Chalet Hotels Ltd (NSE: CHALET) Q1 2026 Earnings Call dated Aug. 01, 2025
Corporate Participants:
Unidentified Speaker
Sanjay Sethi — Managing Director and Chief Executive Officer
Shwetank Singh — Executive Director
Nitin Khanna — Chief Financial Officer
Gaurav Singh — Chief Operating Officer
Analysts:
Unidentified Participant
Vikas Ahuja — Analyst
Sameet Sinha — Analyst
Karan Khanna — Analyst
Prashant Biyani — Analyst
Jinesh Joshi — Analyst
Vaibhav Mule — Analyst
Naveen Baid — Analyst
Nikhil Poptani — Analyst
Presentation:
operator
Conference is now being recorded. Ladies and gentlemen, good day and welcome to Q1FY26 earnings conference call hosted by Chalet Hotels Limited. This conference call may contain certain 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 risk and uncertainties that are difficult to predict. As a reminder, all participant 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 this 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 Dr. Sanjay Sethi MD and CEO of Chalet Hotels Limited. Thank you. And over to you, Dr. Sethi.
Sanjay Sethi — Managing Director and Chief Executive Officer
Thank you, Amshad. Good morning ladies and gentlemen and thank you for joining us on today’s call. I’m joined this morning in our office by my colleagues Shwetang, Nitin, Gaurav and Ruchi. After my remarks and Nitin’s commentary on finances, we’ll be happy to take your questions after that. Let me begin by warmly welcoming Mr. Muneeq Manish Choukhani to the Board of Directors of Shale Hotels Limited as an additional independent Director, he brings with him a wealth of experience, strategic foresight and a strong governance mindset. Qualities that align closely with Chalet’s next phase of growth and evolution.
As shared in the press note last. Evening, I have decided to step down from my executive role at the end of my current contractual tenure as managing director and CEO on 31st of January 2026. In anticipation of this step, we have worked over the last 30 months on the next line of leadership and succession of the company. I’m very pleased to see Shweta being designated to take over from me early next year. This transition is the outcome of a meticulous and collaborative process aimed at preserving our strategic direction while infusing fresh perspective and energy. And now back to the business of running one.
The quarter gone by was marked by substantial external volatility. May brought a series of disruptions. From geopolitical tensions on our borders to multiple airspace closures and a tragic aviation accident. These events triggered significant disruptions across the travel ecosystem. But yet again, the sector demonstrated strong resilience. I’m pleased to share that Chalet’s own portfolio reflected equal strength. Our performance this quarter underscores the strength of our differentiated business model anchored in asset ownership and operational depth. In a landscape increasingly crowded by asset Light players. We continue to believe that long term value in hospitality is created by owning the right assets in the right location, backed by deep operating capability and a prudent capital structure.
This conviction allows us to weather shocks, protect margins and compound value consistently over time. Adding to this foundation is a complementary diversification into the office annuity business which acts as a natural hedge and provides a stable income stream. This dual engine model, hospitality and commercial, strengthens our ability to grow sustainably while managing cyclical volatility. During the quarter we saw continued strength in revenue per available room, largely led by strong average room rates. Our F and B revenue also had a healthy growth of 13%. At the same time, our disciplined cost control remains a core lever in navigating towards uncertain environment.
Hospitality revenue for the quarter stood at rupees 3.9 billion, up 18% year on year. EBITDA for the segment increased 20% to 1.6 billion with margin expansion of another 50 basis points to 41.7%. On a consolidated basis which includes our residential contribution, total revenue rose 146% to rupees 9.1 billion. Consolidated EBITDA came in at rupees 3.7 billion, a growth of 150% excluding the residential project Core revenues which I want to emphasize here, the core revenue business of ours which is primarily hospitality and supported by real estate, commercial real estate, the revenue grew by 27% and EBITDA grew by 37% EBITDA year on year respectively.
We added 165 keys for the year till date, a 5% expansion in the inventory in the first few months. In Bangalore we commissioned 121 rooms in a phased manner at Marriott Whitefield, taking the total count of that hotel to 512. Subsequent to that another eight rooms are ready and they’ll be plugged into the system very shortly. So we expect the total final inventory of that hotel to be at 520 rooms. This scale there gives us operational leverage in a high performing market. At the Duke’s Retreat Kandala, we’ve added 44 more rooms and a new banquet facility.
The final count, final 30 rooms will be completed shortly and will bring the resort to a final key count of 147. Construction at the Upper our upcoming hotel in Delhi Airport continues steadily and remains on track for opening next year. The civil work has actually reached the third floor which is a typical floor and here onwards it will move pretty quickly. Meanwhile our teams are already on the site on MEP internal civil and interior works. We continue to lead. Sorry on the commercial front, our second office tower which is the Cygnus 2 at west in Powai Lake complex is also progressing very well and is scheduled for completion in FY27.
