Bengaluru: Royal Orchid Hotels Ltd, which operates Royal Orchid and Regenta Inn brands, has signed an agreement for a 300 room five-star hotel property at Mumbai airport’s terminal 2, chairman and managing director Chander K. Baljee said on the sidelines of the HICSA hospitality event.
The property, located just a minute away from the terminal, is expected to be operational by late 2024, he added. Last year, the company had secured three properties through revenue-sharing agreements in Gurugram, Pune and Goa.
The company is also set to launch an upmarket full-service hotel brand, offering superior amenities compared to mid-market and budget options, but falling short of the luxury associated with full 4-star or 5-star establishments. Baljee refused to share further details on the new category.
Royal Orchid manages around 100 hotels across India, with a focus on 5-star and 4-star hotels and resorts. Presently, it is in the process of developing 24 hotels in India, and a few others in Nepal.
In recent years, the company has strategically transitioned from hotel ownership to an asset-light model, focusing on managing hotels for other owners, besides leasing hotel assets.
The signing of new properties aligns with Royal Orchid’s expansion strategy, focusing on prominent business centers and transportation hubs. The majority of its upcoming 2,000-room hotel inventory will be in Western India, followed by the North and East.
Earlier this month, it announced the opening of a 288-room 5-star hotel in Surat, Gujarat. The new property will be part of the soon-to-be-launched company-owned upscale brand, Baljee said.
About 10% of the new properties will follow a revenue-sharing model, while the rest will be managed. Only a fraction may be franchised in certain cases, he added.
“The scalability of this model is more practical. In the early and mid-2000s, we began offloading some of our assets to reduce our debts. Having been hotel owners ourselves, we understood what is needed to manage hotels.”
According to Baljee, business turnover for the last fiscal year exceeded FY23, but profitability remained almost flat, partly due to recent corporate-level hires, including a new chief executive.
In the nine months ended December 2023, the company added 20 properties. During an investor call, it projected a turnover of around ₹340 crore for FY24, including that of its Jaipur hotel, which is an associate. It expects to clock over ₹400 crore in revenue next fiscal year.
It also estimates an overall earnings before interest, taxes, depreciation, and amortization (Ebitda) of around ₹110 crore, with an additional ₹12 crore from its Jaipur property in FY25.
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Published: 04 Apr 2024, 08:06 PM IST