6%. In management contracts, they manage hotels owned by someone else so it can not be very high percentage.
Have been following this thread very closely as I am invested in ROHL. Took the opportunity of the dip to add to my position. Very much bullish in this stock due to impressive management, quick turnaround after pandemic, proposed addition in number of rooms and future potentiality, and last but not the least, reasonable valuation.
Would appreciate very much, opinion on technical indicators and chart analysis.
2 Likes
A long range bound consolidation is happening at the ATH zone and stock has rebounded from 200 ma bands, some movement can be expected above 309 which is upper range
Two queries:
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Keshav Baljee is also founder of separate entity Spree Hotels. Isn’t this conflict of interests? The promoters already have listed Orchid Hotels and they are also operating separate business (competitor)?!
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I understand this is a small cap, but still there is no participation from mutual funds?
Disc: Not invested. Still connecting the dots.
Q1 concall summary iro Royal Orchid Hotels -
Revenues - 73 vs 63 cr , up 16 pc
EBITDA - 23 vs 24 cr
NP - 10 vs 11 cr
ARR - Rs 5220 vs Rs 4880 YoY
Decrease in EBITDA and NP due substantial increase in employee salaries to control attrition ( due salary cuts during COVID )
Also spent higher amounts on upkeep and maintenance of hotels which wasn’t done during the COVID period
Cost of borrowings was also up YoY
Well on track to cross > 100 hotels this yr (by Oct). Currently operating 94 hotels. 13 hotels added in Q1- mostly management contracts
Avg occupancy of newly opened hotels ( mostly on management contracts ) is lower. Takes time to build up occupancies. Occupancies of older hotels is > 80 pc !!! ( Industry leading )
Repair and Maint costs should moderate by Q3
Management is aiming for an ambitious tgt of Rs 400 cr topline for FY 24. Even if they miss it by 8-10 pc, it would be a great outcome …IMHO
Occupancies of hotels added even 2-3 yrs back is also > 75 pc !!!
Aim to maintain a staff/room ratio of 1.3 on an overall basis
Focussing on increasing Banquet revenues … showing an encouraging trend. Conference business is also back
Hope to reach room count of 8000 by FY25 end
Intend to expand the company’s resorts in Goa and Bangaluru … both are as such doing quite well
Current room count at 5600. Aim to reach 6500 rooms by end FY24
All this expansion will be via management contracts of existing properties and some revenue share models. Don’t intend to set up own Greenfield hotels
Generally, hotel industry does 40:60 revenue split in H1:H2
July has been soft due heavy rains in Goa/HP
Aim to do 120cr EBITDA in FY 24 … if that happens (even if they do about 110 cr vs 82 cr LY) …it ll be a happy situation for the shareholders …IMHO
Income from management fees ( that they get by managing hotels ) LY was 24 cr
Disc: hold a tracking position
2 Likes
Royal Orchid Hotels -
Q3 Concall highlights -
Revenues - 87 vs 76 cr
EBITDA - 29 vs 28 cr
PAT - 15.7 vs 15.2 cr
Revenue break up ( segment wise ) -
Room rent - 46 vs 43 cr
F&B - 33 vs 28 cr
Other services - 3.6 vs 2.8 cr
Management fees - 8 vs 6 cr
Revenue break up ( model wise ) -
Owned hotels - 30 vs 24 cr
Leased / revenue share hotels - 34 vs 27 cr
JVs / Associates - 18 vs 23 cr
Management fees - 8 vs 6 cr
Added 05 hotels with 210 rooms in Q3. Added 20 hotels with 1030 rooms in 9M FY 24
Company held 51 pc stake in a 130 room hotel in Bangalore. Acquired additional 49 pc stake by paying 34 cr in Q3. The money was paid via internal cash generation
Out of a total of 100 hotels that the company is operating, around 80 odd hotels are just being managed by the company. Here, the company gets a management fees of around 3 pc of the property’s revenue. For Q3, total revenue received by the company from management contracts is 8 cr for managing 80 hotels. That amounts to roughly 3.5 lakh / month / hotel. Company makes an EBITDA of around 50 pc on these properties
Expecting to do a topline of 340 cr this yr and 390 cr for next FY ( both - including the Jaipur hotel ). Expecting an EBITDA of 120 cr for next FY
Company intends to add 38-40 more hotels in next FY - adding the room inventory by around 2500 rooms. Out of these, 03 hotels will be on the lease / revenue share model - which gives a bigger kick to the top/bottom line
ARRs for Q3 at Rs 5600