Meanwhile, our residential project, the Zuwari and Koramangala has seen excellent traction. Since its launch in October 2023 it has attracted robust demand at premium price points with now only 14 units to be sold. We continue to lead from the front on esg. Shalet has been certified further at the great places of work this time. This year is now the sixth consecutive year. It’s a strong endorsement of our people first culture and focus on employee well being and capability building. On environment front, we remain on track with our net zero targets and are actively delivering our commitments to the climate growth Ladies and gentlemen, our strategy of owning high quality hospitality assets complementing complemented by our annuity yielding commercial real estate assets continues to provide a solid foundation for sustained growth.
Our diversified model supported by a strong balance sheet and disciplined capital allocation positions chalet to pursue both organic and inorganic opportunities with confidence. We also intend to do more of this over the next few quarters. With that, I’ll now hand it over to Nitin who will walk you through the financial details for the quarter.
Nitin Khanna — Chief Financial Officer
Thank you Sanjay. Good morning ladies and gentlemen. It is my pleasure welcome you once again to the call. On a consolidated basis, Total revenue surged 146% year on year to 9.1 billion. While EBITDA rose 150% with margins expanding by 70 basis points to 40.9%. This includes revenue recognition from the handover of residential apartments at the Vivaria Koramangla, Bangalore, where we were delighted to welcome our first group of homeowners. 95 apartments were handed over during the quarter. As previously discussed in our earnings call, revenue recognized from this project amounted to rupees 4.4 billion contributing to 1.6 billion to EBITDA. Excluding the residential component, revenue grew 27% year on year to rupees 4.7 billion and EBITDA increased 37% to 2.1 billion with a robust 330 basis points margin expansion to 44%. 44.4%. Revenue from our hospitality segment rose 18% year on year to Rs.
3.9 billion driven by a 10% increase in RevPAR which reached rupees 8059. ADR improved 17% year on year to Rs. 12,207 supported by strong rate performance in both Bangalore and Hyderabad markets. Overall Occupancy stood at 66% down 4.4% points year on year, primarily impacted by softness in the MMR market and the launch of additional inventory at Bengaluru Marriott Hotel, which of course coincided with geopolitical deceptions. As this new inventory stabilizes, we expect occupancies to rebound. Excluding the Bangalore addition, Chalet’s occupancy was at 68% on a like for like basis, I.e. excluding the Westin Resort and Spa Himalayas, ADRs grew 13% while occupancies declined 3.8% points resulting in overall RevPAR growth of 7%.
We continue to diversify across micro markets with varied cost structures and remain focused on enhancing operational efficiencies backed by strong execution. EBITDA margins improved by 50 basis points to 41.7% with further margin expansions expected through robust asset management and operating leverage from ramping up assets. Revenue from our rental and annuity portfolio rose 106% year on year to rupees 732 million with a June exit rate run rate of rupees 250 million. EBITDA increase 130% to rupees 608 million yielding an 83.1% EBITDA margin. Currently committed leasing stands at 77% across our commercial portfolio within the residential segment.
As previously indicated, we have initiated revenue recognition for 95 units of Koramangala Phase 1. Revenue from another 58 units will be recognized in the next quarter. We do not anticipate any further revenue recognition for the remainder of the financial year, which is FY26. The next set of apartments would be ready for handover in the next financial year, that is FY27. During quarter one we sold 13 units at an average rate of rupees 21,100 per square feet reflecting a 7% quarter on quarter increase. Rupees 1.3 billion of cash flows were generated by this project in this quarter.
As of June quarter, 307 units have been sold from a total inventory of 321 units for the entire project. We remain confident of delivering Rupees 4 to 4.5 billion on net exit from this project within next 24 months, including the starter sale of the commercial tower measuring 0.15 million square feet. Our net debt stood at rupees 20.2 billion with the average cost of finance contracting by 40bps quarter on quarter to 8%. We maintained a healthy liquidity position of rupees 3.2 billion at the end of the quarter. The capital work in progress and the assets pending Operationalization amounted to Rupees 7.4 billion at the close of the quarter.
With a disciplined capital allocation framework, we are strategically investing to drive long term sustainable growth. Under our current strategy we have planned capex of Rupees 20 billion by FY27. Primarily funded through our internal accruals. The company’s balance sheet continues to provide the financial resources necessary to pursue potential strategic opportunities in the future. With that, let me hand over to Shwetank for his introductory statement.
