Viceroy Hotels

Viceroy Hotels reported a robust Q4 FY26, with revenue from operations growing 37% year-on-year. Total revenues for the quarter reached INR 49.5 crores, a 35.3% increase from Q4 FY25. Operating EBITDA saw a 43.7% year-on-year growth to INR 15.6 crores, with the EBITDA margin expanding by 183 basis points to 31.4%. This growth was significantly bolstered by the consolidation of Marriott Executive Apartments, which contributed INR 9 crores in room revenues and INR 3.7 crores in F&B revenues in its first quarter of operations.

The company is executing a phased investment plan of over INR 100 crores for renovations. Phase one, involving Courtyard by Marriott Hyderabad, is complete and contributing to improved product positioning. Phase two for Marriott Hyderabad began in April and is slated for FY27 completion, while phase three is targeted for FY28. The ongoing renovation of the Marriott Hyderabad Convention Center, which started in April 2026, is expected to be completed by year-end, with the investment anticipated to be recouped within 1.5 years.

Despite strong revenue and EBITDA growth, Profit After Tax for Q4 FY26 stood at INR 6 crores, a decline of approximately 40% year-on-year. This was primarily due to a deferred tax adjustment from prior year's NCLT losses and a sharp increase in finance costs, which rose from INR 0.64 crores to INR 5.3 crores in Q4, mainly attributable to the INR 215 crores debt taken for the Marriott Executive Apartments acquisition. Management expressed comfort with the current debt level of INR 264 crores (consolidated) and plans to maintain it.

The combined Average Daily Rate (ADR) for Q4 FY26 was INR 7,605, with Marriott at INR 7,423 and Courtyard at INR 8,010. Marriott Executive Apartments reported an ADR of INR 16,578, growing 6.9% year-on-year. However, Courtyard's occupancy significantly dropped from 72.6% to 52.2% in FY26 due to extensive renovations, though management stated it is now returning to normal. The company aims for 5-7% organic ADR growth annually, with an additional 20-22% from refurbishment, targeting a combined ADR growth of 25-30% and an immediate goal of INR 9,000-9,500.

Viceroy Hotels maintains an encouraging long-term outlook for the Indian hospitality sector, driven by rising disposable incomes and improved travel infrastructure. The company is evaluating greenfield and brownfield development opportunities, including a new Courtyard in Madhapur, targeting an opening in FY29 or FY30. This new property is envisioned as a room-play model, leveraging the lower supply in that micro-market for higher profitability. Management anticipates a substantial twofold increase in EBITDAs next year due to the convention center and renovations.

With the addition of Marriott Executive Apartments, the customer mix has diversified to include direct corporate relocation, transient^📎 travelers, and group bookings, adapting to cyclical demand. The company is focused on increasing direct bookings through Marriott Bonvoy members to reduce OTA commissions, aiming for 80-85% direct contribution. They leverage favorable, long-standing contracts with Marriott due to their multi-property ownership and are open to exploring other brands if strategically beneficial.