Royal Orchid Hotels – Available at good valuation!

Royal Orchid Hotels –

Q4 and FY 24 concall and results highlights –

Company’s portfolio –

107 Hotels and resorts @ 70+ locations. Total Room inventory @ 6215 rooms. Total restaurant count @ 175

Ownership wise inventory of rooms –

Owned / JV Hotel rooms @ 591 – no addition in FY 24

Leased Hotel rooms @ 1112, up 94 pc YoY

Managed / Franchise rooms @ 6520, up 23 pc YoY

FY 24 and Q4 occupancies and Avg Room rates –

Q4 data –

Occupancy for Owned, JV, Leased hotels @ 72 vs 77 pc YoY. Their ARR @ Rs 6024 vs 5657

Occupancy for Managed, Franchise Hotels @ 65 vs 63 pc YoY. Their ARR @ Rs 3982 vs 3833

FY 24 data –

Occupancy for Owned, JV, Licensed hotels @ 74 vs 77 pc YoY. Their ARR @ Rs 5673 vs 5370

Occupancy for Managed, Franchise hotels @ 60 vs 63 pc YoY. Their ARR @ Rs 4039 vs 3795

Hotel Room inventory breakdown – Segment wise –

5 Star rooms – 407 ( 268 owned, 139 in JV )

4 Star rooms – 2673 ( 130 owned, 396 leased, 2147 managed / franchise )

Service Apartments – 138 ( 67 leased, 71 managed / franchise )

Resorts / Heritage – 949 ( 54 JV, 142 leased, 753 managed / franchise )

3 star / Budget – 1759 ( 83 leased, 1676 managed / franchise )

Q4 outcomes –

Revenues – 83 vs 77 cr
EBITDA – 24 vs 26 cr
PAT – 17 vs 13 cr

FY 24 outcomes –

Revenues – 312 vs 279 cr

EBITDA – 95 vs 98 cr ( invested aggressively behind hiring talent / employees in FY 24 – due rapid ongoing expansion. This has led to margin compression in FY 24. This should normalise in FY 25,26. Also spent aggressively on refurbishment / maintenance of old hotels in FY 24 )

PAT – 50 vs 49 cr
RoCE @ 20 pc

**Breakup of FY 24 revenues – **

Segment Wise –

Room rent – 170 vs 155 cr
F&B – 114 vs 102 cr
Other services – 12 vs 10 cr
Franchise / Management fee – 30 vs 24 cr

Ownership Wise –

Revenues from owned hotels – 97 vs 88 cr
Revenues from JV hotels – 76 vs 81 cr
Revenues from Leased hotels – 121 vs 96 cr
Franchise / Management revenues – 30 vs 24 cr

In Q4, company acquired remaining 49 pc stake in IKON hospitality ( running a hotel at Mumbai Airport ) for 34 cr

Aim to add 1500 rooms under management / franchise model + 400 rooms under the lease model in FY 25

Aim to do 370-380 cr of topline in FY 25. Aim to grow EBITDA by 10-15 pc only for FY 25. Again, the aggressive expansions lined up for FY 25 may not allow a margin expansion. Margin expansion may only happen in FY 26

Slated to open a new 300 room 5 star hotel in Mumbai in the middle of FY 25. Company to pay yearly rental of 36 cr for this property ( fixed for next 5 yrs ). Likely to do a topline of 100 to 120 cr / yr. Full ramp up expected to happen in FY 26. Expecting to do an additional EBITDA of 15 -20 cr from this property from FY 26 onwards

Aim to grow ARRs by 5-6 pc in FY 25

Company to add 28 rooms in their flagship Bengaluru property

Post elections, Company expects the corporate demand to pick up in a big way

Post FY 25, company is likely to go slow wrt addition of more managed / franchise hotels. They ll take time to consolidate their gains and ensure better quality service and incorporate learnings for the company. Plus they have reached a descent scales wrt recipt of management fee @ > 30 cr / yr

The company’s management contracts are not fixed rate contracts. These r basically a percentage of revenue share and vary from property to property

Disc: holding, biased, not SEBI registered