Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Chalet Hotels Ltd (NSE: CHALET) Q4 2026 Earnings Call dated May. 15, 2026
Corporate Participants:
Shwetank Singh — Managing Director and Chief Executive Officer
Nitin Khanna — Chief Financial Officer
Gaurav Singh — Chief Operating Officer
Analysts:
Vikas Ahuja — Analyst
Sameet Sinha — Analyst
Prateek Kumar — Analyst
Akash Gupta — Analyst
Karan Khanna — Analyst
Abhay Khaitan — Analyst
Presentation:
Operator
Ladies and Gentlemen, good day and welcome to Chalet Hotels Limited Water 4 and full year ended 31 March 2026 Conference call this conference call may contain forward looking statements about the company which are based on beliefs, opinions and expectations of the company as on the date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all bias pin lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes.
Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Shwetank Singh, Managing Director and CEO. Thank you and over to you Sir.
Shwetank Singh — Managing Director and Chief Executive Officer
Thank you Michelle and a very good morning everyone. It’s a pleasure to welcome you to this call today. We value this forum as it gives us an opportunity to share our journey, discuss the growth roadmap ahead. Also, it is imminent that we reflect on the evolving geopolitical and macroeconomic landscape that influences our industry today. As always, we welcome your queries and perspectives. They keep us anchored, focused and aligned in our pursuit of long term value creation for all our stakeholders.
The fiscal year 2526 and indeed the last quarter has been quite remarkable both for the industry at large and for Chalet in particular. Over the past year, the industry has navigated a complex and dynamic environment shaped by several macroeconomic and geopolitical events. These included Operation Sindur trade, tariff related uncertainties, aviation disruptions, extreme weather conditions and the heightened geopolitical tensions in West Asia. Despite these challenges, the industry delivered a resilient and robust performance marked by strong revpar growth, primarily driven by sustained expansion in average room rates.
This performance underscores the inherent strength of the domestic hospitality sector supported by rising disposable incomes, evolving consumer preferences, India’s expanding economic footprint and a strong resurgence in mice activity. And not to forget the evergreen demand driven by weddings. Importantly, while there has been a healthy pipeline of signings by both domestic and global hotel brands, supply continues to lag behind, reinforcing our confidence and excitement as we plan ahead. Turning specifically to the quarter, performance was uneven across three months.
January began on a softer note with no auspicious dates for weddings and additionally Mumbai witnessing municipal elections in the third week of the month followed by a long weekend with Republic Day falling on a Monday. These factors collectively impacted demand, particularly in Mumbai. It is also important to Note that the base for January last year was strong, supported by large concerts including international events like Coldplay and significant MICE activity elements that were absent this year.
February was very strong with both ADRs and occupancies picking up. However, towards the end of February the escalation of geopolitical tensions in West Asia began to materially impact global travel patterns, leading to notable disruptions in March with widespread cancellation across segments. In the context of international business travel, it is important to recognize that multiplier effect it creates. Overseas executive visits are typically accompanied by respective teams. Within India, international business travel slowed down in March.
This associated domestic business demand also got impacted. Consequently, the quarter saw a meaningful impact in the form of both confirmed cancellations and opportunity losses. Despite these short term disruptions, we remain confident in the structural strength of our business and the broader industry fundamentals. Our balance sheet remains strong, our asset portfolio is well positioned and our growth strategies align with long term demand drivers. We continue to focus on disciplined execution, operational excellence and prudent capital allocation as we move forward with that context about the industry and macro environment, let me talk about our own performance and strategic initiatives.
The year 2526 has been a milestone year for us as our consolidated revenue crossed the rupees 25 billion mark and the EBITDA crossed the 10 billion mark, reflecting both the scale and inherent strength of our diversified platform. Excluding the residential business, our revenue grew by 18% year on year to rupees 20,741 million with EBITDA of rupees 9573 million up 21% year on year. Importantly, EBITDA margin improved by 97bps to 46.2%. For the quarter, our consolidated revenue was up by 6% year on year to rupees 5711 million with EBITDA of rupee 2786 million up 8% year on year.
EBITDA margins improved by 100bps to 48.8%. Excluding the residential business, our revenue was very similar growing 6% year on year to rupees 5706 million with EBITDA of rupees 2,800 million up 7% year on year. EBITDA margin improved by 13bps to 49.1%. Let me now touch upon the hospitality business performance that is core of our platform for the year. Hospitality business grew 14% year on year on the revenue and 12% year on year on EBITDA reflecting sustained demand and resilient pricing dynamics on the quarter.
Hospitality revenue grew 3% year on year while EBITDA stood at rupees 2248 million up 1% year on year. From an operating perspective, RevPAR declined 3% year on year in quarter four looking at largely driven by a 7.7% drop in occupancy. As I highlighted earlier, this was predominantly a function of Mumbai underperforming relative to the rest of the industry. As per industry reports, Mumbai ADR growth was only 0 to 2% in occupancy and a decline of 0. Sorry, my apologies. Mumbai saw ADR growth of only 0 to 2% and an occupancy decline of 0 to 2 percentage points during January to March 26 compared to last year.
In contrast, India overall average recorded ADR growth of 6 to 8% with a limited occupancy decline of 0 to 2 percentage points. If we look at our segment in the micro markets that we are present in, the variance was even starker. Additionally, our Powai property continues to face temporary constraints due to ongoing construction of Cygnus 2 tower which has impacted weddings and and mice demand along with the crew, thereby affecting occupancies. Given Mumbai’s high contribution to our hospitality revenues, these factors masked the otherwise healthy performance that we had across the rest of our portfolio.
