Chalet Hotels Ltd (NSE: CHALET) Q3 2025 Earnings Call dated Jan. 30, 2025
Corporate Participants:
Sanjay Sethi — Managing Director and Chief Executive Officer
Nitin Khanna — Chief Financial Officer
Analysts:
Karan Khanna — Analyst
Jinesh Joshi — Analyst
Archana Gude — Analyst
Adhidev Chattopadhyay — Analyst
Abhay Khaitan — Analyst
Hrishikesh Bhagat — Analyst
Pradyumna Telkhade — Analyst
Vignesh Iyer — Analyst
Prashant Biyani — Analyst
Vikas Ahuja — Analyst
Aliasgar Shakir — Analyst
Rajiv Bharati — Analyst
Achal Kumar — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Chalet Hotels Limited Q3 FY ’25 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks 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 in the conference call, please signal an operator by pressing star than zero on your touchstone phone. Please note that this conference is being recorded.
I now hand the conference over to Mr. Sanjay Sethi, MD and CEO, Chalet Hotels Limited. Thank you, and over to you, Mr. Sethi.
Sanjay Sethi — Managing Director and Chief Executive Officer
Thank you. Good morning, and thank you for joining us today for Chalet Hotel Limited’s Q3 FY ’25 earnings call.
I trust you’ve had a chance to review our results and the presentation. The Indian hospitality sector continues to show resilience supported by steady economic growth, stable rate of inflation and increasing demand for travel and tourism despite the state of global geopolitics. These trends create a favorable environment for the sector and we at Chalet are well-positioned to capitalize on these opportunities.
In the coming year, we will see two new major airports open at Mumbai and Delhi, which will positively impact these gateway cities. The new airports are going to unlock a massive opportunity for passenger carrying capacity in these two mega policies. Especially in Mumbai, carrying capacity has been a major bottleneck, which has restricted travel growth for the last few years. I’ll be happy to elaborate further in the Q&A segment as we continue this conversation.
Meanwhile, at Chalet, the journey of growth continues unhindered. Q3 did not just turn out to be the best Q3, but also the best-ever quarter in Chalet’s history. Our consolidated revenue grew 22% year-on-year to INR4.6 billion. Consolidated EBITDA rose 22% year-on-year to INR2.1 billion. We have reported a strong EBITDA margin of 45.5%. The nine-month EBITDA for the company is INR5.2 billion and we expect Q4 performance to materially augment this number. In the Hospitality segment, we recorded a robust 18% growth in the average room rates compared to the same quarter last year with steady occupancy of 70%, resulting in a 16% increase in RevPAR. Even on a like-to-like basis, portfolio RevPAR grew by 17%, driven by powerful performances in Pune, Bengaluru and the Mumbai metropolitan region.
Our energy portfolio, which is our counter to the cyclicality of the hospitality industry, is ramping-up rapidly with revenues surging 92% year-on-year to INR577 million. Additionally, we achieved significant leasing momentum with lease confirmations of an additional 400,000 square feet in the quarter. In the residential real estate segment, we kept strong momentum in sales velocity and rates, achieving sales of 18 apartments in the quarter at an average rate of almost INR22,000 per square foot. Nathan will share more insights on the segment during the call.
Now some updates on the ongoing pipeline of projects. The phased opening of the Dukes retreat continues, 73 rooms, a repeat 73 rooms, a restaurant, a bar and a pool are already operational. Meanwhile, we had — and while we’ve had some delays on the completion timeline, the product is turning out extremely well. Renovations at four points by Shelton Navi Mumbai are progressing well with roughly 20% of the rooms and public areas currently in the works with completion target targeted for the whole inventory by July 2025. The Taja Terminal 3, Delhi International Airport is expected to open in Q2 of FY ’27. New inventory at Bangalore — Merit Bangalore is being released as we speak into operations and will be all-in play in the current quarter itself.
The new hotel projects at Eroly, Mumbai, Varka Goa and the commercial development Cygnus 2 in Mupai are advancing as per plan. Besides these, we are creating new and high-energy F&B experiences at the JW Saha, the Western Pawai and the Dukes Retreat. We are also working on our plans to upwardly reposition the spectacular Coatyard by to the brand. As we move to a new stepped-up phase of growth at Hotels, it is critical to augment our talent capital. In-line with that, I’m pleased to welcome Gaurav Singh, who has recently joined us as our Chief Operating Officer. Gaurav brings with him a rich background in the hospitality sector and we are confident that his leadership will strengthen our operational excellence. With Shwetank, Nitin, Rachit and now Gaurav, we are creating a young and dynamic leadership in the company with a long-term perspective.
The equally exciting news is that we have earned Great Places to Work certification for the sixth consecutive year, underscoring our commitment to a culture of all-round excellence. Ladies and gentlemen, on the back of the infra support, robust corporate travel, a growing MICE segment and the vibrant leisure in wedding markets, we stay optimistic about the next few years. And I’m personally extremely excited about our future.
Now, please allow me to hand over the conversation to Nitin for further updates on the business. Nitin?
Nitin Khanna — Chief Financial Officer
Thank you, Sanjay. Good morning, ladies and gentlemen. Welcome to another quarter of historically best performances.
On the financial updates, in the hospitality segment, ADRs have risen by 18% to almost 13,000 levels for the first time. This is led by strong rate growth in Bengaluru and addition of by Marriott Arabli Resort. Occupancy remained stable at 70% for the same-period, resulting in a 16% RevPAR growth to over INR9,000. On a same-store basis, excluding the newly-acquired hotel at Arabli and the Dukes Retreat, occupancy was at 71% and RevPOR continued to grow by 17%.
Our room revenue grew by 21% for the same-period and total revenue growth was at 17%, which came to INR4 billion for the hospitality division. We have been diversifying into different market segments and micro-market with varied cost structures. While we navigate it, I’m pleased to report that we have maintained focus on cost-control strategies and maintained our industry leadership in margins. EBITDA margins for the quarter for hospitality division was at 46.1%, with well-managed utilities and payroll cost.