Shwetank Singh — Executive Director
Good morning all. I’m Shwetank. As I step into this role, I am very cognizant that Sanjay’s boots are one of the hardest to fill in the industry. What he’s done for the company thus far is absolutely unparalleled. So I must start by thanking you Sanjay. Having said that, I feel fairly confident and I feel confident because of two or three reasons. First of which is that I’ve been working along with Sanjay for last two years now as he mentored me through this role. The second reason that gives us a lot of confidence is the fact that he is going to continue on as a board member and therefore his wisdom will continue to stay in the company which is going to be extremely helpful for us.
And the third confidence comes from the fact that we are supported with a very capable team with complementary skill sets that we all bring to the table. So I can rest assured. So please be rest assured that your company is in great hands and we hope to continue to outperform your expectations as we go along. Personally, I come in with two and a half decades of experience of which nearly two decades are with hospitality in a variety of roles. Before I joined Chalet Hotels I was in my last role heading the business hospitality business for a large real estate player in Dubai.
As we step in and as I step in and take on this role, I feel fairly excited. I’m very excited that I will take forward the legacy of a beautiful company forward and hope to fulfill all your obligations and expectations. We are now ready for the and we can switch to the Q and A.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the Touchstone telephone. If you wish to remove yourself from the question queue you may press star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Vikas from Antique Stockbroking. Please go ahead.
Vikas Ahuja
Hi. Good morning to the management and Congratulations on a good quarter Ashweta. Congrats on wishing you all the best in your new role. And Sanjay sir, wish you best in your next chapter. I know you’re still around. We will surely miss your unbiased view on demand and outlook. So my first question is to maybe Sanjisa, if you can take this. Would it be possible to share some color on growth and the pipeline? Currently we have around 600 rooms under construction in addition to, you know, the Cygnus 2 which is expected to come in next two, three years overall.
In addition we have another 600 which is in planning stage. It would be helpful if you can just provide some medium term outlook over and above these additions would be great. That’s my first question.
Shwetank Singh
Thank you Rika. Thank you for your kind words. Also look, we’ve got about 3300 rooms. Which are currently operational. Over 3300 actually we have about 1200 rooms which are in the pipeline that is announced in various stages of either planning approvals or actual development on the site. We have shared some dates with you in the past, we continue to hold them. But we are a growing company and as I said in my opening statement, our intent is to continue to grow. If you ask me what I see happening end of this year with the current pipeline plus operations in excess of 4,500 rooms, I see no reason why our pipeline plus operating hotels will not cross the 5,000 mark in the current financial year itself.
There are certain opportunities that we are pursuing in a mix of Greenfield and Channel leases.
operator
Ladies and gentlemen, we have seemed to lost the line with the management. Please stay connected while we rejoin the management. Ladies and gentlemen, we have the management back online with us. So you may proceed.
Vikas Ahuja
Apologies for that. You know I just want to complete my my part of the answer so very quickly. 3300 classrooms in operation, 1200 under various stages of development. That takes us to about 4,500 rooms. Our wish list or our goal this year is to get to 5,000. On that count we have some visibility, early stage visibility. As and when we progress on those, we come back and share them with you. That’s about it for now. Thank you.
Vikas Ahuja
Thank you. My second question is on this NMR legion. So is the drop in occupancy in the region is mainly due to the fully operational of Fairmount or there are other factors contributing to that. And in addition, you know, how should we look at the certain markets, you know, Bangalore and Hyderabad? We have seen some moderation in growth on Y and Y basis this quarter. Especially in Hyderabad I think we were doing 20% and now it’s closer to 10%. Yeah.
Nitin Khanna
Thank you. Vikas Shwetank is back on the line just for everybody to get that. So the mmr, what’s happened in MMR is there is no doubt that the opening of new supply in the micro market of where the Sahar Hotel is has had an impact. But it’s a slight impact. We would also like to remind you that we were coming off a very high base of occupancy at the jw. So a little bit of moderation can be expected when it comes to that. As far as performance is concerned we see it only as a minor blip for now and we expect that to improve in the next quarter itself.
With respect to the southern markets, Bangalore we have opened an addition of, we have added another 120 rooms to the inventory. So you would have noticed a slight drop in occupancy as a result of that. But our rates have held and actually continued to do quite well as a result. Our revpars overall have total revenue from that hotel has grown quite significantly. With respect to Hyderabad, that market has been improving year on year for the last few years whilst we as more and more commercial space gets opened and absorbed there we expect it to continue to do very well.
But you know a growth rate change can have some cyclicity and to expect a 20% growth overall year on year may not necessarily always hold true. So it’s just that adjustment that’s going through that Hyderabad might be going through right now.