Post Mar 25, company shall focus on larger hotels on revenue share models. Company’s aim was to expand aggressively in FY23-25 period so as to establish its brand name. Once that is done, company can get hold of a lot more leased / revenue share hotels ( otherwise, ppl were not taking them as seriously )
Hotel industry is undergoing a boom similar to 2003-08. Bank financing rates have also fallen while extending loans to Hotel industry
Company intends to re-work their branding architecture so as to clearly differentiate between their 5 star vs 3 star offerings
Expecting an ARR hike of 6-8 pc for next FY
Company is expanding the room capacity at their owned hotels at Goa ( adding 44 rooms ), Bengaluru ( adding 28 rooms )
Company is expanding the room capacity at their owned hotels at Goa ( adding 44 rooms ), Bengaluru ( adding 28 rooms )
At present, company is not planning to open up at Ayodhya or Lakshadweep as the company doesn’t want to do any Greenfield capex right now
Disc: holding, biased, not SEBI registered
3 Likes
Royal Orchid Hotels -
Q4 and FY 24 concall and results highlights -
Company’s portfolio -
107 Hotels and resorts @ 70+ locations. Total Room inventory @ 6215 rooms. Total restaurant count @ 175
Ownership wise inventory of rooms -
Owned / JV Hotel rooms @ 591 - no addition in FY 24
Leased Hotel rooms @ 1112, up 94 pc YoY
Managed / Franchise rooms @ 6520, up 23 pc YoY
FY 24 and Q4 occupancies and Avg Room rates -
Q4 data -
Occupancy for Owned, JV, Leased hotels @ 72 vs 77 pc YoY. Their ARR @ Rs 6024 vs 5657
Occupancy for Managed, Franchise Hotels @ 65 vs 63 pc YoY. Their ARR @ Rs 3982 vs 3833
FY 24 data -
Occupancy for Owned, JV, Licensed hotels @ 74 vs 77 pc YoY. Their ARR @ Rs 5673 vs 5370
Occupancy for Managed, Franchise hotels @ 60 vs 63 pc YoY. Their ARR @ Rs 4039 vs 3795
Hotel Room inventory breakdown - Segment wise -
5 Star rooms - 407 ( 268 owned, 139 in JV )
4 Star rooms - 2673 ( 130 owned, 396 leased, 2147 managed / franchise )
Service Apartments - 138 ( 67 leased, 71 managed / franchise )
Resorts / Heritage - 949 ( 54 JV, 142 leased, 753 managed / franchise )
3 star / Budget - 1759 ( 83 leased, 1676 managed / franchise )
Q4 outcomes -
Revenues - 83 vs 77 cr
EBITDA - 24 vs 26 cr
PAT - 17 vs 13 cr
FY 24 outcomes -
Revenues - 312 vs 279 cr
EBITDA - 95 vs 98 cr ( invested aggressively behind hiring talent / employees in FY 24 - due rapid ongoing expansion. This has led to margin compression in FY 24. This should normalise in FY 25,26. Also spent aggressively on refurbishment / maintenance of old hotels in FY 24 )
PAT - 50 vs 49 cr
RoCE @ 20 pc
**Breakup of FY 24 revenues - **
Segment Wise -
Room rent - 170 vs 155 cr
F&B - 114 vs 102 cr
Other services - 12 vs 10 cr
Franchise / Management fee - 30 vs 24 cr
Ownership Wise -
Revenues from owned hotels - 97 vs 88 cr
Revenues from JV hotels - 76 vs 81 cr
Revenues from Leased hotels - 121 vs 96 cr
Franchise / Management revenues - 30 vs 24 cr
In Q4, company acquired remaining 49 pc stake in IKON hospitality ( running a hotel at Mumbai Airport ) for 34 cr
Aim to add 1500 rooms under management / franchise model + 400 rooms under the lease model in FY 25
Aim to do 370-380 cr of topline in FY 25. Aim to grow EBITDA by 10-15 pc only for FY 25. Again, the aggressive expansions lined up for FY 25 may not allow a margin expansion. Margin expansion may only happen in FY 26
Slated to open a new 300 room 5 star hotel in Mumbai in the middle of FY 25. Company to pay yearly rental of 36 cr for this property ( fixed for next 5 yrs ). Likely to do a topline of 100 to 120 cr / yr. Full ramp up expected to happen in FY 26. Expecting to do an additional EBITDA of 15 -20 cr from this property from FY 26 onwards
Aim to grow ARRs by 5-6 pc in FY 25
Company to add 28 rooms in their flagship Bengaluru property
Post elections, Company expects the corporate demand to pick up in a big way
Post FY 25, company is likely to go slow wrt addition of more managed / franchise hotels. They ll take time to consolidate their gains and ensure better quality service and incorporate learnings for the company. Plus they have reached a descent scales wrt recipt of management fee @ > 30 cr / yr
The company’s management contracts are not fixed rate contracts. These r basically a percentage of revenue share and vary from property to property
Disc: holding, biased, not SEBI registered
2 Likes
Why is stock trading at a low p/e compared to peers. Most hotel stocks are trading at upwards of 50 PE. What is the market discounting here.