On the rental and annuity front, our revenue for the quarter was at INR577 million and we have clocked exit of INR20 crores monthly run-rate in December ’24. The EBITDA for the division was at INR455 million with 79% margins. As Sanjay highlighted, we have made strides in the leasing pace and I’m confident we will be reaching full potential of the commercial inventory within a couple of quarters.
Coming to the updates on the residential projects, we have sold additional 18 units during the quarter. We have reached the last leg of sales for the nine towers which are ready for handovers. Majority of new sales are for the last two towers, which are currently under construction. Our blended selling rate is approximate INR21,700 per square feet. Out of total 321 units, we have 50 unsold inventory, which are largely in the new towers and we expect it to take about few quarters to sell. Overall collections during the nine months was INR2.9 billion and we have an outstanding receivable of INR4 billion as on December 31st.
Consolidated revenue for the quarter was INR4.6 billion with a growth of 22% year-on-year. Consolidated EBITDA was at INR2.1 billion with a growth of 23% year-on-year and a margin of 45.5%. Consolidated PBT for the quarter was at INR1.2 billion versus INR0.9 billion in the same quarter last year. The PAT for the quarter was at INR965 million as against INR706 million in the same quarter last year, a growth of 37%. During the year-to-date, the company spent about INR4.8 billion on capex and lag acquisitions. The net-debt as on December 31st was at INR15.8 billion.
We closed the quarter with an average cost of finance standing at 8.53%, a reduction of 34 bps from March ’24. The company has been actively investing in its growth and has a capital expenditure under the current plan of around INR20 billion for the next three years. This will be largely funded through internal accruals. We will continue on our growth trajectory and our balance sheet is in a very comfortable position to support further strategic growth opportunities.
With this, let me open the floor for Q&A.
Questions and Answers:
Operator
Thank you. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on your touchstone telephone. If you wish to remove yourself from the question queue, you may press star two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles.
The first question comes from the line of Karan Khanna with Ambit Capital. Please go-ahead.
Karan Khanna
Yeah. Thanks for the opportunity and congrats, Sanjay, Nitin and team on another strong quarter. So my first question, Sanjay, when we talk about the MMR market, where for nine months FY ’25, you’ve seen a RevPAR growth of about 6%. While when we look at your peers, they’ve reported about 12% to 14% RevPAR growth over the same period. Could you highlight key reasons for this, given you’ve been highlighting the scarcity of upcoming supply in the market? And as a follow-up, what kind of an impact are you expecting from the upcoming Fairmont Hotel, which is expected to open up in the next couple of months?
Sanjay Sethi
Hi, Karan. Thank you. Look, our MMR RevPAR has grown about between 6% and 7%, largely on the back of an ADR strategy. We’ve — we did let go of some businesses which were low-paying business during the period for reasons for long-term reasons. A 13% growth in the average room rate for the Mumbai metropolitan region is an extremely healthy rate. We’ve — our occupancies continue to be in the mid-70s even in MMR, which is a healthy occupancy to have. In other cities, our occupancies are at 66%, which has improved by 2%, but then the combined RevPAR growth for us is 16%. Even on an occupancy basis, if you were to look at our overall portfolio, we were largely flattish, add to that the aggressive growth on the rates, throwing up a RevPAR of 16%, I think we’ve done a good and satisfactory job.
To your question about new supply, you’re right and I’ve maintained that there is a some serious competition coming in-place with the new hotel at the airport in Mumbai. They have a total inventory of 450 rooms, out of which around 200 are in the state that will be open in the near-future. We are very confident that the — our partnership with Marriott with a very strong distribution, sales and loyalty program will continue to get us the premium in that market. We are confident that we’ll continue to be number-one on the RevPAR basis there. And we are also confident that in the coming year, we will continue to have growth at JW Merits.
Karan Khanna
Sure. And your investor presentation continues to suggest that the share of foreign guests continues to stand at 39%, which is good, but that has remained flat Y-o-Y. So are you seeing any signs of recovery in FTAs given this would possibly aid in higher ARR growth?
Sanjay Sethi
So yes, I do expect growth in the foreign travel and I actually alluded to one major change that’s going to happen in the coming year, which is going to support that, which is the airports expansion that we’ll see in Bombay. And I would like to elaborate on this for everyone’s benefit, I think will be useful for everyone to understand. Here’s my perspective on the new airport. As and when that opens at Navi Mumbai, the two, three things will happen. Number-one, the cargo will be split between the two airports. I don’t have a ratio of how it’s going to be split, but even if it splits 50-50, you’re still creating major capacity opportunity at the Island City Airport, which is the main airport.
Second, the passenger traffic will also split between the two airports. And people who need to then travel to the mainland side will prefer the Navi Mumbai airport, but people whose purpose of visit is the island city will come to the island city. And therefore, again, because the people are going to go to the other airport for the Navi Mumbai side, there’ll be spare capacity created in the main Island City Airport. It does two, three things. Number one, it makes it easier for travelers to come in and out because flight seats capacity will be augmented. Second, the airlines — a lot of the international airlines have had trouble finding slots. So the international carriers have not had slots in Bombay since COVID actually.
Now with this split, it will create an opportunity where they can let out more slots to both domestic and international careers, which will create an opportunity for direct flights from the U.S., both East and West Coast, which I think will support further growth on the foreign travelers. Having said that, while the percentages remained flat, our absolute numbers are up. So we must be conscious of that or not by a big margin, but they’re up 5% over last year. So your number of foreigner room nights in Q3 this year was 72,684 versus 69,326 room nights on room nights last year. So that’s I think a key takeaway. The other is, look, domestic traffic is growing and it continues to grow very strongly, and we’re very confident in that will support growth for all our types. I hope I’ve answered everything that you asked for.
Karan Khanna
Sure. This is helpful, Sanjay. My second question, you’ve included the Kerala project in your pipeline of assets. So can you talk a bit more about the opportunity, the kind of capex timelines and the RevPAR expectation that you have for this 150 key hotel? And will the demand be primarily leisure led or do you also expect some corporate demand in this market?
