ROHLTD - Royal Orchid Hotels Ltd Share Price

Outlook by Management:
Royal Orchid Hotels Limited (ROHL) remains optimistic about growth, emphasizing expansion through new properties (including leased and managed hotels) and strategic refurbishments. The Mumbai hotel (Iconiqa) is nearing completion, expected to drive significant revenue (~Rs.100 crores annually) upon licensing. Management aims to enhance margins by diversifying offerings (e.g., lifestyle brand Iconiqa), optimizing costs, and expanding into underserved regions (East/Northeast India). The company plans to scale its managed hotel portfolio (targeting Rs.50 crore revenue in FY26) and leverage its Regenta Rewards loyalty program (360k+ members) to boost repeat business.

Major Points:

1. Financial Performance:

   • Q3 FY25 consolidated revenue grew 9.5% YoY to Rs.94.86 crores; PAT rose 15% to Rs.18.11 crores.
   • EBITDA growth (4% YoY) impacted by Ind AS adjustments (non-cash) and upfront costs for expansion.

2. Expansion & Pipeline:

   • Added 4 hotels (165 keys) in Q3; Mumbai hotel (300 keys) to open by April 2025.
   • 20+ managed hotels in pipeline; targeting 10 leased/revenue-share properties (~1,200 rooms) in 2025.

3. Operational Strategy:

   • Focus on "flexi-lease" revenue-share model (breakeven occupancy: 45-50%) to mitigate fixed-cost risks.
   • Renovating owned assets (e.g., Goa, Bangalore properties) to drive premium pricing.

4. Brand & Innovation:

   • Iconiqa positioned as an upscale lifestyle brand, competing internationally.
   • Regenta Rewards program driving 12-13% repeat business.

5. Challenges:

   • Licensing delays (e.g., Mumbai); municipal approvals cited as a bottleneck.
   • Stabilization period for new hotels (~1,000 days) impacts near-term margins.

Management remains confident in long-term growth, backed by a robust pipeline, operational efficiency, and diversified offerings.

Question 1:
"Can you throw some light on the new Mumbai hotel, its revenue potential and the cost structure?"
Answer:
The Mumbai hotel is leased with a Rs.240 crore refundable deposit and minimal investment. It is positioned as an upscale lifestyle hotel (5-star) below competitors like JW Marriott. Operations are expected to begin by late April 2025 after licensing, targeting a revenue potential of ~Rs.100 crores annually.

Question 2:
"What are the details of the 10 lease hotels scheduled for 2025, including room count and revenue projections?"
Answer:
Approximately 1,200 rooms across 10 hotels are planned under a revenue-sharing model (no fixed lease payments). Exact timelines and financials depend on municipal approvals and stabilization. The Mumbai hotel alone aims for Rs.100 crore annual revenue.

Question 3:
"What are the revenue and margin targets for managed hotels in FY26"“FY28?"
Answer:
Managed hotels target Rs.50 crore revenue in FY26, growing with 20+ pipeline properties. PBT margins are projected at 46"“47%, driven by scalable fee-based income and low operational costs.

Question 4:
"Why has EBITDA growth lagged despite room expansion?"
Answer:
New hotels require stabilization time (1,000 days on average), and upfront costs (workforce, refurbishments) impacted margins. Older hotels reported 67% occupancy vs. 51% for newer properties.

Question 5:
"How is Regenta Rewards performing, and what is its impact?"
Answer:
Launched 4 months prior, the loyalty program has 360,000+ members, driving 12"“13% repeat business. It enables seamless point redemption and aims to boost customer retention as the portfolio expands.

Question 6:
"Are there plans for a stock split or bonus issue?"
Answer:
The management will evaluate shareholder rewards (dividend, split, or bonus) post-analysis but cannot commit immediately. Dividends resumed in 2023, reflecting improved profitability.

Question 7:
"What is the status of Goa expansion and Mumbai hotel timelines?"
Answer:
Goa's 45-room addition faces delays due to land conversion approvals, targeting completion by October 2025. Mumbai's hotel awaits licenses, with soft launches in April 2025 and full revenue from late FY25.

Question 8:
"How does the revenue-sharing model work, and what is breakeven occupancy?"
Answer:
Under flexi-lease, Royal Orchid pays owners a revenue percentage (no fixed rent). Breakeven occupancy is 45"“50%, minimizing downside risk while aligning incentives with asset owners.

Question 9:
"What are the expansion plans for East India and international markets?"
Answer:
A dedicated team is scouting for East/Northeast India properties. International growth focuses on management contracts in South Asia (e.g., Nepal, Sri Lanka), prioritizing domestic opportunities first.

Question 10:
"How is Iconiqa positioned, and will it expand further?"
Answer:
Iconiqa is a homegrown upscale lifestyle brand targeting airport-adjacent customers. Designed for adaptable use (day stays, events), it aims to scale across India as a competitor to global chains.