1 Like
Multiple factors -
The Hotel Industry is the strongest at the top end - 4 star, 5 star level. Royal Orchid has a large presence at the 3-star level. That’s one source of skepticism
FY 25 is gonna be a year of consolidation. That’s another
Royal Orchid / Regenta - is still not an established brand. I think, they need to put in another 2-3 yrs of good work in areas of quality control etc to make their brand - more robust
2 Likes
May be partly also due to governance concerns. Google for governance issues and study the past Annual Reports of the company. There are several litigations, auditor qualifications, adverse remarks, write offs, defaults, etc. Company was a defaulter and went through CDR mechanism. The promoters have reduced their stake over the years.
2 Likes
The tides have turned for the hotel industry with surge in tourism. Royal Orchid has been regularly adding new properties at key tourist locations like Gangtok, Sakleshpur, Puri etc. Sales from the newly added properties will reflect in top line in some time. In this market I think Royal Orchid is a value pick and can be bought. You will have to be patient but it can easily double in 2 year’s time.
Disclaimer: Invested / Biased.
Another point according to me could be the fact that they are adding new hotels but all under managed hotel bucket except Mumbai which will be on Revenue share basis. Usually if one is bullish on hotel and tourism industries, operating leverage play is the most important trigger for your bottom line, for which managed hotel is not the best way I believe. It is kind of safe bet that is in downturn Royal Orchid doesnt stand to lose much due to low fixed cost and in upturn it does not get that multiplier effect in its bottom line either. A hotel player like Lemon Tree operating in a similar segment has lot of triggers left in its financials which are yet to perform whereas, a player like Royal Orchid who depends largely on increasing hotel under management and boost from large Mumbai Hotel (which should start meaningfully somewhere in Q4). This I will is one of the reason of why re-rating looks difficult unless investors turn head to toe and buy everything in hospitality industry.
2 Likes
Royal Orchid Hotels -
Q1 Concall and results highlights -
Revenues - 78 vs 73 cr
EBITDA - 21 vs 23 cr
PAT - 9 vs 11 cr
Breakup of revenues -
Room rentals - 41 vs 40 cr
F&B - 27 vs 27 cr
Other services - 2.5 vs 2.6 cr
Management fee ( received from management contracts ) - 8.6 vs 6.8 cr
Property wise breakup of revenues -
Owned - 26 vs 20 cr
Leased - 30 vs 28 cr
JV / Associates - 13 vs 21 cr
Managed - 8.6 vs 6.8 cr
Segment wise distribution of rooms ( owned, leased, managed, in JV with Royal Orchid ) -
Owned - 268 + 130 ( 5 star + 4 star ) = 398
Leased - 396 + 67 + 142 + 83 ( 4 star + service apartment + Resort + 3 star ) = 688
JV - 139 + 54 ( 5 star + Heritage ) = 193
Managed / Franchise - 2547 + 71 + 803 + 1715 ( 4 Star + service apartments + heritage / resort + 3 star ) = 5116
Grand total = 6395 rooms / keys
Upcoming hotels - 24 + with 1900 + rooms / keys. Out of these, 02 hotels in Gurugram and Mumbai are leased. All others are managed. The Gurugram hotel is going to be a 124 room hotel with 02 Banquet halls
Q1 was a difficult Qtr as the business got affected due to heat waves and elections across India
Company’s 300 room Mumbai hotel ( leased ) is expected to open by Q1 FY 26 ( currently under construction ). Company expects the ADRR @ 9.5-10.5k for this property
Company is seeing a descent pick up in business in Q2 after a subdued Q1.( aprox a 6-8 pc increase in ARRs across the board )
Guiding for a topline of 378-380 cr, 500 cr for FY 25, 26 with a PAT of aprox 55 cr and 70 cr respectively
Company expects the Mumbai hotel to do revenues of aprox 100 cr for its first year of operation ( ie FY 26 ). This hotel is near T-2, has 300 rooms, 02 Banquet halls, multiple F&B outlets. This should also improve the brand visibility of the company because of its prominent location
Company expects to derive revenues of > 100 cr alone from managed properties in next 3-4 yrs. EBITDA margins in managed properties are around 45 pc
The upcoming Gurugram hotel has a revenue potential of 25-30 cr
Disc: holding, biased, not SEBI registered, not a buy/sell recommendation
1 Like
An article on moneylife website about accounting manipulations.