Sanjay Sethi
So Karan, this hotel has been on our books for a while, but it was stuck at the government level. The government has now announced they’re fast-tracking the approval process at their end because it will transfer the land from one government department to the second government department before we can start our processes at our end. Now that’s taking shape. Timelines are fluid. I don’t want to commit on timelines because of the nature of the transaction. However, this 150 room hotel is a — the first phase is 150 rooms. Potentially, we can go up to 300, 400 rooms, but I don’t think the market can support that for now. The Phase-1 will have 150 rooms in a convention center. To a large extent, we will create the demand in-house with the convention center for the 150 room to support the 150 rooms. Obviously, 150 rooms have not been enough for the convention center that we’re developing. It’s a large one. And so other hotels will also get the benefit of this. And in a staged manner, we have the opportunity because there are lakes within the property. We will have the opportunity of putting front wheelers on the property itself, but we’ll play that part by year depending on how the demand paces are.
Karan Khanna
Sure. And my last question is on your leasing portfolio. And while Nitin mentioned that you’re confident of leasing out the entire 2.4 million square feet in the next couple of quarters, but apart from the 1.6 million square feet, which is already leased-out, have you signed any other LOIs, which could help you reach your target by end of this?
Sanjay Sethi
And at this point of time that’s all we have to share. It’s a 400,000 square-foot improvement on the 1.2 million that was there and 1.2 million included 0.5 million of JW Sahar. So actually from the leasing space that was available, it’s grown from 700,000 to — by another 400,000, which is a material jump-in the lease space. And we expect this momentum to take us through in the next two or 3/4.
Karan Khanna
Sure. Thank you and I’ll come back-in the queue for any further questions. All the best.
Sanjay Sethi
Thank you, Karan.
Operator
Thank you. Next question comes from the line of Jinesh Joshi with PL Capital. Please go-ahead.
Jinesh Joshi
Thanks for the opportunity. Sir, I have a book keeping question. After the debt repayment that happened some time back, I think our finance cost has settled in the band of about INR30 crores or in the first two quarters. But if I look at the 3Q run rate, the cost has shot up to about INR45 crores. So if you can just explain the reason behind this given debt repayment happened? And also how should we foresee the run-rate going ahead?
Nitin Khanna
So, hi, Jinesh. To answer your question on the interest cost, if you remember in the last quarter, we had said that the Powai commercial building is capitalized and this happened towards the end-of-the last quarter. This interest is post OC, which has started charging — we started charging to P&L from this quarter. That’s the major increase.
Sanjay Sethi
So our net-debt continues to be at 1580 million and as Nitin mentioned earlier, we’ll be able to support the current announced pipeline of growth largely through internal accruals. Contact.
Jinesh Joshi
And secondly, I mean, if I look at the Bangalore market, our ARR growth was about 30% odd in this quarter. So if you can highlight what led to such a sharp surge? And also secondly, I think on the hotel, while we have not committed on the timeline, can you just confirm whether that $20 billion capex number that you have guided for the next three years, does anything with respect to is included in that number.
Sanjay Sethi
So this is a little fluid as I mentioned earlier, so we’ve not put that number as yet. We’ll see how that faces up. The important thing was to put it in the list both from all of your perspective that it is in the tracker. That’s a potential growth opportunity. We will obviously take it forward depending on how it sort of positively impacts our own performance, but the number is not in there as yet. So if you want to build-up from a cost perspective as a pipeline, you’ll have to add that. Indicated about say crores.
Jinesh Joshi
Sure. And the Bangalore market, if you can highlight.
Sanjay Sethi
Sorry, I missed that part. So Bangalore, I don’t think we’ve given any separate numbers on city-wise ADRs. We’ve given Mumbai and then we’ve given other cities. Other cities, ADR has jumped by 26% and that’s on a — on growth at okay, we’ve given.
Jinesh Joshi
On Slide 7.
Sanjay Sethi
Yeah. So okay. So yeah, so Bangalore has improved by ADR by 31%, you’re right. And our occupancy has also improved by 4%, which is a 40 odd percent growth in the RevPAR in that particular hotel. Look, Bangalore has struggled to keep pace with Hyderabad, but now in the recent quarters, we’ve seen it’s a catching-up pace with Hyderabad. And therefore, it is just a natural growth that’s happening there and we expect this to continue. So, we are also going to add another 129 rooms in this property here over the next few weeks, which will increase capacity and therefore, we’ll play the RevPAR route till those 129 rooms stabilize.
Jinesh Joshi
Understood. Sir, one last question from my side. If you can just refresh what are the existing leasing rates in the Bangalore and the Mumbai market on a per square feet basis, given the fact that the progress on leasing has been quite good at least in the last quarter.
Sanjay Sethi
Yeah, sure. So the — why one is trading around in the 120s and Bangalore in the mid-60s on a per square-foot basis. This is of course without CAM. And when fully occupied, we expect to take care of all the costs. So we expect 100% — near 100% flow-through to the EBITDA margins. And the Sahar one, which has been almost fully occupied for a while now is now trading between 145 and 150.
Jinesh Joshi
Got that. Thank you so much and all the best.
Sanjay Sethi
Thank you.
Operator
Thank you. Next question comes from the line of Archana Gude with IDBI Capital. Please go-ahead.
Archana Gude
Hi, sir. Thank you for the opportunity and congrats on another strong quarter. I have three questions. Particularly this, you spoke about very — being very confident about strong earnings growth in near-term, which is very encouraging. How there are talks of discretion spending under pressure and which is from this subdued volume offtake for the consumption companies. Have you also seen some downsizing of the budget of cancellations, particularly in Q4? And does it really worry us?
Sanjay Sethi
I’m sorry, I it was a little unclear, but I’m guessing you asking how does the slowdown on the consumption side reflect on our hotel side of the story, right?
Archana Gude
Sir, I was asking about this consumption being slightly subdued for a few last couple of quarters. So have you seen some downsizing of the budget or cancellations in Q4?