Compared to business, hotels, resorts did very well during this quarter. Western Rishikesh has delivered a strong performance and has continued its momentum into April and May Athiva Khandala did its first full quarter of full inventory. We did multiple marketing activities during this period to create market awareness and this was all exceptionally well received. The pickup in occupancy with ADR sustaining north of rupees 15,000 gives us confidence for the upcoming monsoons which will be followed by the wedding season.
Coming to our commercial real estate business during the quarter, we signed LOI for an additional 67,000 square foot at Bangalore taking the overall occupancies to over 83%. Occupancy at Powai remains strong at 90%. Our March 26 run rate of rentals touched rupees 280 million as indicated in the last call, while growth in FY2627 would be driven by improvement in occupancies at Poway and Bangalore. Commissioning of Cygnus 2 in FY 2728 will bring a major growth in this business. Now let me talk about our strategic initiatives during the quarter starting with pipeline expansion.
CHALET now has 3,389 operating keys with a pipeline of approximately 1,655 keys across seven assets that takes the total key count to more than 5,000 marking another milestone in our journey. During the quarter we added two major projects to our pipeline. We both in high demand destinations with strategic advantage and potential to deliver high returns over the long term. Udaipur we completed the acquisition at Udaipur Resort marking our entry into this fast growing and deep leisure market of Udaipur.
We have paid a total consideration of Rupees17.10 million for 144 key resort spread over 8.2 acres of land, reducing the land to launch risk substantially. The location is very prime and the land is very beautiful. We intend to significantly upgrade the infrastructure and rooms before we rebuild and relaunch the property as an upper upscale resort, a wide open space in the Udaipur market with limited new supply. We are also evaluating expansion potential through different avenues. Clarity on this shall emerge in the next few months.
Thus we are not able to share the project timelines, capex and brand related information at this stage. But what I can tell you today is that this will be another marquee asset for our portfolio. Hyderabad In February we announced an ultra luxury 330 key hotel in Hyderabad, a greenfield project located outside Mindspace Maripur. The hotel will operate under the Ritz Carlton brand. This is our first ultra luxury project and we are excited about this especially given the prime location in Hyderabad and that has strong demand for luxury product.
Also it helps us in positioning given our strong presence in the micro market with two properties already operational and performing very well. The hotel will be constructed by Mindspace REIT and we shall be taking over a warm shell on a long term lease basis. Our fit out cost shall be close to rupees 5600 million and largely after we get the position in quarter four FY28 so it is back ended. We expect the launch to launch this project by end of FY 28 29. I am also delighted to share that our Corporate Sustainability Assessment score by Dow Jones Sustainability index has jumped from 67 to 82 this year putting us at second place globally among the hospitality peers.
This is a significant achievement given our thrust on sustainable growth. Also I would like to highlight that our green energy consumption has now moved up to 65%. Let me now talk about the updates on live projects. Work is at full swing in the CYGNSS2 provide and we are on track for an FY27 and substantial completion. Although the West Asia crisis has put some pressure on labor availability. We expect to lodge 70 rooms at Taj Project at Delhi International Airport by Quarter 4 FY27 with balance inventory to be launched in a phased manner thereafter.
Mindspace has begun excavation work at Hyderabad and Aeroli. Both the projects are on track. In summary, the Indian hospitality industry’s performance is being driven by a potent mix of strong domestic travel, higher disposable incomes, improved infrastructure and connectivity, event linked tourism and a favorable demand supply gap. There might be some short term hiccups but the story continues to unfold in a positive manner. Chalet is well geared up to seize the opportunity with strong cash flows and robust growth pipelines.
With that I will now hand over to Nitin who will take you through the financial details of the quarter.
Nitin Khanna — Chief Financial Officer
Thanks Vetank Good morning to everyone on the call. I’m pleased to walk you through our financial performance for the quarter and the year ended 31st March 2026 and also provide perspective on key financial and performance drivers, balance sheet strength and capital allocation. Starting with the full year, our consolidate revenue increased by 60% year on year to 2 million 80124 million supported by residential revenue recognition. During the year EBITDA grew correspondingly by 59% year on year to 12,301 million.
EBITDA margin stood at 43.7% excluding the residential segment, our performance reflects the underlying strength of the operating businesses. Ex residential revenue grew 18% year on year to Rupees 20,741 million while EBITDA increased 21% year on year to 9,573 million. EBITDA margins expanded by 97 basis points to 46% driven by operating leverage, strong cost discipline and portfolio mix. Moving to the quarter, consolidate revenue grew 6% year on year to 5711 million with an EBITDA of 2786 million up 8% year on year.
This has resulted in 100 basis point improvement in EBITDA margin to 48.8% on an ex residential basis. Quarterly revenues stood at Rupees 5706 million up 6% year on year with an EBITDA of Rupees 2,800 million. Also reflecting 6% year on year growth. The EBITDA margin improved by 13 basis points to 49.1% highlighting the consistency in underlying operating performance. Let me now cover the hospitality segment for the full year. Hospitality revenues grew 14% year on year to 17,311 million supported by incremental inventory and Rapo growth.
EBITDA increased 12% year on year to rupees 7,603 million with EBITDA margins at 43.9%, a decline of 81 basis points year on year. REPR for the year was up by 5% to rupees 9226 million. Sorry, repar for the year was up by 5% to Rs 9226. For the quarter, hospitality revenue rose 3% year on year to Rs. 4740 million with EBITDA of rupees 2248 million up 1% year on year. EBITDA margin for the quarter stood at 47.4%, lower by 102 basis points. The moderation in margins is primarily attributable to portfolio mix and stabilization dynamics.