Sanjay Sethi
Just one line from my side, this is Sanjay here. Look, I’m really not concerned about Bangalore. Bangalore occupancy has dropped by 6 odd percent only because we added 120 odd new rooms. The rate has grown at about 2728% from the quarter which is a strong substantial growth. Mumbai, though our occupancies may be muted, we still managed to grow the rate at 10%. And remember this is the quarter where we had the India park space off. We had slightly capacity issues on account of the unfortunate air accident which blocked a lot of aircraft. So all that combined together and despite that this is what we’ve been able to deliver and we expect this to go from strength to strength going forward.
Vikas Ahuja
Sure, that’s helpful. And also you know one broader level question, you know some of your competitors are building in substantial watches to acquire assets maybe through you know, partnerships with private equity or promoter backing. So if we get you know, any large opportunity, how we are prepared to do that? You Know how we go looking for those funds. And final, finally one bookkeeping question. You know, so residential, we have booked 450 kilodes around that number this quarter. How should it flow for the rest of the project? And, and roughly, you know, the cash flow from this would be close to around 200, 300 crores which will be, you know, deployed back into as a capex.
So I mean that is how, if, if you can just give us some trajectory, how should we build in in our numbers? Thank you
Shwetank Singh
Vikas Let me answer the first part on the acquisition and then I can hand. Over to Nitin for the second part of the question. So as far as acquisition is concerned, we are very well capitalized. We are always on the lookout for suitable opportunities. If you look at our debt levels, we are very comfortable and well within the range of 3.3.5 times EBITDA is the benchmark that we internally hold to sort of keep checking ourselves. So therefore a short answer to that question would be that we are very open to new acquisition opportunities and very well capitalized to take advantage of as and when the opportunity may arise. Nitin, for the second part, let me just clarify on the recipe part also.
So as you are well aware that revenue recognition is primarily directed from an accounting entry perspective, our cash flows are completely different. I think from your question perspective. I think in my opening remark I had very clearly clarified that 95 flats we have recognized the revenue are handed over to the flat owners in quarter one and in quarter two the number is 58. And I also told that in quarter three and quarter four we are not expecting any handovers. Any further revenue which will come will only fall in FY27 itself.
Vikas Ahuja
Okay, from cash flow perspective, how much? We are going
operator
to interrupt sir, but. I may request you to rejoin the question queue for follow up question. Thank you. The next question is from the line of Samitzana from Macquarie. Please go ahead.
Sameet Sinha
Yes, thank you. Sandhya, congratulations. I enjoyed working with you short but still enjoyed it. All this for your next endeavor. Welcome Shatank. I look forward to working with you. A couple of questions I guess as you talk about the 5,000 total keys, how are you thinking about business versus leisure? And the reason I ask is because the leisure as it increases is part of the portfolio. I’m trying to understand how it changes the people. I mean the staff to room ratio is obviously higher. There you have higher percentage of FNB which is a low margin business.
So if you can think about it the next five years, how could the PNL Change and then I have a follow up.
Shwetank Singh
Thank you for the question. And Sanjay is still around, so please don’t start saying bye to him. He’s still around for a while. So to answer your question, our growth strategy has been quite clear and that’s something that we sort of always keep as a North Star. When we got into Covid, we looked at our portfolio and wanted to get some geographical diversification as well as some portfolio diversification between leisure and business. It’s a strategy that we have followed broadly to stay within the large cities with big boxes and then within drivable distances from key airports.
It’s according to this strategy that we went on and acquired some leisure portfolio into our some leisure hotels into our portfolio and we’ll continue to sort of stay in with that strategy for the foreseeable future. As to say what exact percentages we will end up with would be difficult. But we had started off with the mindset of at least bringing in 20% of our portfolio into the leisure properties. Having said that, you’re right. The staff to room ratios in leisure properties typically tend to be higher. Overall, we are at about 0.97 for our portfolio, which I believe is the best in the industry.
And the western Rishikesh that we acquired recently was at 2.27 when we acquired, but we have managed to bring it down to 1.67, thereby bringing in asset management efficiencies that we are known to bring into play.
Sameet Sinha
Got it. One second question. So in terms of the residential revenue recognition, Nitin, can you talk about EBITDA margins tracking at about 37%? Is that how we should assume? As the other part recognizes? Well, that’s a good margin structure to go with.
Nitin Khanna
Thanks for your question, Samit. Look, there has been a history in this project and you have been. Everybody is well aware of that. In the first phase of handing over flats to the owners, the priority has been to hand over to the whole customer that these were the units which were sold at a rate which was around 10k. And as you have rightly seen that the last flats which we have been selling are around 20k per square feet. So the margins are probably better in the phase two. The phase one margin has been a little lower because the older customers have been handed over as of now.