Sanjay Sethi
Well, look, Q3 numbers are in front of you. It’s healthy growth as Nitin mentioned, 17% RevPAR growth even on a like-to-like basis on asset-to-asset basis, which was there earlier. Overall, we’ve been able to show 16% growth, including the new assets which are ramping-up. Now that’s your Q3 performance. Q4 is typically better than Q3, and I can share with you that we expect that trend to continue.
Archana Gude
Sure, sir. Sir, secondly on this restaurant, it has been over 3/4 that we have acquired. How has been the performance so-far? Any positive or negative surprises there in terms of demand and pricing?
Sanjay Sethi
No, actually it’s doing very well. It has also had 15% RevPAR growth in this quarter. So it is trading well. Occupancies are up, the rates are up, it’s now trading north of INR15,000 for the quarter three, looking — looking strong. And also as I said in the opening statement, we are going to upgrade and reposition this asset over the next six months or so into higher brand positioning. It will move-up from by merit to Marrit. Which will support.
Archana Gude
Sure, sir. And sir, lastly, you spoke about this Bangalore market catching-up with Hyderabad, but this 31% AGR growth on Y-o-Y looks very, very on a higher side. So should we take it as the base rate going-forward or was there really one-off in this quarter?
Sanjay Sethi
No, it’s not one-off for sure. And incidentally, Hyderabad West India has also grown at 28%. So the strong story of these two what do I quote — what I referred to as new-age cities for India continues to be very robust. It was not a one-off story. It continues to be strong on all parameters, demand and of demand and we also see supply to be muted in that city and therefore, there is no reason to believe that this will slow-down.
Archana Gude
Sure, sir. Thank you so much and all the best, sir.
Sanjay Sethi
Thank you.
Operator
Thank you. A reminder to all the participants, please restrict yourself to two questions. Next question comes from the line of Adhidev Chattopadhyay with ICICI Securities. Please go-ahead.
Adhidev Chattopadhyay
Yeah, good morning. Thank you for the opportunity. Sir, first question is on the Hyderabad market. Anecdotally, what are you picking-up that the room rates continue still to be pretty strong and the overall market seems to have re-rated. So could you please just confirm these trends or do you see it more a one-off, maybe some events or other thing driving that in that market? That is the first question.
Sanjay Sethi
Sorry. Good morning,. It’s not a one-off event. It is normal growth of the business. Q3 is a better quarter than Q1 and Q2. That’s what we’ve seen play-out. And we see Q4 being equally strong. And this is — this growth in Hyderabad and Bangalore is structural nature. It is not driven by singular events that are happening in those series.
Adhidev Chattopadhyay
Okay. Okay. Now I just come to the point that we have locked-in for one of our hotels, right, the rates, right? So just wanted to get your view on that. Do you see some scope for the rates being renegotiated or something or of that sort, that is where us coming from actually?
Sanjay Sethi
You mean renegotiated efforts?
Adhidev Chattopadhyay
Yeah, yeah, yeah. Yeah.
Sanjay Sethi
So we’ve got a one more year to go, I mean one more rate cycle to go, which again has a 15-odd percent growth built into the contract.
Adhidev Chattopadhyay
Okay.
Sanjay Sethi
And for now, we will honor that contract, but 15% growth in the contract is a solid growth. Remember that hotel gets 100% occupancy at these rates. And if you’re growing at 15% 16% year-on-year, that’s your RevPAR growth, which is solid by any measure. Meanwhile, the other Hyderabad hotel, which is a larger one of 127 will continue to reap the benefits of the rate growth that’s happening there. Also, because the one that is locked-in with a single client, there is no — the cost side is very, very tight, we’re able to throw up gross operating profits, which is a hospitality terminology use, we’re able to throw up those GOPs in the mid-60s, low-to mid 60s. That itself is a massive upside for us. The margins are high in that hotel.
Adhidev Chattopadhyay
Okay. Okay. Sure, sir. Sir, so the second question is on our — now this leasing which you’ve alluded to, right, to get it fully leased. So with the rent-free period assuming that maybe three to six months and also by in another 12 months from now, what would be the exit run-rate assuming that we are at a very-high rate of occupancy on our commercial portfolio.
Sanjay Sethi
So we’re expecting roughly INR30 crores as your exit run-rate once all of this is released out, which in effect is about, I think the closer to INR400 crores almost, right, on an annualized basis and expect about 90% of that to flow-through to EBITDA.
Adhidev Chattopadhyay
Okay. So this — so we could assume in FY ’27, right, this full effect is so, right, what are the leasing will be doing in the whole company.
Sanjay Sethi
That is coming in some of the quarters of ’26 also.
Adhidev Chattopadhyay
Okay, okay. Okay, sir. Yeah, thank you very much. That’s the detail.
Operator
Thank you. Next question comes from the line of Abhay Khaitan with Axis Capital. Please go-ahead.
Abhay Khaitan
Hi, thank you. Thank you for the opportunity, the question. So my first question is on particularly on the JW Marriott Sahar. So given the sharp increase in ARR you’ve already taken, I think the focus is clearly on ARR and not occupancy. But how do you think the occupancy is going to fare in the coming months, particularly because of the intense competition in that particular micro-market? And in that sense, will we see some sort of a cutting of rates or some sort of flattening of rates to become — to remain competitive in the market?
Sanjay Sethi
Look, we’ll have to remain competitive. But as I mentioned earlier in another — on another question, the distribution system of Marriott and the loyalty program is a major draw over all competitors and that supported us in the past. You’ve got to remember that we’ve got very good hotels in the neighborhood. I don’t want to name them, but if you scan the market around there, they are very strong brands and hotels in that neighborhood. And we’ve been outperforming them for a very long-time. We’ll continue to outperform that market. I don’t see any reason to be concerned of slowdown. We may not grow at the pace as other hotels. But look, that hotel clocked even in last quarter where we had some occupancy issue slowdown on the benefit of rates, it still clocked 76% occupancy. So as a big hotel, it’s 588 crores. So I don’t — I’m not concerned. We’ve got a very solid product. We’ve upgrading the F&B with a couple of new F&B outlets. We’ve got the Merrit loyalty program, we’ve got the distribution system. We’ve got ongoing relationships and we’ve already locked-in RFPs for this coming year.