Our resort assets are at an early stage of stabilization with average occupancy at around 43% for the year which we expect to trend towards 60% as these assets mature. Additionally, the PNL currently absorbs costs related to incremental inventory at Bengaluru which as highlighted in earlier calls is a transitory impact and this shall normalize as occupancies ramp up over the next few quarters. We remain focused on maintaining cost efficient operating structures, project productivity and exercising disciplined asset level cost control as the portfolio scales.
Turning to the commercial real estate businesses, this segment continues to provide high margin stable cash flows for the year. CRE revenues grew 55% year on year to Rupees 3061 million and 37% year on year to Rs. 847 million. For the quarter, the monthly rental exit run rate in March 26 stood at rupees 280 million. On the profitability front, full year EBITDA increased 65% year on year to Rs 2,544 million translating into a strong EBITDA margin of 83.1%. Quarterly EBITDA stood at rupees 708 million of 42% year on year with an EBITDA margin of 83.6%.
Current portfolio committed is at approximately 88%. We expect monthly rentals to scale up to rupees 300 million during FY27. Commissioning of Cygnus 2 at Pawai will lead to a step change in growth FY28 onwards. Moving to residential project during the year we handed over 152 units resulting in a revenue recognition of rupees 7383 million and EBITDA of rupees 2728 million. To briefly refresh the project structures, phase one residential has been completed with 152 units handed over and one unit pending handing over.
Phase two residential comprising 168 units is under development with handover expected in FY27. The project also includes one 60,000 square feet of commercial space which is yet to be developed and will be leased post completion. Coming to Balance Sheet Debt and Capital Allocation over the last two years we have deployed approximately Rupees nineteen billion towards growth, capex and acquisitions. Despite the significant investment phase, net debt has reduced from Rupees 25 billion as of March 24 to approximately 19 billion as of March 26.
While a portion of this deleveraging was supported by equity inflow in April 25, it is important to highlight that approximately 15 billion has been funded through internal accruals. Reflecting the strength of our operating cash flows and disciplined capital allocation, we continue to maintain comfortable liquidity position with a cash buffer of around rupees four billion as of year end. The average cost of finance remains stable at 7.48% as of March 26. From a capital deployment perspective, capital work in progress and assets not yielding returns stood at Rs.
8.3 billion at year end, providing visibility on near to medium term growth. Looking ahead, we have outlined a planned capex of approximately Rupees 30 billion over FY27 to FY29 across our hospitality and commercial real estate portfolio. This includes announced acquisition and committed investments and importantly is expected to be largely funded through internal accruals. Underscoring our focus on maintaining balance sheet discipline, we have also taken an enabling approval for debt raise of up to Rupees 10 billion.
To clarify, this is purely enabling in nature and there is no immediate plan to raise incremental debt. Overall, our balance sheet continues to provide adequate headroom and financial flexibility to pursue strategic opportunities as they arise. The CRE portfolio, with 2.4 million square feet of leasable area has the potential to generate rupees three to four billion of annual cash flows at stabilization. Combined with strong EBITDA generation from the hospitality business, this creates a robust and sustainable free cash flow base to support our long term growth strategy.
With that, I would like to open the floor for questions. Thank you.
Questions and Answers:
Operator
Thank you very much sir. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask questions may please press Star and one on their Touchstone phone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use only handsets while asking questions in order to ensure that the management will be able to address Questions from all the participants in the conference. Kindly limit your questions to only two per participant.
Should you have a follow up question, please rejoin the queue. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Vikas Ahuja from Antique Stockbroking. Please go ahead.
Vikas Ahuja
Hi, good morning to the management and thanks for taking my question. Sir, my first question is why did we choose to do the subsidiary level dilution stuff? Dilution structure for DIAL instead of funding it entirely through internal acquisition or maybe through debt. I mean for us this was a great deal we got and now we are diluting stake. It’s a little confusing for me. And what are the investors incoming in dial? What strategic value do they bring beyond capital? Any color on this would be great.
And after that I have a follow up. Thank you.
Shwetank Singh
Morning Vikas. Thank you for the question. Look, we are implementing a number of projects at this stage. And we have also announced some acquisitions recently. As you are well aware, in order to manage this growth in a very calibrated manner, the board has approved a one time proposal for a minority equity shareholding in just one of our projects. So it is not something that we are sort of taking for the long term. It is for one of the projects. We have done it at dial. It is a project under execution.
As you are well aware, it is a great project. Nothing has changed on the fundamentals of the project at all. This is one strategic call that we have taken to fully understand this space. That’s all there is to it at this stage.
Vikas Ahuja
Okay, thank you. And also, you know, given the large upcoming pipeline including, you know, the Hyderabad and the DIAL higher oligo operatives, how should we think about, you know, annual Capex intensity over FY27 to 29? How much of this CAPEX upcoming should be funded through internal accruals versus internal debt? And what is the expected peak debt? If we can, you know. I understand with DIAL also we are just trying to manage the debt levels. What we have done, if any peak debt guidance we can get would be great.
Shwetank Singh
So Nitin actually referred to it in his speech in quite a lot of detail. Just high level. I’ll give you. Then Nitin will give you more details. I mean he correctly pointed out that over the last two years we have invested about 19 billion in capex and 15 billion of that came from internal accruals. The proof of the pudding is in the fact that 25 billion was at debt earlier. Two years back we are at 19 billion. So whilst we have been investing in the capex. We have actually been reducing debt. So our internal accruals remains very strong.
Our capital work in progress right now is 8.3 billion. Something that is not yielding any output for us. In total we are expecting to invest about 30 billion between FY27 and 29.
Nitin Khanna
How we are going to fund it? Nitin will give you more little bit more idea. Look. Thanks Vikas. Look, the same cash flow momentum will continue and I don’t see any major capital which we are going to draw from the borrowings as such unless there is a very strategic acquisition coming in our place. So for announced projects this entire 30 billion will be funded through internal accruals. Secondly, I also pointed out that the CRE business, the one project which is already in pipeline will start giving us results in FY 2829.