Sameet Sinha
Got it. Thank you very much.
operator
Thank you. The next question is from the line of Karan Khanna from Ambit Capital. Please go ahead.
Karan Khanna
Hi, good morning team and thank you for the opportunity. Firstly, congratulations, Sanjay, on a great tenure and for all the contributions that you’ve made to Shari Hotels over the past few years. Best wishes with the new responsibilities you’ll be taking as a non executive director and congrats Pritang and best wishes with the new role as MTN CEO. My first question to you Sanjay and while we’ve been hearing about stickiness in occupancy is where after a hotel reaches a certain occupancy level around the 70% mark, that’s when hoteliers start increasing arrs and occupancies tend to remain stable.
This has largely been the trend for you as well this quarter. However you’ve taken aggressive ARR hikes But the occupancies fell 6% and 2% for MMR and non MMR portfolio respectively. Could you share your thoughts on the same and you know how do you plan to navigate the ARR occupancy trade off going forward? And more important on a like for like this is your RevPAR growth was about 7 8% but if you look at some of your peers that have reported I think number was north of 12 13%. So how do we read this for Shaile?
Sanjay Sethi
Hi Karan and thank you very kind words. Look in terms of occupancy, stickiness and rate growth dynamics, you got it largely right that once you move north of 70% the rates tend to climb up very quickly. But you’ve got to keep in mind the quarter that we’re discussing is amongst the two weakest quarters in the annual cycle. Despite that we’ve had material ADR growth in the portfolio even if you exclude Rishikesh. So that story of area growth continues to be strong on occupancy and I do not want to under emphasize it’s important for you to understand this is in a quarter where we had after many years a conflict between India and Pakistan which was material in nature.
There was air disruption on account of the conflict. There were air disruptions in the West Asia region. There were air disruptions after the unfortunate crash that we all were so sorry to hear about. Despite that we’ve delivered this so our story I think remains extremely bullish and strong. We expect Sahar Pawai, Bangalore, Hyderabad to continue to be considered on the trend of reed increasing average room rates. And at Pawai we also expect occupancies to fill up when the good season comes. That’s when the MIC business kicks in in the annual cycle which is H2. I hope I’ve answered
Karan Khanna
so this is a follow up. Sanjay, you know looking at the sector as a whole and you know it’s an inherently cyclical industry which has now been in upcycle for the last five years. Now the last cycle peaked during year four or year five. While you understand the structure, demand drivers are more resilient. Now if you look at the quantum of signings in the last few years across the industry, that seems to suggest that we’ll see a lot of new supply coming into the market over the next one or two years and then signings have been happening in tier one markets as well.
So could you share your revised thoughts on the cyclicality of the sector as a whole and perhaps your view going forward for the next three or four years? Do you still maintain a double digit rappar growth for Chalet hotels in particular?
Sanjay Sethi
Initial reaction and Shaitan could sort of step in with I absolutely hold the belief that 10% untied double digit revpar growth is pretty much given for the next few years. And you know I’m very confident that it will happen for the next three to four years at least. Beyond that I don’t have visibility and. I believe that this will be driven. By a stronger travel ecosystem within India both on the measure and business side. We’ve got to keep aside our two quarters once in a while when these situations happen, but business is back to normal as we speak.
Shwetank Singh
Yeah. Just to add to that, you know this is an industry where supply can’t sneak up on you. So and you know it’s notoriously hard to execute in India and a lot of people out there have actually failed in trying to execute this. So when we hear of signings and we hear of plans, we should factor in some degree of loss along the way. And you know our math tells us that that could may not be better than 35, 40% overall. So we do take announced supply with a picture of of salt but we are very mindful of it and overall I think for the country the demand is still outpacing supply quite comfortably even despite the new announcements.
So we remain very, very bullish about the sector for the near future.
Karan Khanna
Sure. And my second and last question to you Shwetank, Given that you’ve been with Chalet for last couple of years and will now be spearheading the organization, could you share your views on how you see the portfolio mix evolving going forward? And given your past experience at Golden Sands Dubai, how do you see the portfolio evolving in terms of will it be more indexed towards leisure or what’s the ideal mix of business, leisure and maybe mixed use assets across markets according to you? And any thoughts of how you plan to pursue this growth in terms of additions to the pipeline, the sourcing of funding and perhaps some thoughts on long term comfortable leverage levels for the business.
