# 1. Financial Performance ## A. Key Figures * **Total Income:** **₹31.86 Cr** Q2 FY26 · **₹58.31 Cr** H1 FY26 * EBITDA: ₹8.82 Cr Q2 FY26 (27.7% margin) · ₹13.64 Cr H1 FY26 (23.4% margin) * Profit Before Tax: ₹4.68 Cr H1 FY26 · ₹4.3 Cr Q2 FY26 * Profit After Tax: ₹1.36 Cr H1 FY26 · ₹4.38 Cr Q2 FY26 ## B. Revenue & EBITDA * **Renovation-Driven Headwinds:** Revenue and EBITDA declines in Q2 and H1 primarily due to Courtyard renovation, including facade work rendering rooms unsellable. * **Resilient Margins:** EBITDA margins remained stable despite courtyard occupancy below **50%** of prior-year levels, underscoring strong cost discipline. * **Near-Term ROI Outlook:** Renovation payback expected in **under 2–3 years**, supported by facility upgrades and higher anticipated ADRs. ## C. Profitability Trends * **PAT Volatility:** Q2 PAT declined sharply despite marginal PBT, driven by a **deferred tax adjustment**—management noted need for further clarification. * **Lower Financing Costs:** Interest expenses reduced following refinancing via Kotak and repayment of promoter loan, with new rate at **25% lower**; most interest now capitalized on capex. ## D. Cash Flow Strength * **Cash Flow Resilience:** H1 operating cash flows improved YoY despite lower reported profits, reflecting effective working capital and cost management during renovations. ## E. Balance Sheet Update * **CIRP Completion:** Viceroy Hotels successfully exited CIRP process post-Resolution Plan approval (Oct 2023), settling all obligations ahead of schedule—a key milestone in turnaround. --- # 2. Occupancy & Pricing ## A. Key Figures * **ADR:** **₹6,620** Marriott Q2 (+9%) · **₹6,837** Courtyard Q2 (+13%) · **₹6,807** Marriott H1 (+11%) · **₹6,748** Courtyard H1 (+14%) * **RevPAR:** **₹4,726** Marriott Q2 · **₹2,156** Courtyard Q2 · **₹3,794** combined Q2 · **₹3,803** combined H1 * Occupancy: 71.4% Marriott Q2 · 31.5% Courtyard Q2 · 56.9% combined Q2 · 56% combined H1 ## B. ADR Growth * **Pricing Power Intact:** Strong double-digit ADR growth across brands, sustained by limited competition and a near-monopoly in the five-star segment. * **Value-Enhancing Upgrades:** Full room renovations—not just refurbishments—support durable rate increases by delivering modern, premium guest experiences. * **Ancillary Revenue Potential:** Launch of a larger, higher-quality spa expected to boost **average per capita spending** on amenities. ## C. RevPAR Trends * **Structural Demand Advantage:** Persistent demand-supply gap in Hyderabad’s luxury segment enables pricing and occupancy upside, underpinning RevPAR resilience. * **Portfolio Resilience:** Combined RevPAR held steady in H1 despite significant renovation-related disruptions, signaling strong underlying demand. ## D. Occupancy Rates * **Seasonal Rebound Expected:** Occupancy set to rise sharply in Q3 and Q4 on the back of festive and wedding season demand, aided by inventory normalization post-renovation. * **Marriott Partnership Leverage:** Viceroy benefits from Marriott’s global operating standards and **Bonvoy loyalty program**, driving sequential occupancy improvement. --- # 3. Renovation & Capacity ## A. Key Figures * **New Capacity:** **+56 rooms** (Courtyard) · **168 rooms** fully operational by Nov 30 * **Phase Two Budget:** **₹30–35 Cr** for Convention Center + partial refurbishment * **Convention Center:** **20,000 sq. ft.** expansion · Start Apr 1, 2026 · Completion by Sep 30, 2026 * **Room Refurbishment:** **168 of 295 rooms** to be completed by Mar 31, 2027 ## B. Phase One Completion * **Substantial Delivery:** Phase One largely complete with **+56 rooms**, spa, gym, rooftop restaurant, and pool now open or nearing completion, enhancing asset quality. * **Minimal Disruption Strategy:** Phased refurbishment of 295 rooms limits downtime to **20–30 rooms at a time**, preserving revenue flow. * **Modernization Push:** Facility upgrades—including what management calls one of **Hyderabad’s best spas**—align with international standards to boost competitiveness. ## C. Phase Two Plan * **MICE-Focused Expansion:** Phase Two centers on a **20,000 sq. ft. Convention Center** to capture high-growth MICE demand, with construction set to begin April 2026. * **Staged Execution:** Full room refurbishment will be staggered, with **168 rooms** to be upgraded by mid-FY27, minimizing revenue impact through controlled pacing. * **Offset Strategy:** Revenue from the newly completed Courtyard building will help **mitigate occupancy and event revenue loss** during Convention Center development. ## D. Greenfield Progress * **Madhapur Greenfield in Motion:** Project advancing through land-use conversion and design phase, with construction to start immediately upon regulatory approval. * **Strategic Portfolio Mix:** Growth strategy balances **Greenfield developments** and **Brownfield acquisitions**, targeting prime assets in high-demand micro markets. * **Brand & Location Focus:** Future projects will partner with **international operators like Marriott**, focusing on business traveler demand and **Tier 1/Tier 2 city opportunities**. --- # 4. Segment & Revenue Mix ## A. Key Figures * **F&B Revenue Mix:** **45%** of total revenue * **Room Inventory:** **463 rooms** across two flagship properties · **56 newly added rooms** at Courtyard by Marriott * **Convention Center Size:** **10,000 sq. ft.