So that’s one big jump which we’ll see from a CRA business. From a hospitality business. We still have two assets which are in the ramp up stage. You see Athiva which has just launched in November 25th. We are yet to see the complete results from the FPS part launching Ativa in the next quarter. You still see a ramp up which is coming over there. Bangalore, 120 plus rooms. We still see that effect on EBITDA coming in. So I am fairly confident that from the same momentum from the cash flow will continue and we will be doing the efficient capital allocation as we have been doing in the recent past.
Shwetank Singh
And sorry just to add the new commercial real estate that’s coming up is also 900,000 square foot. So it’s a big development and that will be very value accretive for us in terms of cash flows.
Vikas Ahuja
Yes sir, this is helpful. One final bookkeeping. You know ADR uptake of 8% possible to get, you know same store number. Also you know can management share FY27 ADR outlook if we have any because you know with the outbound international travel becoming expensive and domestic leisure demand improving, do you think Chalet City heavy Marriott led portfolio to see relatively lower same store Adi versus the peer. That’s my final question sir. Thanks a lot for your time.
Shwetank Singh
No, not really. We continue to believe in the strength of the business. In fact if you have heard the recent announcements from our honorable Prime Minister, he’s spoken about encouraging more travel within India. So it’s a trend that we are closely watching out for. Already I think the Middle east image has taken a bit of a beating and therefore we actually expect the the marriages to move from Middle East Back to India. So actually we are expecting a strong recovery and bounce back in the second half of the year, broadly speaking.
So we don’t see any slowdown coming yet.
Vikas Ahuja
My question was we are more corporate heavy versus some of your peers which are more leisure heavy. So for example, this quarter also our revpar number, I mean even the ABR number was little lower than the peers. So I was trying to understand that whether that trend you think will continue in the near term because you know, flying to other countries have become, become expensive. But it’s same, it’s, it’s vice versa also. Right. And we get our fit number is much higher than some of the others. So.
Yeah,
Shwetank Singh
So we hear you. It’s not, it’s not that it’s a trend that we don’t look for, but we don’t see any slowing down in particular for any of these reasons. Yes, we are a bit business heavy but we are also been diversifying our portfolio into the leisure side. So we are absolutely in a good space with respect to all of this, I think.
Vikas Ahuja
Okay, sir, thank you. Wish you luck for the next quarter.
Shwetank Singh
Thank you.
Operator
Thank you. The next question is from the line of Sumit Sinha from Macquarie. Please go ahead.
Sameet Sinha
Yes, thank you. So I had a couple of questions kind of going deeper into the previous one. Clearly domestic travel has picked up and hopefully it will continue to gain momentum, especially over the summer. Can you talk about sort of what initial trends you are seeing in terms of spend, especially in the context of the statement that you made earlier where foreign travelers tend to travel with other people, especially domestic executives and that. So there’s a multiplied effect there. So that is one question.
My second is in terms of commercial leasing, you’re saying that it will be totally leased out by fiscal 28th. Any reason it could take that long or what’s the holdup? I know in the past that you’ve spoken about that you were careful about the quality of the counterparty there. Is that the reason or is the Bangalore market seeing any sort of different sort of macro impact?
Shwetank Singh
Okay, let me take the questions in the two parts on the commercial leasing side. Actually we have had a very decent pickup on Bangalore. I think we have now upped our occupancy to nearly how much? 91% in Bangalore. So I think we have made good progress there. And actually part of our comment on the leasing was for SGMUS 2. It was not for our existing inventory. Our existing inventory is nearly, is above 90% occupancy right now. So you know, we can we, I Suspect that we can only, we only have a 10% play there.
So there’s. And if you see our exit has almost reached the 30 crore per month mark. So I think on the leasing side we are doing fairly well. With the recent pickup. Our occupancies have improved quite dramatically with respect to foreign tourist arrivals. Of course there is a geopolitical tension that is unresolved as we speak and it continues to be a space that we monitor. But we have pivoted during this period. We have closely monitored this trend and therefore gone back to some of our corporates with more favorable rates and better offer.
And therefore we have upped the game on that. We have also looked at the cruise segment and increased our base occupancies by bringing them in wherever possible. So as I said, we are monitoring this trend closely. We expect it all to return very quickly after the tensions subside. On the leisure side, there seems to be no stopping. People continue to want to travel. Our leisure portfolio is doing very well and with Athiva Khandala in particular, we are still stabilizing. So you know, the growth potential on that is very, very substantial for this year.
Sameet Sinha
Got it. Thank you.
Operator
Thank you. We’ll take the next question from the line of Pratik Kumar from Jefferies. Please go ahead.
Prateek Kumar
Yeah. Good morning. Good morning sir. My first question is on your quarter. Can you split your quarter like on a month wise basis. But we were discussing March. So because your RevPAR of minus 3% compared to 6 to 8% for peers. So what specifically have hurt you more and how is your March performance And then maybe how on a net basis things have, I don’t know if it has improved in April, May or how are they shaping up?
Shwetank Singh
Okay, good question. Even though the question hurts us, but it’s still a good question. Let me actually in my speech I referred to a very steady January for the reasons that Mumbai was not marked because of elections, the municipal elections and a long weekend which sort of stunted the growth in Mumbai. February was very strong across the board. In fact, our south hotels, some of our south hotels were upward of 35% growth year on year. So you know, the structural demand, there’s nothing wrong with it.
