation, causing an estimated EBITDA displacement of INR10 crores. Once the convention center returns, management expects a significant boost to banqueting and event revenue. The Greenfield Courtyard Madhapur project is in the approval stage, with construction expected to start this year (Q4 FY27) and operations targeted for FY29-2030, following delays due to a new state tourism policy.

Despite Q1 FY27 EBITDA margin of 26.3% being lower than Q4 FY26's 31.4%, management reaffirmed its confidence in achieving an EBITDA margin above 30% in the near term and a long-term benchmark of 40%. They explained that Q1 and Q2 are seasonally weaker quarters, and margins are expected to improve significantly in Q3 and Q4 as renovation activities conclude and the convention center reopens. The high room revenue contribution from Marriott Executive Apartments is also expected to contribute positively to future EBITDA percentages.