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Royal Orchid Hotels Ltd, a Bengaluru headquartered listed player in the hospitality sector is targeting to add at least 25 more hotels to its existing chain of 75, according to Chander K Baljee, Chairman and Managing Director of the company.
Currently, the company manages a mix of managed, franchised, and owned properties. Customers’ desire for shorter holidays, better transit connections between smaller towns, and the wedding season have all boosted the company’s business post-Covid hiatus, Baljee said.
“Since March 2022, the business has been booming, which is evident from our Q1 results,” said the MD. In the quarter ending June 2022, the company had revenues of ₹63.4 crore and a net profit of ₹11 crore. Earlier for the full financial year of FY2021-22, it had revenues of ₹138.52 crore and a net profit of ₹26.8 crore.
The hotel chain has set a target of having 100 hotels in its portfolio by the middle of 2023. Baljee said, “Our current portfolio stands at 75 properties, with another 33 hotels already signed. We are close to achieving our target.”
Tapping opportunities
Royal Orchid will add new hotels to State capitals and tier-II and -III cities. Baljee said, “We are exploring opportunities across Gwalior, Jhansi, Raipur and Ambala. These are some of the places people prefer to stay in hotels rather than with their relatives.”
Although the company runs an asset-light business, Baljee stated that during the pandemic, the revenue-sharing model picked up. “We will add 10-15 hotels on a revenue-sharing basis, and our capital expenditure for the same would be ₹100 crore,” he added. As of now, it operates two hotels in a revenue-sharing format.
According to Baljee, while earlier people saved up for vacations and opted for longer vacations of 15 days, today tourists prefer shorter vacations of four to five days. “Moreover, these shorter gateways have received an impetus due to improved road connectivity and many more accessible driving destinations. This has led to a big boom in business,” he added.
The wedding season is another growth channel for the business. Baljee said, “We have around 18 hotels in the country that cater to the wedding segment. Weddings are a recession-proof business, and that is the silver lining there — the wedding business will grow significantly.”
Revenue boost
Royal Orchid intends to boost its revenue to ₹300 crore in FY23. Baljee said, “Our target is supported by rapid growth in the business. In FY24 and FY25, we intend to generate revenues of ₹400 crore and ₹500 crore, respectively. As we continue to pursue the completion of numerous deals, our goal is to have 200 hotels in the next three years.”
The hotel chain currently employs 6,000 people across all of its operations and as a result of the addition of more hotels, its workforce would expand by 2,000 people by September 2023.
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