That continues to be very strong. And Chalet, if you look at Chalet’s performance throughout, our strength has always been foreign tourists. And they’re brilliant. They stay longer, they consume more F and B. They stay around the hotel and, and they tend to pay. They have higher per diem so they pay us better. In the south hotels Particularly in March, what we witnessed was a dramatic amount of cancellations. Just to give you a number, we lost almost 9,000 room nights from foreign tourist arrivals and some attached business as I had referred to in my speech from the domestic side which was a much smaller number but still an attached number.
Overall I think the political tensions have caused about a 10 to 12% disruption in our business. If that hadn’t happened, I think we would have been really strong. When you compare us to our peers you have to also sort of look at the fact that our portfolio is where it is. And given that portfolio we have had great days. And this was an unfortunate quarter from our perspective where we were in a micro market which was not very strong but that tends to change. These are short term trends. Fundamentally Mumbai is still one of the strongest markets this country has and the fact that there is such demand, there are such barriers to entry, we will be continue to operate, we’ll be continuing to operate in a very, very strong market I think.
Prateek Kumar
And how is this trend move like a foreign tourist arrival which is 40% of the mix in April may have the significantly improved or how is that changed?
Shwetank Singh
So you know it’s not a good idea to just look at percentages. We heard a lot of our peers talk about just percentages because you know percentages can be misleading when the overall demand itself is dropped. So the way to look at it is the real loss in room nights. And as I said just for March alone we lost about 9,000 room nights from foreign tourist arrivals. It has become a bit better. April has been stronger and actually has surprised us also on a year on year trend. And May is really strong.
But to give you that a full picture, May last year at this time was very weak because of operation Sindhur. So we are getting a bit of an advantage for that. June looks steady so this quarter will be fairly strong overall is our expectation.
Prateek Kumar
Sure, thank you. One other question on capex. So this year we ended up doing capex of 400 crore versus like around 800 to 900 crore expectation I think which we generally were guiding.
Operator
Can you please rejoin the queue for follow ups please? We have a queue sir. Thank you. Ladies and gentlemen. We would request all the participants to kindly limit their questions to only one per participant as we have a long queue for questions. Thank you. The next question is from the line of Akash Gupta from Nomura. Please go ahead.
Akash Gupta
Hi, am I audible?
Operator
Yes sir. Please proceed.
Akash Gupta
Hi. Congrats on great performance for the quarter. So my question number one is that we have multiple Hotels which are reaching stabilization phase in FY27. And then we also have introduced, we have done new acquisitions over the past two years. Wanted a quick summary on like where are we in the stabilization phase of each of the hotels and how should we look at that by FY27 end? That’s my first question.
Shwetank Singh
Thank you. Aakash, I really like you. You’re the first one who’s acknowledged a good performance. Just to sort of talk about our portfolio, let me break it down. Let’s take the easy one first. We have added 129 rooms to Bangalore and as Nitin keeps pointing out, 129 room addition is like adding a whole new hotel. So that is still picking up and therefore you must have seen an occupancy drop overall in Bangalore. But that’s because we are still absorbing the new set of rooms. It came at a time where there was geopolitical headwind.
So the timing was not great in hindsight. But we still believe that by becoming one of the largest hotels in that micro market, we are going to gain from the inventory size and quickly rebound to a 60% occupancy. So there is a big headroom that’s coming from Bangalore very clearly. Moving on. Athiva Khandala is only entering its first proper operational year and with the positioning that we have managed to do for it with ADRs north of 15,000, we believe that there is a very strong potential of growth there in this year and in the coming two to three years.
Therefore we can expect a very, very good sort of performance coming from there. On the customer side, we have had excellent feedback, very well received and that’s something that we have been actually working on very consciously and spending a lot of marketing dollars on. And that seems to have worked because almost every feedback that we have had is brilliant and our rating is over 4.9 on TripAdvisor. So very good performance there from that hotel. FPS which we are rebranding to Aseeva will also see a big upside mainly because that market has become stronger in that area with the opening of the new airport.
But also the fact that we have invested close to 100 crores in that property, completely gutting it out and rebuilding it from scratch. Our projects team has done a brilliant job. It’s a Hirsch Bender design and what has come out as a product is absolutely beautiful and we expect that to again have a very strong impact overall on the portfolio in terms of growth. Looking at our other two resorts, Rishikesh had a Western Rishikesh had a very difficult year last year with Operation Sindur and the fact that we had monsoons.
So on a low base, a stabilizing hotel is expected to give a very good growth over last year. Our courtyard at Aravalli, which has now been rebranded to Marriott Aravalli should also have a significant upside given that there is a clear brand uptick on it and Delhi NCR being a very brand conscious market, we expect the rates to go up as a result. So overall we have multiple opportunities. There have been FNB outlets that we have opened which are not stabilized. Those are also growth engines. There are a few additions that we are doing through our asset sweating route which we will keep announcing in subsequent quarters.
So there’s a lot of work that’s going on within the portfolio which should give us significant upside overall.
Akash Gupta
Understood sir, thank you for that answer. So my second question is your two acquisitions the Udaipur and the Hyderabad one? Sir, could you give us an understanding as to how you are thinking about those two micro markets? And second is what kind of IRRs have you baked in into the calculations for these numbers and what kind of ADR growth rates have you baked in for these IRRs? Thank you so much.
Shwetank Singh
Look, our stated strategy on development has always been very clear. We want to be putting up big boxes, taking large concentrated bets in key markets just ahead of the infrastructure curve. On the leisure side, we have always said that we wanted to diversify our portfolio to get to at least 20% of our revenue from the leisure segment. And leisure we define as drivable distance which is about an hour, hour and a half from a key airport. Besides this, we have also said that we will look at some deep markets in leisure such as Goa, Udaipur, Jaipur, etc.