Abhay Khaitan
Okay. Got it. Thanks. And my second question is on the overall portfolio. So what we have been seeing that bulk of the RevPAR growth is coming from higher ARR and now even Bangalore market and Hyderabad market has also seen a very sharp increase. But going-forward, do you think that the reset that has to be done is largely done? And will now the ARR growth that we have been seeing for the last one or two years will now slowdown from this level or do we see — still see more triggers that will enable a double-digit ARR growth?
Sanjay Sethi
Thank you. So I’ve maintained that we will see double-digit RevPAR growth. Even for the last few quarters, I’ve said that. We actually been exceeding that over the quarters. I see no reason why that commentary needs to change. Very confident that we will deliver double-digit RevPAR growth on our existing portfolio and we’ll add through new assets and new inventories.
Abhay Khaitan
Okay, got it. Thanks.
Operator
Thank you. Next question comes from the line of Hrishikesh Chandrakant Bhagat with Kotak AMC. Please go-ahead.
Hrishikesh Bhagat
Hi. Just two questions. First is, I see on the timeline of your pipeline that you given, there is a 1/4 delay that you are compared to last quarter presentation, especially in case of Dukes and Bengaluru. So if you can throw some light on that. And secondly, on the other projects also, is there any risk of delay you.
Sanjay Sethi
Thank you, yes, look, is delayed. I actually mentioned that in my opening statement. It will be Q2. We are just ensuring that it comes out really well and the full product is ready. We already have 73 rooms operationally. It’s not always non-operational. But then there are banquet hole one or two F&B outlets and the balanced rooms are still to be completed. There has been delays. There have been delays for various reasons, but we’re very confident that Q2 now will be — so Q1 will be a quarter that we will open this very strong end of Q1 actually. Also keep in mind that Bangalore is already being released, whilst there we said that it will be pushed back. The fact is that today — as we speak today, the hotel teams are taking over the hotel rooms and snagging them for snag at our end. And as soon as that is cleared, we’ll get them operations. So sometime in end of February, early March, we should see that inventory getting added to Bangalore. It will be this quarter though.
Hrishikesh Bhagat
Yeah. The other question is on this news about potential — you did expand — explain at the start of the call about the impact of the new airport, but any impact likely of the shutdown of T1 terminal, which is likely in Q3 ’25 — ’26 rather November ’25 onwards reasonably peak period for us. So do you think….
Sanjay Sethi
While the Terminal one is scheduled to be shut-down for whatever the plans are and we don’t want to speculate on those plans right now. The overall capacity will get enhanced between the two airports. So you will still net-net have more capacity into the Mumbai city between the terminal two and the new airport in Navi Mumbai. Our problem at Mumbai wasn’t the terminal space. So Terminal 2 is large-enough to accommodate more people. The problem was the runway space. So that runway remains identical to where it was for the main Island City Airport. And for the Navi Mumbai, it will be an additional run — two runways that will come into play. So overall capacity into Mumbai will enhance.
Hrishikesh Bhagat
Okay. Thanks. Thank you.
Operator
Thank you. Next question comes from the line of Pradyumna Telkhade with ICICI Bank. Please go-ahead.
Pradyumna Telkhade
Hello. Hello, Olivi.
Sanjay Sethi
Yes, we can hear you present. Go-ahead.
Pradyumna Telkhade
Hi, sir. Thank you so much for the opportunity and congratulations on another great quarter.
Sanjay Sethi
Sorry, sorry, we can’t hear you. You’ll have to improve the volume.
Pradyumna Telkhade
Hello? Is it audible?
Sanjay Sethi
We can just about hear you, but we can’t understand.
Pradyumna Telkhade
Hi, sir. Thanks for the opportunity and congratulations on another great quarter. I have two questions. First is regarding the residential project at Khormangla. So in last quarter, you have said that we can expect quarter-four to have a revenue recognition and cost recognition as well, basis few conditions like electricity connections and so are we able to recognize that entirely in Q4 FY ’24, if you could guide us on the same?
Nitin Khanna
Yeah. Yeah. So the electricity connection, etc., they are steadily hampering up. And then probably in-quarter four, we’ll be able to hand over at least 60 flats in Kora Mangla.
Sanjay Sethi
So the short answer is yes. It is getting completed in this quarter and the handover process will start, which will allow us to recognize the revenues and costs on a progressive basis.
Pradyumna Telkhade
Okay. So we can — so the entire — revenue recognition can happen in Q4 FY ’25.
Sanjay Sethi
Entire revenue recognition. It will be graded revenue recognition, which will be as Nitin mentioned, in the range of around 60 apartments, give or take, 10.
Pradyumna Telkhade
Okay, sir. Sir, second follow-up question is regarding the hotel at Gova. If you could please tell us how much capex is expected and how much it will be funded through internal accruals and debt.
Sanjay Sethi
So roughly the capex is going to be about INR1.4 crores per room per key. We are planning about around 175 to 180 keys or rooms. In terms of timeline, we expect to get all approvals in the next three, four months’ time. And then depending on whether the monsoons are on us or not, we will start either just before or immediately after the monsoon. And from the start date, we expect about 30 months of completion.
Pradyumna Telkhade
Okay. So how much it will be funded through internal accruals? Debt, any idea on that?
Sanjay Sethi
So I see money to that extent is fungible, right? We don’t — overall on the company basis, we don’t expect debt to go with the announced pipeline to beyond INR1,900 crores, INR2,000 crores as a peak debt at any point of time. We are currently at. Of course, Chalet is on an aggressive growth path as we get new opportunities that may move downwards or upwards. But as of now, this is the guideline that we have.
Pradyumna Telkhade
Okay. Thank you. Thank you so much, sir.
