Apeejay Surrendra Park Hotels plans to triple its room capacity to 6,635 keys by FY30 to capitalize on rising domestic travel demand. The company expects margin improvement in FY27 as occupancy rates recover from early-year geopolitical disruptions and the hotel sector sees continued pricing strength.
What Happened
Apeejay Surrendra Park Hotels Ltd. (ASPHL) has outlined a significant expansion strategy to grow its portfolio to 6,635 keys by FY30. This growth plan involves a mix of asset-light management contracts and direct ownership or leasing models. For the current fiscal year (FY27), the company is adding 472 keys. This update follows a challenging start to the year, where the company saw a dip in performance during the first quarter of FY27 due to geopolitical tensions in the Middle East, which impacted international tourist arrivals. However, management has indicated a recovery in booking trends throughout May and June 2026.
The Industry Demand And Pricing Context
The domestic hospitality sector is currently seeing demand that outpaces new room supply by roughly 400 basis points. Factors such as a steady rise in business events, consistent wedding-season demand, and the expansion of spiritual tourism circuits are driving higher occupancy levels across the industry. ASPHL currently operates with an occupancy rate of approximately 92%. With demand exceeding the current pace of new supply, the company is targeting double-digit growth in average room rates for FY27, which is a key driver for overall revenue.
Expansion Of The Flurys Brand
Beyond its core hotel operations, ASPHL is focusing on its confectionary business under the Flurys brand. The company plans to open 40 new outlets during FY27, which would bring its total network to 150 locations. This segment is not just a secondary business; it currently accounts for roughly 12% of the company's total revenue. By increasing its retail footprint, the company aims to diversify its income stream beyond hospitality, which is traditionally more sensitive to economic cycles and global events.
Margin Improvement And Valuation
After facing pressure on profit margins in FY26 due to higher operational costs and fluctuating occupancy levels, ASPHL expects to see an improvement of 200 to 300 basis points in its EBITDA margins during FY27. This improvement is expected to come from higher room rates, better-optimized occupancy, and internal cost-saving efforts. From a valuation perspective, the stock has seen a decline of about 9% over the last two months, contrasting with the relatively flat performance of the Nifty 50 index. The company is currently trading at approximately 9.5x its projected FY28 EV/EBITDA, which is at the lower end of its historical valuation range.
What Investors Should Track
Investors may monitor the progress of the planned 472-key addition for FY27 to ensure the expansion stays on schedule. Additionally, the execution of the 40 new Flurys outlets will be a key indicator of the company’s retail growth strategy. The primary monitorables include the sustainability of the 92% occupancy rate, the actual growth in average room rates as the fiscal year progresses, and whether the company can successfully expand its room count without excessive debt pressure from its asset-heavy expansion model.