So it has always been our stated strategy to go to these markets and we have taken a very proactive approach to our development strategy. Having said that, coming to Udaipur, we have always believed Udaipur is a deep market. If you look at our acquisitions more recently, we have basically focused on reducing the land to launch risk. While Greenfield is our strength and continues to stay our strength, we believe that the maximum value resides in turning around opportunities such as Udaipur where we are taking up a resort and actually gutting it completely and refurbishing it to a much higher level and positioning.
Athiba coming from Dukes is a classic example of that. We see Udaipur similarly, all segments are firing in Udaipur today and continue to do so. A classic example is the issues that the world faced right now with the geopolitical tensions actually Udaipur gained overall because those marriages came back to Udaipur from being destination weddings outside the country. So, so Udaipur strong continues to stay strong. We have taken up a case where we can actually make refurbishment and reposition. Hyderabad has been on fire for a long time and that particular micro market we love because we have 13 million square foot of our own office space there in that micro market from our sister concerned Mindspace.
We already have two hotels there in the two West Inns. This is a third. Taking full advantage of the cluster, giving us a new position point also and give us an advantage so that we can actually start to dictate the price in that market. Taking it on lease from Mindspaces I think is also a brilliant strategy because it actually lowers our CapEx burden to the extent of the warm shell and also back ends our fitment cost on the CapEx side. And you know we have publicly spoken of a 560 million capex overall.
But there are two things that I want to remind you all. First of all, it will be back ended. Second of all, it also includes about 40,000 square foot of commercial space the cost of which is also built into that CapEx. So we continue to remain very efficient when it comes to the CAPEX side. We believe that that market is really strong and will continue to grow. In fact we don’t mind looking at a few more hotels in and around financial district of Hyderabad also. The GCC story of India is very clear.
There have been multiple articles recently that you must have seen. Everything seems to have grown in that sector and India continues to be very strong and that’s something that we have complete trust and faith in.
Akash Gupta
Understood sir. Thank you so much.
Shwetank Singh
Oh sorry, one second. Sorry, one apologies. It’s not 560 minutes. 560 crores. I missed a zero. I wish it was 560 million.
Sameet Sinha
Okay,
Operator
Thank you. I request to all the participants to kindly restrict their questions to only one. Should you have a follow up question, please rejoin the queue. We’ll take the next question from the line of Adidas Chattopadhyay from ICICI Securities. Please go ahead.
Vikas Ahuja
Yes, I’ll try to squeeze in my questions in one shot. So the first is just the accounting thing on the capital WIP of more than 800 crores. Where does this sit on the balance sheet as of March 26? Because the capital WIP number looks just north of 100 crores. Could just clarify on that and other question is on our Bombay hotels, the operation was the Westin and the four points which is getting converted into apiva. Now if you could just help us. You alluded in your opening remarks that occupancy has been impacted a bit by the Cygnus Tower 2 construction.
So in 27, what is the outlook on occupancy considering this and with the Athiba rebranding in Washi, how do you see the occupancy trending in the year 27? That’s it. Those are the questions from my side.
Shwetank Singh
We have lost track of the questions. But Nitin, we’ll start with the Capex question and then we’ll jump in for the other parts please.
Nitin Khanna
So the 800 crores actually sits, you know from an accounting balance sheet perspective in three segments. So one is of course the direct cvip. The second is if you see the notes to accounts it actually sits in IPUC which is around 486 crore. The CVIP Pure number is 1,132crores and balance is actually lying under inventory which is around 269. So if you add that up that comes to around 800 crores. Okay,
Vikas Ahuja
Yeah.
Shwetank Singh
Should
Vikas Ahuja
I repeat my question or.
Shwetank Singh
No, let me just deal with the Athiva question first. At FPS that market is. I mean that market has always been strong. We have always been a leader in that market and by a very, very long margin we actually chose this opportunity to invest significantly in that property because we wanted to rebrand it at a higher level for our brand and therefore we made that investment. We don’t see any slowing down in that market. In fact we expect that market to be growing quite rapidly and I think our timing of launch on that market has been quite fortuitous.
Doesn’t always happen like that. But in this case we have managed to time it quite well is my belief. Coming to Powai, I think we did mention that there is a short term stability stress on the occupancy side because we have an under construction commercial building there. The stress is coming for two, three because of two, three factors. One is the crew doesn’t like the noise. They like to sleep in odd hours of the day as and when their flights come in. So we’ve had some crew that has left us. We have managed to retain some of them in JW Sahar but we have still had a net outflow on that.
Secondly, we have lost the porch of the banquet space mainly because there was a connectivity at the basement level with the buildings building next door that’s under construction. We are rapidly closing that out and we should be able to close it out fully and significantly in the next quarter. Post which we expect our mice and social business to resume. Back to business as usual. Did I want, did I answer all your questions or did I miss something?
Vikas Ahuja
No. So that is I think fairly clear so broadly to take away 27. These things should get ironed out at least that.
Operator
Can you please rejoin the queue sir, we have a long. Okay, okay, fine, thank you. I would request all the participants to kindly limit their questions to only one. Please rejoin the queue for follow up questions. We’ll take the next question from Karan Kanna from Amber Capital. Please go ahead.
Karan Khanna
Yeah, hi, thanks. And just two quick questions. Firstly, in terms of the guidance for pipeline addition for FY27, given that you’ve already crossed 5,000 keys which was the guidance at the start of the year, so how should we think about that going into FY27 and which segment will it be more leisure or business? So that’s question number one. And secondly just a clarification on Ritz Carlton Hyderabad is the capex number 560 crores which is as per the presentation or 630 crores as per the press release and is it safe to assume, you know 25,000 ARR and 80% stabilized occupancy and you know by when can we expect stabilization of this hotel?
And just to follow up on this, what can be the lease payments more like 15% lease payment to Mindspace REIT or will it be higher? And in that context what kind of margins are you expecting for this project?