Sanjay Sethi
Thank you.
Operator
Thank you. Next question comes from the line of Vignesh Iyer with Sequent Investments. Please go-ahead.
Vignesh Iyer
Hello. Thank you for the opportunity. There are two questions from my side. First thing is, I wanted to understand how the wedding markets panned out in-quarter three vis-a-vis last year’s same quarter and how has January panned out for the same?
And my second question, sorry — and my second question is more on the corporate rate hikes this cycle. Can you tell me how we were planning on doing some increase in corporate rates. So if you could tell me how it has panned out?
Sanjay Sethi
So Vignesh, on the wedding side, we don’t have — I don’t have specific data at hand right now, but it’s been good, much better. And in fact, the good point is that this time in-quarter four and quarter one of next year, we see weddings being strong. Last year, we didn’t have any weddings in Q1 and Q2. But this year, we see significant weddings even in Q1. Q4 seems to be as good or better than the Q4 last year. And therefore, we are very bullish about this Q4 doing extremely well. We will, of course make sure that we take on weddings and groups subject to they being more value-accretive from a revenue management perspective.
If the transient or independent travelers continue to get us higher-return revenue returns, we will obviously go down that route. So we will control the inventory on various segments depending on what’s best for us. I want to give an example a little bit. If a city has a big event or a big wedding going on, sometimes it is in our interest not to take other — any other event because we know there’ll be compression in the city, which will force individual travelers to look for hotels, look for accommodation in alternate hotels. At that point of time, they’ll come through the retail rate, which can allow us higher-rate increases.
Vignesh Iyer
Right. Right. Yeah. Also on the corporate…
Sanjay Sethi
Sorry, you had a question on the corporate rate. I don’t have an exact number for you right now, but it seems to be a healthy sign-off. We’ve also, this time again kept the RFP contracts for last room available rates, very limited, which will allow us to again revenue manage the rates as we go-forward.
Vignesh Iyer
Okay. As it is usually lesser than the retail rate, would it be fair to assume it would be more like on a lower double-digit at least?
Sanjay Sethi
I don’t want to speculate and give forward-looking numbers on that. We’ve already given indication that we see no reason why we won’t grow in a comfortable double-digit RevPAR numbers on a same-store basis. That’s the only guideline able to share at this point in time.
Vignesh Iyer
Okay. Okay, sir. Thank you and all the best, sir.
Sanjay Sethi
Thank you.
Operator
Thank you. Next question comes from the line of Prashant Biyani with Elara Securities. Please go-ahead.
Prashant Biyani
Yeah. Thanks for the opportunity. Sir, of the total debt, can you break it up between hotel, commercial and residential business?
Sanjay Sethi
I’ll let Nitin comment on that, but it’s fungible debt. So we will at — we take it at a corporate-level. But if you were to — and I’m giving an old way before Nitin comes into the exact numbers, today, if you were to practically look at it from a bird’s eye view, all the debt that we have, almost all of it is actually on the office assets. The hotels are debt-free if you really look at our portfolio. Nitin, you want to come and confirm that?
Nitin Khanna
Yes. So actually on the commercial LRD, if you see the eligibility is roughly 6 times the current rentals, whatever there. So if you take INR20 crores as a running run-rate, the basic eligibility from an LRD perspective is already INR1,800 crores. So given my net-debt is 1580, hotels are as Sanjay has rightly put, are actually debt-free.
Prashant Biyani
Okay. And would we be taking any additional debt for the new commercial tower at Powai?
Nitin Khanna
Yeah. Absolutely. Once the construction finance — as the construction moves on, we will be taking construction finance.
Sanjay Sethi
But at the same time, we’ll have accruals, which will set that off to counter the net-debt part.
Prashant Biyani
Right. And sir, how much incremental capex would we require for the new Powai Tower as well as for the residential project?
Sanjay Sethi
So this is coming in. I think the residential project is about cost is pending cost is INR300 odd crores and new sales opportunity is INR500 crore-plus their receivables. So together, we’ll end-up with about INR400 crores to INR450 crores of net cash flows after repaying the promoters on the office side, Nitin, if you can come in and share what is the Phase 4?
Nitin Khanna
So Powai, which is the Powai second Phase-2 is roughly INR800 crores of capex spend out of which we have already spent close to INR200 crores. So INR600 crore is the balanced capex which we might be spending in next 3/4.
Prashant Biyani
Okay. Sir, just lastly for JW Sahar, you mentioned some time back that RFPs have been locked for this year. Can you share how much growth it that it has been at vis-a-vis last year.
Sanjay Sethi
So as I said earlier, I don’t have the data with me. Also, I think it’s fairly confidential in terms of how we look at that. And the guideline that I’ve given is that please feel comfortable that we will deliver at least low double-digit RevPAR growth on all our test.
Prashant Biyani
Sure. That’s it. Thank you from my side.
Sanjay Sethi
Thank you.
Operator
Thank you. A reminder to all the participants, please restrict yourself to two questions. Next question comes from the line of Vikas Ahuja with Antique. Please go-ahead.
Vikas Ahuja
Hi, good morning, sir. Sir, my first question is, especially on the Sahar. So with the opening of has clearly had a negligible impact on pricing of Sahar. However, do you think the addition of Fearfield nearby will have an effect since its pricing is much lower than ours, could pose a challenge, especially considering that both are brands. So this is my first question.
Sanjay Sethi
Vikas, Fairfield is a budget hotel in the portfolio. There is no reference point between the two as far as pricing is concerned. Fairfield to JW Marriott can have a gap of almost anywhere between 2x to 5x on the pricing. So I don’t think that’s a fair comparison and it’s not even worth looking at. So don’t bother about the Fairfield one at all. And open for a while, the zero impact game.
Vikas Ahuja
Okay. Okay, sure. And second, it — you did talk about Hyderabad market doing well. So I mean — and we are also hearing a similar feedback. Is it — is that surges largely because of the surge in GCC openings or it’s a base effect or any particular factor which is leading to such a high surge in pricing there.