2 Likes
Royal Orchid share has reacted to penalty imposed by SEBI. At this price it appears to be cheap as company’s performance is not impacted by it. After a difficult Q1, outlook is improving . Q3 is expected to be best. And new hotel at Mumbai is expected to be a game changer as it will start contributing from 2026 FY.
This is my expectation and I may be wrong. Invested.
2 Likes
Royal Orchid Hotels -
Q3 FY 25 results and Concall highlights -
Company’s Current portfolio -
5 Star rooms -
Owned - 268, JV - 139. Total - 407
4 Star rooms -
Owned - 130, Leased - 396, Managed - 2427. Total - 2953
Service Apartments -
Leased - 67, Managed - 71. Total - 138
Resorts / Heritage -
Leased - 142, JV - 54, Managed - 854. Total - 1050
3 Star -
Leased - 83, Managed - 1972. Total - 2055
Grand total -
Owned - 398, JV - 193, Leased - 688, Managed - 5324
Total no of Hotels @ 112 @ 75 locations
New Hotels added in last 9Ms @ 11, located across - Puri, Agra, Gurugram, Kasauli, Surat, Nepal, Jaipur, Gwalior, Raipur, Dalhousie, Dwarka
Total rooms added in last 9Ms @ 737
Upcoming hotels @ 28 with 2800 + rooms
Q3 financial outcomes -
Revenues - 95 vs 87 cr
EBITDA - 31 vs 30 cr
PAT - 18 vs 16 cr
9M FY 25 financial outcomes -
Revenues - 250 vs 230 cr
EBITDA - 71 vs 71 cr
PAT - 35 vs 34 cr
9M segmental revenues -
Room rent - 132 vs 124 cr
Food and Beverages - 93 vs 85 cr
Other services - 8 vs 9 cr
Managed Hotels - 24 vs 21 cr
Two of company’s exiting offerings likely to come up in next few months -
Regenta Resort - near Statue of Unity @ Kevadia, 49 rooms, likely to come up in Feb 25
ICONIQA - near T2 Mumbai airport, 292 rooms, likely to come up in Apr 25
Q3 ARR @ Rs 6320 vs 5700 YoY
9M FY 25 ARR @ Rs 5530 vs 5580 YoY
Ownership wise breakup of 9Ms revenues -
Owned - 87 vs 69 cr
Leased / Revenue share - 97 vs 90 cr
JVs - 49 vs 59 cr
Managed Hotels - 24 vs 21 cr
**The upcoming Hotel @ Mumbai is a leased property. It’s going to be a 5 star offering, positioned just below JW Marriot . Company expects this property to add 100 cr in topline on an annualised basis **
In FY 26 & 27, company is slated to start operations @ 10 leased properties. This should further add meaningfully to the topline
These 10 hotels combined are slated to add 1200 rooms under the leased / revenue share category
Revenues from the managed hotels should cross 50 cr in FY 26 ( in 9M FY 25, it was 24 cr ). PBT margins in the managed hotels comes to about 46-47 pc
ARRs of newly opened hotels ( in last 12 months ) is @ Rs 4180 vs corporate avg of Rs 5530. Similarly, newly opened hotels have an avg occupancy of 51 pc vs corporate avg of 70 pc. As these hotels ramp up, absolute EBITDA and margins should improve
Achieving 51 pc occupancy within 12 months of new hotel opening is in itself an achievement
Should commission 28 new rooms by Apr 25 in their Bangaluru resort
Additionally in their flagship hotel at Bengaluru, 25 rooms have already been renovated. Balance 25 rooms should also get renovated in Mar to May 25. Company is seeing healthy bump up in their ARRs post the renovation
Gross Debt @ 78 cr
Cash on books @ 60 cr. This would be utilised to add 40-45 rooms at their Goa hotel, initial operationalisation of the new Mumbai Hotel
Disc: used to hold previously. Planning to add. Biased, not SEBI registered, not a buy/sell recommendation
3 Likes