Shwetank Singh
Right. By the time you got to your second question I’ve forgotten the first one so let me deal with the second one first. Karan. So the one in Hyderabad is 560 crores of capex. When we had reported it in the press we had actually done the right thing by adding IDC and lease deposit and therefore that had added up to 630. We realized that the market didn’t interpret it that way and hence we wanted to clarify this that the pure construction cost that’s going into the building is 560 crores with including 40,000 square foot of commercial space.
So it is still very very efficient. Probably at the top end of CAPEX deployment in that price positioning of the hotel. Coming to the price positioning 25,000, should we expect 25,000? I think quite easily today the market at the top end is driven by it and we know that they are fairly in that region already if not higher than that. So there is no reason for us not to expect that kind of pricing from a hotel which will be brand new and probably much superior to the comp set there. So that’s the second part of the conversation Karan.
Nitin Khanna
From a direction perspective I think we normally don’t give future directions in a very specific property. And this is again a capex which is a back ended. I would suggest to keep this information up to this level only.
Karan Khanna
Sure. And on the pipeline for FY27 Shwetank, how does that look like? Is there a guidance you’d like to lay out for that?
Shwetank Singh
Yeah. So look, I hope you like our expansion plans because we are now up to 1655 taking up to over 5000 keys. So I think we are probably amongst the best in the market when it comes to the growth cycle. Secondly, are we going to stop there? Is your main question. Absolutely not. We continue to be in a growth phase as a company. We love our group and sister companies as well. So we tend to work with them for a while. It just helps us to follow the commercial development. It just gives us captive demand and almost ensures that we start on a very, very strong base as soon as we come to the opening.
So overall we love expansion. We are going to continue to expand. What are we going to do in terms of what kind of assets? We continue to be very efficient on the green field. We love conversions because we know that we can sort of reduce the risk on land to launch and get a higher return on our capex employed overall. But we would also not stop at acquiring good hotels like the Westin Rishikesh or the Marriott in Aravalli because we know that it significantly reduces the execution risk for us overall and gets us to cash flows very quickly.
Operator
Thank you sir. I request to all the participants to kindly not to club the questions and restrict themselves to only one question per participant. The next question is from the line of Achil Kumar from hsbc. Please go ahead.
Vikas Ahuja
Yeah, hi, thanks for taking my question. I’m so sorry I have to act very quickly. So one, you know, I want to understand about the impact. So you highlighted that you lost 9,000 rooms but that’s all from foreign tourist rivals. How do you see the domestic? I mean because everybody’s talking about the domestic replaced international. So how do you see the domestic demand and do you see the domestic corporate events are actually increasing them? They are not canceling. So how should we think about that?
And you must be talking to your corporates. How do you see that business? You know, so that Is first question. Secondly, on the strategy about the growth you highlighted that you are expanding, you know, beyond business hotel. So you are expanding luxury and you said 20%, you decided to go to 20% at least or maintain 20% luxury side. But I mean you know I think if you see the GCC growing, lot of GC growth is coming, tier 2, tier 3 cities, Jaipur, Coimbatore and all. So is your strategy still remains limited to expansion in these known cities or you are sort of open and then you plan to grow in other cities where you see a lot of business coming through in the GCS and even in the leisure.
Thanks.
Shwetank Singh
So sorry, just to clarify we didn’t say luxury, we said 20% in the leisure segment. Sorry,
Vikas Ahuja
Sorry, my bad.
Shwetank Singh
I just wanted to clarify that because you know that luxury is not something that we want to get to 20 percentage in terms of our growth. As I said, our strategy is very well stated. We are not going to mend what is not broken. The strategy is working brilliantly for us. We will go to leisure spaces, deep markets but we will continue to expand in the key markets just ahead of the infrastructure curve with large big boxes because we know that the unit economics on them is brilliant and therefore if you see our industry leading EBITDA margins comes from the fact that these are big boxes with very efficient operations and a brilliant asset management team to back up all of that.
So hence we will continue to grow and continue to grow in a diversified manner as we have said before. What was your first question Achal on? Was it on? What was the other question you had? Sorry, it slipped my mind
Operator
Sir, Achal has left the queue. Maybe he’ll get back to us later. We’ll move on to the next question from the line of Deepak Saha from Ashika Institutional Equities. Please go ahead.
Vikas Ahuja
Thanks for the opportunity. Just one question sir. If you see the last two quarters trend, the divergence between webpar and room Garani in this quarter minus 3% RevPAR meaning to 4% kind of a room revenue growth. So under normal course of business given the last year base was also very low. If you’re able to pull off mid single digit high single digit kind of a revpar growth can we expect to assume that that can culminate into double digit kind of a mid double digit kind of a home revenue growth at least FY27?
Shwetank Singh
Yeah, absolutely. I mean this is the shortest answer I’ll give today. Absolutely
Vikas Ahuja
Perfect sir. Last one on the lease side, any risk from work, from home point of view in Terms of incremental signing, that is possible.
Shwetank Singh
Sorry, I couldn’t hear the question.
Vikas Ahuja
I’m saying on the, on the commercial side, as far as incremental signings are concerned, given the commentary that has come from the senior leadership, I understand long term vs. But in terms of incremental signings on the commercial annuity, do we see any moderation risk on the commercial annuity side?
Shwetank Singh
No, not at all. In fact, if anything, our demand side has gone up and quite significantly. And while at Chalet we understand the space, the group understands the space even better. And if you see the growth of Mindspace, you’ll realize it just continues to grow. So the GCC story is there was a recent article also on Times of India. If you have seen everything seems to have nearly grown at 30, 32% in the last three to four years of the GCC space. So it’s a space that’s really growing. We don’t see any slowing down on that.