Sanjay Sethi
Yeah. So it’s driven by the office absorption in that market. We see that very strong. It’s also growing. Our own group is adding several million-square-foot of office space in that area. And to a large extent those relationships pay-off at our hotels. All hotels are doing extremely well. So it’s not just one hotel or two hotels that are doing well, which is a great sign to have because if the market is elevated, it will ensure long-term growth for all of us. And I do hope that we can see similar trends in other cities in the country where the markets themselves elevate themselves by that 15%, 20%. But Hyderabad looks strong, structurally strong, going to be strong, supply-side weak, we are very positive about Hyderabad.
Vikas Ahuja
Sir, finally, sorry to harp on this rates question again, but some of the industry experts are talking about a slowdown in second-half. However, our commentary remains reassuring on rates. So just want to clarify this area strength we are seeing is largely a broad-based or we have few pockets which would be helping us to grow double-digit or maybe high-single-digit in the second-half also? Thank you.
Sanjay Sethi
It’s broad-based. Our portfolio on a same-store basis has grown on ADI at 17%, overall around 18% growth. And this is a similar trend that we’ve seen across cities, you now have quarter three results out from two, three of the listed companies, similar story being coming out from everyone. So this whole H2 thing being slowed down clearly is a fallacy as far as at least big cities are concerned.
Vikas Ahuja
Thank you.
Operator
Thank you. Next question comes from the line of Aliasgar Shakir with Motilal Oswal AMC. Please go-ahead.
Aliasgar Shakir
Yeah. Thanks for the opportunity, sir. First question is on the F&B. So this quarter been a wedding season, festive season and you know, we’ve seen a F&B growth of about probably 8%, 9%, which is maybe slightly below the RevPAR growth. And I think our SMB is also not at its peak, right? It’s close to about 34% plus of the total plus we have spent a lot also on upgrading our MICE and other activities. So if you can just throw some light on what has led to a slower-growth and do you expect this to pick-up in the coming quarters?
Sanjay Sethi
So, the F&B growth at 8% may look muted, but that’s on the back of the fact that we’ve got two hotels that got added as hotels, which have lower F&B. By Rawali is one example. The other is that Duke’s retreat 73-odd rooms that have open have really no business coming in because our banquet all instruct over there and in the works. We also have two or three new outlets that are on the verge of opening out as I alluded to a high-energy F&B space is opening at TreW at the rooftop the hotel and also at the — what do you call it, at the Western Powai where we’ve got a large high-energy F&B space that’s about to open. So all of this will supplement the growth for us.
We are not a very heavy F&B driven company in any case so far. And I think that’s what probably drives our margins also. However, we like to adequately — adequately size the F&B and where it needs support for new F&B opportunities, we always add. For example, we continue to always evaluate every square-foot of space that we have in the hotel and see how we can sort of sweat that real-estate asset and create some F&B or the experiences for the guests to grow. Going-forward, I don’t see F&B growth going dramatically up, except that in Q1 come — in the coming years Q1 because weddings are better than last year, we see Q1 doing very well.
Aliasgar Shakir
Got it. So with all these renovations that we are doing, do you think that this 30% has still opportunity to rebid at the higher-end or maybe of course, you mentioned that it will not grow significantly, but at least, I mean track at par with RevPAR growth or slightly higher in the near-term because of this rebase.
Sanjay Sethi
So earlier, again, I would repeat, our focus is on rooms, room revenue. This is your highest-margin business. Within F&B, Banquet is a high-margin business, restaurants give negligible margins and I won’t be too fussed about it, frankly, if you ask me. It continues to be on growing ADRs aggressively. That’s where we should focus. At the same time, we should have enough F&B to draw people into the hotel and make sure our residents have enough options as they stay with us and great experiences. So that’s where we stand today.
Aliasgar Shakir
Understood. Understood. And secondly and last question is on the margin. We have done pretty strong revenue growth, but margins have kind of been flattish. So if you can just share some color, of course, we are at very healthy margins, but are you seeing any pressure on your cost because of which your strong revenue growth also didn’t lead to any margin improvement, how should we look at margins going-forward with your revenue growth being, if at all at double-digit?
Sanjay Sethi
Okay. So margin is growing. I mean, the fact that we’ve got dukes open and our inventory for the last quarter, which is actually negative EBITDA because the revenue is low, costs are fixed and the other one is four points per shellaton where we shut-off inventory and some public areas now for renovation, those are dragging the margins down because and if we take those two out, our margin for the hospitality segment is actually 47%, which by any measure is a very strong margin to come out with.
Aliasgar Shakir
Understood.
Sanjay Sethi
Quarter three last year.
Aliasgar Shakir
Understood. So as we stabilize, of course, we should expect your margins to move up?
Sanjay Sethi
That’s right. Also, we added, which is in its ramp-up phase. The margins there are in the mid-30s. If once that stabilizes, you know, these will further go up.
Aliasgar Shakir
Understood. Got it. Very clear. Thank you so much for answering question.
Sanjay Sethi
Thank you.
Operator
Thank you. Next question comes from the line of Rajiv Bharati with Nuvama. Please go-ahead.
Rajiv Bharati
Yeah. Thanks for the opportunity. Sir, this is again with regard to the previous question. So asset, because it’s largely mice-driven asset, should be clubbed in the F&B part of it, you should have a significant contribution of F&B in it?
Sanjay Sethi
Well, Rajiv, it’s — whilst it is a MICE-driven project, it’s a residential MICE largely. And because it’s a residential MICE, from a percentage perspective, rooms still contribute majority of the revenue. It — I mean, it doesn’t have too much of non-resident F&B coming in for dining only, except maybe at weekends we get some gas. And so it is not really going to enhance or up your F&B percentage. It will continue to be consistent with the other hotels. And therefore, you know, we don’t expect any major change on account of that. However, the upgradation of the product from of Merrit to Merit will have its own positive consequences. Some of it may come lug off into F&B.