Shwetank Singh
God, how much time we have on this call? You have asked me five, six different questions. Okay, let me give you short answer for the first part. You know, we have, through Sanjay’s effort and the team’s effort, we have managed to put in a model that works perfectly for us where we have a very, very beautiful hospitality portfolio broken down by measure in business, geographically diversified as well now and propped up very well to, to sort of COVID for the cyclicity through a very strong commercial real estate business. So that model has worked for us. The residential business is clearly a one off. That’s something that we don’t necessarily plan to continue going forward.
So when we look at this model, there is no reason for us to change and mend what’s not broken. It’s been one of our strength areas and we’ll continue to build on this exact model. But I would like to point out that within this, commercial real estate is not something that we do as the first choice. Wherever we have built commercial space, we have built it on or near an existing hotel where we own the land, thereby actually giving us zero cost on the land and therefore very high returns on, on what we put in place.
So that’s how we continue to look at our portfolio. As I answered earlier also in the call, we will continue to look at big boxes in big cities and especially we would love to go to markets which are in the making and just be ahead of the commercial real estate curve because that’s how this business has been built. And that’s, that’s been something that’s been very successful for us and that’s how we’ll continue to look at going forward. In terms of. What was the second part of your question? Did you.
Karan Khanna
Yeah. In terms of addition, while you did speak about it, you know, the sourcing of funding, will you be looking to fund it by your own balance sheet and what’s the comfortable leverage levels according to you?
Sanjay Sethi
So as I said earlier, we normally like to stand, I would ask Nitin to add more color to it, but we, we would like to stay within the 3.5 times multiple of EBITDA. When it comes to debt, we have multiple sources of raising debt. The main one being lease, rent, discounting. So that’s something that we have in our portfolio and it’s a great strength for our portfolio as well. The second part is of course the fact that we are producing a lot of cash from this business and that is allowing the internal accruals also to be utilized for expansion as we go along.
So, you know, overall we are very. We are fairly well capitalized and even ready for any further opportunities that we may have. On the acquisition side, would you like to add anything?
Nitin Khanna
I think you covered it.
Sanjay Sethi
Okay, thank you.
Karan Khanna
Sure. This is helpful. Thank you and all the best.
Sanjay Sethi
Thank you.
operator
Thank you. Ladies and gentlemen. In order to ensure that the management is able to question is able to answer questions from all participants in this conference, please limit your questions to two per participant. The next question is from the line of Prashant Bhiani from Elara Capital. Please go ahead.
Prashant Biyani
Yeah. Thank you for the opportunity. Sir, with delay in commencement of Ayat Regency Eroli and Bamboo asset in Goa, would you like to advance the construction of Trivandom Hotel? Otherwise, you know, the organic asset addition. In FY28 looks to be challenging.
Sanjay Sethi
Hi Prashant. Thank you for the work that you are putting in for the industry. We all receive your emails quite often and I see that a lot of hard work is going into what you are trying to do and all the best for that. To answer your question, yes, it has been. It has been challenging to move forward. Ideally because of the NGT laws that changed and we spoke about it on our last call as well. In terms of Trivandrum, there are still a few steps left before we can actually start executing this project.
The main one being the signing of a lease document with the government in order to do that also. So there are a couple of steps left. So even if we would love to sort of move that project forward, right now we are not in the position. To move it forward. We will have to wait for these hoops to be crossed before we take it up as a project. While this is happening, the market has changed in Trivandrum and we continue to study it very closely. And we will come back to you when we are prepared to take this project forward.
Prashant Biyani
Sure. How has July been in terms of. Occupancy across portfolio and in particular for. Hotels which are more dependent on FTA. And to a question which Mr. Sethi. Answered about taking the total portfolio size. To 5,000 keys in which micro markets would the team like to add assets? Now these were my two questions.
Nitin Khanna
Okay. As a company, we don’t like to give forward guidance on what’s just happened in the current quarter. July has been a tough quarter, tough month for hospitality in general. But that’s where I would leave it for now. Because August And September look strong with respect to where, which markets we would like to grow in. As I said earlier, we want to continue to build in larger cities, either through greenfield or through acquisitions if we get the right asset in the right market. And we will continue to look at leisure portfolios within drivable distance from key airports.
And that’s the strategy. We’ll continue to sort of hold to.
Prashant Biyani
Sure. Thank you so much.
operator
Thank you. The next question is from the line of Jinesh Doji from PL Capital. Please go ahead.
Jinesh Joshi
Yeah, thanks for the opportunity. Sir, I have a question on our interest cost which has gone down by about 40 basis points on sequential basis. So once we reach an occupancy of say about 90% in the annuity business in about 2 to 3 quarters and the lease income stabilizes, where can the borrowing cost.
operator
Sorry to interrupt, sir. Could you be a bit more louder?
