Increase in room rates, higher occupancy to drive gains for Indian Hotels

Indian Hotels reported strong consolidated revenue growth of 29 per cent year-on-year (Y-o-Y) in the third quarter of the current financial year (Q3FY25), led by revenue per available room, or RevPAR, growth of 15 per cent.

The average room rate, or ARR, was up 13 per cent and occupancy improved 120 basis points (bps) Y-o-Y on a standalone business.

Like-for-like revenue growth was 15 per cent Y-o-Y, while TajSats (airline catering) grew by 18 per cent Y-o-Y.

The new and reimagined segment reported 40 per cent Y-o-Y growth.

Management contract revenue rose 32 per cent Y-o-Y to Rs 180 crore.

New and reimagined business drove performance with consolidated revenue up 29 per cent, operating profit up 31 per cent, and adjusted net profit up 29 per cent to Rs 2,530 crore, Rs 960 crore, and Rs 580 crore, respectively.

Standalone revenue was up 15 per cent while operating profit rose 22 per cent Y-o-Y to Rs 1,470 crore and Rs 680 crore, respectively.

Occupancies were up 120 bps Y-o-Y to 78 per cent while ARR rose 13 per cent Y-o-Y to Rs 20,440.

RevPAR grew 15 per cent Y-o-Y to Rs 15,943. For subsidiaries, sales grew 55 per cent and operating profit grew 61 per cent Y-o-Y to Rs 1,060 crore and Rs 280 crore, respectively.

New business verticals   like Ginger, Qmin, and am  Stays & Trails   grew 38 per cent Y-o-Y to Rs 160 crore while TajSATs posted 18 per cent Y-o-Y growth to Rs 270 crore.

Chambers reported year-to-date (YTD) revenue of Rs 100 crore (+18 per cent Y-o-Y).

Revenue from key subsidiaries grew by over 20 per cent to Rs 870 crore.

The international consolidated portfolio achieved 78 per cent occupancy (+400 bps Y-o-Y), with 9 per cent RevPAR growth.

The US market is poised for a strong Q4FY25.

The UK market experienced softness due to new supply.

The management says that the company is on track to hit double-digit revenue growth in FY25.

The construction for its Sea Rock hotel may commence in the second half of the current calendar year (H2CY25).

Momentum will continue in the medium term, led by increase in ARR, upgrades in hotels, and corporate rate hikes along with higher occupancy levels.

There's strong room addition pipeline until FY28 in both owned/leased (3,564 rooms) and management hotels (14,100). Higher income from management contracts is expected along with value unlocking by scaling up reimagined and new brands.

Indian Hotels had 55 signings and 20 openings in the first nine months of FY25 (85 per cent of signings being capital-light), taking the total portfolio to 360 hotels.

The company is on track to open 25 hotels in FY25 and another 30 in FY26. The management believes that it is on track to reach its target of 700 hotels by CY30.

New and reimagined business grew 40 per cent Y-o-Y in Q3FY25, driven by opening of marquee properties.

Vivanta hotels in Srinagar and Surajkund were upgraded to Taj in Q3FY25.

Ginger Mumbai Airport is operating at occupancy of 85 per cent and ARR of Rs 6,750.

Loyalty-led programs contributed 40 per cent of enterprise revenue for Ginger in Q3FY25.

Indian Hotels is on track to achieve its guidance of double-digit revenue growth, with Q4FY25 expected to maintain or accelerate momentum, given continued favourable demand scenario, large-scale events and concerts, momentum in domestic tourism, a prolonged wedding season, traction in spiritual destinations, and favourable weather for foreign tourists.

Domestic tourism will get a boost from key sporting events, and events like Bharat Mobility Expo, Aero India, Pravasi Bhartiya Diwas, and Mahakumbh.

Occupancy rates have almost peaked, with only marginal increases expected, and growth in ARR is expected to drive RevPAR.

The market response has been positive and analysts have upgraded targets despite Q3FY25 results being in line with consensus.

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