Rajiv Bharati
No, I was just thinking that because this was not in the base and if you were to strip out the contribution of F&B from this asset, then the 8% number would come down even further on purely on the FMB income.
Sanjay Sethi
Because it’s not contributing to the same number as the other hotels because it doesn’t do non-resident business. So if you take that out, the growth will actually go up a little bit. And I will…
Rajiv Bharati
Sure. And you are…
Sanjay Sethi
On a like-to-like basis.
Rajiv Bharati
And you mentioned that if you would — the Dukes impact and 4 point impact if you were to remove the EBITDA margin would be 47%.
Sanjay Sethi
In hospitality segment, yes.
Rajiv Bharati
Okay. Which is still — which is still underwhelming considering that you had some of the markets where you have grown 15% plus, Bangalore grown 30% plus. So operating leverage is…
Sanjay Sethi
There are variable costs that are connected with these revenues that come right from commissions to management fees to raw-material costs to operating costs. And as we go learning and up our offering — our rates, we also enhance our offering to our guests. We need experiences to be solid for all our guests. We continue to do that. Margin expansion at 40% — and margin at 47% in Q3, which is typically lower than Q4 is I think a very strong margin report.
Rajiv Bharati
Got it.
Sanjay Sethi
Given that we have some hotels which are just coming into the play — into speed.
Rajiv Bharati
Sure, sir. Thanks a lot. All the best. Thank you.
Sanjay Sethi
Thank you.
Operator
Thank you. Next question comes from the line of Achal Kumar with HSBC. Please go-ahead.
Achal Kumar
Yeah, hi. Thanks for the opportunity. And my first question is about — so we’ve been hearing that currently the expensive cost-of-capital expensive — expensive land, I mean it really is not worth it to think about the greenfield projects. It’s so expensive and of course, the timeline if you’re building a five-star could be four years or five years. But then now the rates are skyrocketing and you’re expecting rates to further go up. So how does the equation work? I mean, do you think — or do you think it’s really true that greenfield projects — I mean, you may not see many greenfield projects and it’s really not worth it or you think the rising rates are actually — are really favorable and we could see more greenfield projects coming up in the due course? What are your thoughts on that, please?
Sanjay Sethi
So Achal, on a base of 3,050 operating rooms, we have close to 1,100 more rooms under development. So clearly, we are going down that road of expansion. That’s a significant uptake to us. A third more. And this is what is the pipeline that we are working on now. But our BD team is constantly looking at more opportunities to grow. I think I did give an indication that there is no reason for us to believe that between our operating and pipeline, currently, we are at about 4,10 4,200, I see no reason why in a few quarters down the line that shouldn’t be a close to 5,000 number. So yes, the growth — we are bullish. There’ll be some cities where you may not be able to do greenfield. You will find alternate ways of doing it through mixed-use or JVs or rented assets, rented shelves, all of those options that are in front of us. We have a large group that supports us on similar asset classes. We expect to leverage that and grow aggressively going-forward.
The good part of the story is cities like Mumbai where we have maybe 55% 60% of our portfolio today have high barriers-to-entry, which are extremely positive for the Chalet story. And we’d like to believe that this is going to hold us extremely well in the coming years. Similarly in Hyderabad, we already have 600 rooms. Bangalore is going up from 390 to 520 rooms. All this is happening within our existing land parcel. So for us, the cost of building them out is significantly lower.
Achal Kumar
So I mean, so is it worth assuming that your next target could be the Tier-2 cities or Tier-3 cities where — where the construction could still worth it and where the cost of construction could be lower? I mean, do you think — I mean strategically do you think that way, that path?
Sanjay Sethi
So look, they need to make economic sense in each of these individual assets. If they work, we’ll look at them. We have no boundaries that restrict us. Our growth will be aligned with where we can get healthy returns. I mentioned this in a previous call. To some extent, we are spoiled by our own returns and anything that we do going-forward will have to match-up with these returns. We are certainly not going to dilute our performances by taking subpar assets into the portfolio.
Achal Kumar
Okay. My second question is about — wanted to understand more about the Pune market because Pune, I keep hearing that not doing great. There is not a corporate market. It’s not a — it’s not a leisure market either. So for you guys, how the Pune market is doing, any thoughts on that, please?
Sanjay Sethi
So tremendous growth. I mean, if you look at our Novotel Pune, our RevPAR growth in the hotel is 35%. So on a like-to-like basis, we had the same number of rooms last year in the same quarter. We’ve grown by 35% in that hotel, clearly a strong market. Pune is not necessarily a very strong rate market, but certain pockets within Pune have high-potential for new supply of hotels and we’ll continue to explore them as we go along.
Achal Kumar
But is that — I mean, so the rate — sorry, the growth which you’re referring to, is it more of a corporate growth or is more of a leisure growth?
Sanjay Sethi
Pocket growth.
Achal Kumar
Okay. All right. Okay. Okay. Okay. My last question is about the airport asset. I mean, you’ve been doing a lot on the airport assets. Any thoughts or any plans to have anything around new Airport?
Sanjay Sethi
No. So look, we do get opportunities once in a while around that area. We’ve looked at them. And so-far, given the whatever we heard and saw, the economics didn’t make sense at that point of time. But we will continue to keep our eyes and ears open to see any new opportunities that come around to you.
Achal Kumar
Okay, perfect. Thank you and wish you all the best.
Sanjay Sethi
Thank you.
Operator
Thank you. Ladies and gentlemen, as there are no further questions, we have reached the end of question-and-answer session. I would now like to hand the conference over to Mr. Sanjay Sethi for closing comments.
Sanjay Sethi
Good morning, everyone again, and good afternoon. Thank you for joining us.
In conclusion, I’d like to firstly thank you for joining us for the call and more importantly to confirm that we continue to be extremely excited of the space that we are in, both in hospitality and also equally in the office assets that we have. And we believe that next few years, visible few years that we have a site — insight on, which is the next four years, look extremely bullish and strong.
Thank you.
Operator
Thank you. On behalf of Chalet Hotels Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.