Chalet Hotels reported a 9.6% year-on-year increase in revenue for the first quarter of fiscal 2027, excluding residential sales. The company's hospitality business saw a notable rise in average daily rates, despite a slight dip in occupancy levels due to softer foreign tourist arrivals. Investors are currently monitoring the company's expansion plans, including new property additions expected to contribute to earnings by fiscal year 2028.
Chalet Hotels posted a resilient performance in the first quarter of fiscal year 2027, with revenue on a like-for-like basis reaching Rs 5.1 billion. This 9.6% year-on-year growth highlights the company's ability to maintain momentum in its core business operations. Notably, the company’s total revenue comparison with the previous year is influenced by a significant drop in residential unit sales, where only one unit was sold in Q1FY27 compared to 95 units in the same period last year. Excluding this segment provides a clearer picture of the hospitality and commercial annuity performance.
Hospitality Business Trends and Challenges
The core hospitality division reported revenue of Rs 4.2 billion, marking an 8.5% increase compared to the previous year. This was primarily driven by an 8.5% rise in Average Daily Rate, showing the company's pricing power in a competitive market. However, occupancy rates faced pressure, declining by 120 basis points to 64.8%. This slowdown is linked to lower foreign tourist arrivals, which typically account for 35-40% of the company's hospitality revenue. The leisure segment remained a bright spot, posting a 19% increase in Revenue Per Available Room, demonstrating that demand in specific premium leisure pockets remains strong despite broader global travel headwinds.
Profitability and Operational Margins
Profitability remained a highlight for the quarter, with EBITDA excluding residential sales reaching Rs 2.4 billion. The consolidated EBITDA margin reached 46.7%, reflecting strong operational control. The hospitality segment achieved a margin of 42.6%, an improvement of 90 basis points year-on-year. Additionally, the real estate and annuity business continued to function with high efficiency, maintaining an 85% margin, which rose 190 basis points. These margin improvements are critical for investors as they indicate the company's ability to manage costs effectively even when occupancy rates fluctuate.
Expansion Plans and Future Outlook
Looking ahead, the company is focused on its pipeline of new projects, which are expected to support growth in the coming fiscal years. The addition of 380 rooms at the Taj Delhi property, along with the CIGNUS-II project, remains a key development. These assets are projected to begin contributing to the company's financials from the first quarter of fiscal year 2028. While the brokerage outlook remains positive, investors should monitor the timeline of these project completions, as any potential delay in construction or commissioning could affect the expected growth trajectory for FY28. Furthermore, the pace of recovery in foreign tourist arrivals will be a key factor to watch, as it directly impacts the occupancy levels of the company's urban luxury hotels.