Royal Orchid Hotels - Available at good valuation!

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.


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:

  • 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)?!

  • 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


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


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


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.

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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


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.


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.

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