Sanjay Sethi
Not able to hear you properly.
Jinesh Joshi
Is it, is it, is it better now?
Sanjay Sethi
Yeah, it is much better now. Yeah.
Jinesh Joshi
Yeah. I had a question on our interest cost which was down by about 40 basis points. So what I was trying to ask is that once we reach an occupancy of say about 90% in the annual business and the lease income stabilizes, where can the interest cost cost setting act given we will have full LRD benefits that would come to us.
Sanjay Sethi
So thanks for your question. As I had pointed out in my opening statement as well, our current exit rentals for June quarter is already in the range of 25cr. And in the earlier calls we have been saying that our exit for this year end might go around 30 crs. So with occupancies ramping up, I personally feel that the rate of interest currently, you know, where the occupancies are already at 77%. We are utilizing LRD facilities with occupancies increasing to 90%. We might see a little blip coming in, but it will not be a substantial reduction in terms of rate of interest.
With the repo rate and the current difference between the current repo rate and the spread, it is already very low. As you can see, the rate of interest has already come down to 8%. We are already in talks for refinancing with the current lenders. And with this ramping up, we do. See a positive change coming in the coming quarters.
Jinesh Joshi
Got that? Two short follow up questions. One is on our same store revpar in the resort business which is up by about 20, 20% yy. So any specific reason we would want to call out which led to a very sharp Jump in this quarter given the fact that it was impacted by certain aberrations. So that is one. And secondly, if I remember right, for our Puramangala project there was some promoter support which had come in with respect to preferential issuance and also some loans. So given that the cash flow situation from the project is expected to improve, is any promoter led liability left to be reassigned?
Shwetank Singh
Okay, I’ll answer the first part of your question. There is Indeed been a 20.9% RevPAR growth in the in the leisure portfolio. And the main reason for that is that we are still stabilizing at Courtyard. And if you remember, we had acquired a hotel which was not fully stable. And such growth can be expected in a stabilizing hotel. It’s not something that you should necessarily hold us to in the coming future, but that’s something, that’s one of the reasons why that has happened. We are also at Duke’s, we are picking up performance. So that’s also added to this growth.
That’s where I leave it. Because that’s the same store. The question was on the same store.
Jinesh Joshi
Right. And that promoter led.
Shwetank Singh
Nitin will answer that. Can you just repeat your question please sir?
Jinesh Joshi
If I remember right, on the Koramangala side, I think the promoter had given, given some loan to fund the project temporarily and there was some preferential issuances. Well, so now given the cash flow situation is better. I mean having repaid that amount is what I wanted to check.
Nitin Khanna
So you’re right. So There was a 200 crore ring fencing which was done by the promoters in during the IPO out of which 40, 40 cr we have already paid in the current quarter. And with cash flows getting improved in the coming quarter, we will pay as per our commitment.
Jinesh Joshi
Thank you. Thank you so much.
operator
Thank you. The next question is from the line of Vaibhav from Guest securities. Please go ahead.
Vaibhav Mule
Hi team. Congratulations on a strong set of numbers and congratulations Shwetang for your new role. My first question was specifically on the MMR region. So with the opening of Fairmont in the vicinity of JW Sahar, our OTA. Channel check suggested the, you know, pricing. For Fairmont was similarly in the range of JW Sahar. So given Fairmont is focusing on, you know, improving the occupancy at the expense. Of slightly lower ARRs, do you see that as that can potentially impact JW. Sahar in any way in the coming quarters? That was my first question. And along with that if you could just give a broad color on the. Asset wise operational performance For Mumbai assets, mainly on ADR and occupancy front.
Shwetank Singh
Okay, for the first part of the question, I don’t know for what period and for what particular date you checked the rates for. And you know, typically these tend to go up and down depending on what the base occupancy levels are within the hotel on that particular date. So I wouldn’t read too much into it if the check was for one or two day period. However, having said that, whenever a new hotel opens in any micro market there is bound to be some. Some strain on existing hotels. And that’s the occupancy strain that we felt for this quarter.
And finally, I would say that Fairmont is very likely to try to position themselves on a rate front with our existing hotel. And therefore I’m not too surprised that they are trying to pick the price exactly where. Where we are pegged at for any given day. At least on the open channels.
Vaibhav Mule
Yeah, yeah. Perfect. And regarding your CRE portfolio, I just wanted to confirm what kind of occupancy. Run rate do you expect by the end of the year?
Nitin Khanna
So currently we are at 77%. We are expecting some good leads coming in the coming. You know.
operator
Ladies and gentlemen, we seem to have lost the connection with the management. Please stay connected while we rejoin the management. Sam. Ladies and gentlemen, we have the management back online with us. Sir, you may proceed.