Operator
Thank you. The next question is from the line of Abhay Ketan from Access Capital. Please go ahead.
Abhay Khaitan
Yeah, hi. Hi Shaitang and Nitin and thank you for the opportunity. So just one question on the margin side. So even in FY26 we saw that there was some slip in the hospitality EBITDA margin. And going forward, if we are expecting incremental occupancy to come more from domestic versus international, how are we looking at the margin outlook in FY27 and 28 and what are the strategies that Chalet as a unit can take to increase that?
Shwetank Singh
See, look, if you see, historically our margins have been absolutely at the top end of the industry and it continues to stay there. What we need to realize is that for the city hotels we are not likely to significantly grow the margin percentage. We are pretty much at a stable point where the flow through is equal to the margin. So you can’t grow the margin at that point even mathematically. So they will continue to remain stable and that will be our key challenge and our asset management team’s key challenge to keep that margin stable.
But on the leisure side, we still have some growth because we are not stabilized on the margins in our leisure portfolio. And we expect that to grow to at least mid-40s, thereby overall continuing to grow the the margins of the portfolio. Don’t forget we have a little bit of a scope on the CRE side also because our margins are at I think 83, 84% right now. So there is some growth that we can bring from there. Don’t forget that we had Also mentioned asset sweating and asset sweating is very central to how we look at our existing business.
We will continue to add new revenue generating areas where they didn’t exist before and therefore we will continue to see a margin expansion as well as a growth overall on the revenue side.
Vikas Ahuja
Thank you. In
Nitin Khanna
Addition to that there was also a Bangalore ramp up. You know we have added 121 rooms which also will, you know, kind of impact our margins. And once the complete ramp up happens, that also will, you know, stabilize our EBITDA margins.
Operator
Thank you. The next question is from the line of Jinesh Joshi from PL Capital. Please go ahead.
Vikas Ahuja
Yeah, thanks for the opportunity. My question is on dial while you highlighted that this is a one time proposal for one project but just wanted to understand this decision a bit better. Basically this is an airport hotel. You have. Taj is a branding partner. So, so that means that the scale up can be much faster in the first year itself. Then in such a scenario why choose to dilute? Why not take a debt and fund the capex of that particular hotel? So yeah that’s, that’s question one. I just wanted to know the thought over here.
Shwetank Singh
Sorry Ginesh Egbar, can you repeat your question? We were losing you in between.
Vikas Ahuja
Why. Why choose an equity partner in dial rather than funding the capex via debt? Because this is the airport hotel. Occupancies can be very healthy in the first year itself. So wanted to know the reason behind dilution versus debt funding?
Shwetank Singh
No. So this is not a capital decision for us. Jinesh, let me clarify that this was not a capital decision. We are trying out a project level partnership, something that we have not tried before. We are just trying to figure out how this works. You have already seen the strength of our balance sheet. It’s not that we are looking or scrolling for capital right now. So it’s not a capital decision. Just for clarity.
Operator
Thank you. We’ll take the next question from the line and this will be the last question for today due to paucity of time. Costa Pavaskar from ICICI Direct. Please go ahead.
Vikas Ahuja
Yeah, thanks for the opportunity. Congrats for resilient performance. And I will just ask the question which earlier participant was trying to ask on the demand trend. Sir, you mentioned in your initial comment that you have witnessed cancellation on the foreign tourist arrival. In terms of, of the. What we are trying to understand is that if this, you know, scenario continues, global uncertainties continue. I’m not talking from the quarter one perspective. I’m talking from the entire perspective.
Q1 might be good for us because the base was low. But if this, you know, uncertainties continues. So from domestic, you know, corporate cancellation point of view or if there are any cancellations going ahead since even government is also trying to emphasize more on, you know, online meetings or work from home kind of a scenario and if corporate tries to reduce on their travel cost going away. So in that context, is there any risk of cancellation from the domestic, you know, corporate travel point of view?
And if, you know, if this is first part of the question, second part to it is that are we like whatever, you know, steps you are talking about or the upside risk we have in terms of the leisure properties or you know, the rooms coming occupancies at Bangalore, new rooms getting into that will mitigate whatever the risk which I’m talking about.
Gaurav Singh
This is Gaurav, I’m answering this on behalf of the team here. You know, from, from a perspective of what Shwetang just touched upon, the international traveler, we did have a decline in the numbers that were shared to you, approximately 9,000 in just the month of March. But when we look at the domestic traveler, so to speak, we’ve had no decline principally in the entire portfolio. We believe that given that there is more scope of opportunity available in the portfolio now with the occupancy available, we’ll be able to, you know, use that space available by correcting our segments towards driving the occupancy upwards.
When we speak of correcting a segment, it is essentially looking at segments which we otherwise may have restricted given that we had international business coming in largely like groups, mice that could have been restricted in larger size. If I was to give a perspective of that as a number, we’ve seen an upward Trend of almost 10% on our group segment moving from 20 to 22% of the entire business segment just in the last month alone. And these corrections will allow us to be able to move our segmentation driving domestic demand upwards.
Operator
Thank you, sir. As that was the last question, I now hand the conference back to Mr. Shwetank Singh for closing comments. Thank you. And over to you, sir.
Shwetank Singh
Thank you so much. I understand there was still a long queue of questions and we missed some of the people. Please feel free to write to Deepak, who heads investor relations for us. We’ll be very happy to answer your questions separately. As always, we appreciate your insightful suggestions and queries. We hope we have been able to respond to all your queries. In case you need any further clarification or insights on our business, please contact Deepak once again and he will be able to help you.
Good day and thank you so much.
Operator
Thank you, members of the management, on behalf of Chalet Hotels Ltd. That concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.