ROHLTD - Royal Orchid Hotels Ltd Share Price

Management provided an optimistic outlook for Royal Orchid Hotels Limited (ROHL), emphasizing a significant growth strategy leading into FY 2030. The key points from their future forecast include:

1. Ambitious Vision: ROHL aims to expand from 115 hotels to 345 hotels and increase their room count from approximately 9,500 to over 20,000 by FY 2030. This growth is expected to be achieved through strategic planning and implementation.

2. Financial Targets: The company projects revenues to reach Rs.550 crores to Rs.600 crores in the next two years, a notable increase from the current revenue of Rs.343 crores in FY '25. This projection is based on a confirmed pipeline of signed properties.

3. Operational Efficiency: Management highlighted a targeted return on capital employed (ROCE) of over 25%, focusing on disciplined execution and operational efficiency across their hotel portfolio.

4. AI Integration: ROHL is investing in AI technologies to enhance guest experiences and streamline operations. Examples include AI-based chatbots for 24/7 guest support and a dynamic pricing revenue dashboard.

5. New Property Launches: The newly opened ICONIQA hotel in Mumbai, featuring 292 technologically advanced rooms, is a flagship property that aims to redefine upscale lifestyle hospitality.

6. Sustained Growth: Q4 FY '25 revenues reached Rs.92.34 crores, with a year-on-year growth of 12%. Strategic leasing arrangements, such as renewing a lease for their flagship hotel in Bangalore at Rs.2.6 crores for 30 years, reflect management's commitment to long-term operational success.

7. Regenta Rewards Program: The introduction of a fully digital loyalty program aims to enhance customer retention, with an initial goal of achieving a repeat business rate over 40%.

These insights reveal a proactive management approach towards expansion and modernization, positioning ROHL for substantial growth in the competitive hospitality sector.

1. Question: "You showed that branding slide... How will I know ICONIQA?"

Answer: Thank you for that question. Out of our 115 hotels, only 13 are branded as Royal Orchid. While the parent brand is well-known, we must promote our sub-brands like Regenta. The market requires differentiation, and in this competitive landscape, promoting a robust brand helps build value. For instance, like Starbucks and its sub-brands, we aim for distinct identities that define our offerings without diluting the parent brand.

2. Question: "Can you help us to understand the operating metrics to reach Rs.550 crores top line?"

Answer: Sure! The hotel will contribute approximately Rs.100 crores annually. We have also signed revenue-sharing arrangements in Goa, Gurgaon, and Lucknow, which will add more revenue. Our projections are based on confirmed hotels, and we anticipate maintaining occupancy rates in the mid-70% range with an ADR growth of about 5-8% in order to reach our target numbers by FY 2027.

3. Question: "What is your focus on improving the F&B ratio?"

Answer: Absolutely, we aim to improve our F&B offerings, particularly with ICONIQA. This hotel, unlike our past offerings, is designed to attract both business and leisure guests through our multiple restaurants and bars. We recognize that higher-quality venues resonate with customers, and we're committed to maximizing F&B revenue with a diverse approach that caters to varied guest preferences.

4. Question: "Could you explain your business model across different hotel types?"

Answer: We have three owned hotels, five leased properties, and a mix of managed and franchise hotels. Our management model generates revenue through a percentage of the top line and profits. The flexi-lease model involves a refundable deposit based on projected revenues, ensuring lower risk while maintaining flexibility in our operations.

5. Question: "Can you provide your guidance for FY '26 revenue growth?"

Answer: Our guidance for FY '26 revenue stands at Rs.450-Rs.480 crores, with an expected organic growth of around 10%. We're targeting a sustainable ADR growth between 5-8%, which aligns well with our expansion strategy and ongoing demand recovery in the hospitality sector.