Nitin Khanna
Yeah, apologies for the this disconnection. I was talking about the CRE run rate, you know, how it’s proceeding. So we could see some good leads coming up in the coming quarters. Some of the clients have hard options. We see a positive optimism over there. We are expecting to land somewhere around 90% occupancies in the coming quarters.
Vaibhav Mule
Perfect, sir. And you didn’t provide the color on. The asset wise ARRs and occupancy in the Mumbai market.
Shwetank Singh
That’s something we normally refrain from giving you exactly numbers hotel by hotel. But if you go through our investment deck, you should be able to work that out is how I would leave it for you.
Vaibhav Mule
Okay. Perfect. Sir, thank you so much for answering. The question and all the best.
operator
Thank you. The next question is from the line of Naveen Bed from Nuama Asset Management. Please go ahead.
Naveen Baid
Thank you for the opportunity and congratulations. Sanjay on a great stint at Chalet. I just wanted a housekeeping question. In terms of the Koramangala project. How much of cash flows we are yet to receive net of the expenditure that we may have to incur in the project.
Nitin Khanna
Look in the last call, if you remember in the month of December we did said that the total project, you know when we see commercial and in the reci phase two also coming up. In next two years we will be. You know getting a 500cr from the entire project. That’s, that’s something from the entire project for balance collectible. Currently we have around 345 crores in. In the current project, whatever we have sold.
Naveen Baid
So both put together about 850 crores we get to receive over the next couple.
Nitin Khanna
345 is including in that 500 crores.
Naveen Baid
Yeah. Okay. Okay, got it. And how, how much we want to spend? I mean of course there’s some remaining. So how much are we going to spend over the next couple of years?
Nitin Khanna
I think the finder crore which I. Gave is actually net of all the spends.
Naveen Baid
Okay. Okay. Thank you.
operator
Thank you. The next question is from the line of Nikhil from Kizuna Wealth. Please go ahead.
Nikhil Poptani
Yeah. Hi sir. Thank you for giving me the opportunity and congratulations on good set of numbers. So my first question is like what our strategy for the mundane region specifically JW Sahar, like how are we going to build up our occupancy going forward? Are we going to cut down the rates because due to competition or we are going to have some strategy for it. Can you please addict on that point?
Shwetank Singh
No, let me first start by and I will hand it over to Gaurav to sort of fill us in. He’s our chief operating officer. But short answer is there is no reason to cut rates or there is no reason to sort of take a very hard stance on that. The way we look at it is we need to maximize our revenues through a revpar strategy at all times and we will whilst we have to. We are in a market where we will need to react to some of the competition. We broadly would hold to our long term strategy and the way we see the market progressing.
I’ll ask Gaurav to add.
Gaurav Singh
Thank you Nikhil. This is Gaurav continuing on what Shwetan said. We continue to look at our segmentation and our channels of business. Given that new inventory has been added in the market, the channels of business and also our segmentation is something that will keep changing and we believe that going forward there may be a change from transient to group and contract business. But in principle we have very strong belief that we will have a good quarter and a good financial year even. In the hotel that you just.
Shwetank Singh
And finally to round that off we have, we have very deep faith in the fact that Marriott brings on board a very strong loyalty program and that should hold us in very good stead in that market despite the growing competition.
Nikhil Poptani
That’s great to hear an assault. So can you give the breakup of how much is the your airline business or contract business in our JW soil and the MMR region? Basically,
Gaurav Singh
whilst we do track that data, we don’t have it in front of us right now. So if you could email it to us separately. Email to us separately. We would write back to you and give you that data point.
Nikhil Poptani
Thank you, sir. That’s it. From my side and all the way back.
Sanjay Sethi
I just want to add here, the airline business is not a massive business. And if you do want a reference point, the contract segment which includes the airline crew business in quarter 126 was roughly 11% of the total improvements that were occupied.
Nikhil Poptani
Okay, sir, thank you. Thank you very much.
operator
Thank you. Ladies and gentlemen, as there are no further questions from the participants, I now hand the conference over to Dr. Sethi for closing comments.
Sanjay Sethi
Thank you so much, everyone. Thank you for your kind words. But do remember I’m still here. Another six months of an executive role to sort of have a fiduciary responsibility towards that. Shatank, I and the rest of the team will work hard to make sure we deliver and build on the momentum that we’ve created, grow on the momentum that we’ve created. And I’m very confident that the industry is in still not peaked out. I think the peak is another couple of years away, but we’ll have a really good run for the next four years. Thank you and wish you all the best.
operator
Thank you. On behalf of Chalet Hotels Ltd. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.