** current · **20,000 sq. ft.** planned post-expansion * **Banquet Space:** **Nearly 10,000 sq. ft.** in CBD ## B. F&B Contribution * **Core Revenue Driver:** F&B remains a dominant segment, contributing nearly half of total revenue, with plans to optimize performance toward a **40% contribution benchmark** despite current overperformance. * **Demand Momentum:** H2 saw stronger footfall in Hyderabad, boosting conference activity and driving **robust F&B revenue growth** and higher facility utilization. ## C. MICE & Events * **Strategic Growth Vector:** MICE positioned as a cornerstone segment, with expansion of the Convention Center expected to elevate its contribution toward a **close to 50% target**, reinforcing the property’s identity as the **Marriott Convention Center**. ## D. Room Inventory * **Supply Advantage:** Operations concentrated in Hyderabad’s CBD, where **limited new supply** and **high land costs** create a structural barrier to entry, supporting pricing power and occupancy. * **Operational Resilience:** Recent room additions enhance capacity buffer, ensuring maintenance cycles of **20–30 rooms** do not constrain available inventory or service delivery. * **Related-Party Land Lease:** Land is owned by relatives of the MD and leased at **25% EBITDA-based rent**, with transaction affirmed as arm’s length and duly approved. --- # 5. Demand & Market Trends ## A. Key Figures * **Demand Growth:** **10–12%** annual growth in mid-segment and upper-scale categories in Hyderabad * **Supply Growth:** **3–4%** annual increase in non-luxury hotel supply in Hyderabad ## B. Corporate Travel * **Favorable Macro Backdrop:** Robust economic growth, rising incomes, and strong domestic consumption underpin sustained hospitality demand. * **Hyderabad as a Business Hub:** City’s prominence in IT and pharma, along with expanding Grade A office space and global capability centers, drives resilient corporate travel. * **Strategic Segment Shift:** Management pivoting toward business-oriented hotels amid relatively weaker luxury demand, capitalizing on stable corporate mobility trends. * **Geopolitical Resilience:** Temporary Q1 corporate cancellations due to global tensions had minimal impact, with swift recovery post-stabilization. ## C. Leisure & Weddings * **Leisure and MICE Momentum:** Rising consumer appetite for travel, improved connectivity, and growing MICE activity are boosting demand, particularly in Hyderabad. * **Wedding Destination Play:** Expansion enhances convention capacity and room inventory, positioning the property as a major social events and wedding hub. * **Portfolio Diversification Explored:** Company evaluating entry into tourist and vacation-centric destinations, including Tiger Reserves for resort development, though subject to seasonality risks. ## D. Supply-Demand Gap * **Pronounced Imbalance in Hyderabad:** Demand growing at double-digit rates while supply expands at less than half the pace, creating a structural supply-demand gap. * **Pricing Power Intact:** Limited new supply over the next five years supports strong **RevPAR and ADR growth**, enhancing profitability for established players. * **Seasonality in New Markets:** Resort opportunities in Tiger Reserves show promise due to high ADRs, but require disciplined site selection and cost control. * **Operational Timing Advantage:** Ramp-up aligns with seasonally strongest quarters, providing near-term tailwinds to performance. --- # 6. Risks & Operational Pressures ## A. Renovation Impact * **Revenue Disruption Ahead:** Phase two upgrade of the Convention Center to weigh on near-term revenue due to loss of leasing income and lower room occupancy. ## B. Cost Inflation * **Margin Pressure Mounts:** Hospitality margins face headwinds from rising **food, beverage, staff, energy, compliance, and maintenance costs**. * **Cost Mitigation Underway:** Multi-year focus on upgrading **back-of-house MEP systems** aimed at reducing structural operating expenses. --- # 7. Guidance & Outlook ## A. Key Figures * **Growth Target:** **5–7%** near-term · **10%** aspirational (vs. industry 7–8% CAGR) * **EBITDA Margin Target:** **>30%** portfolio-level (vs. **28%** prior year) ## B. Growth Target * **Strategic Renovations Driving Long-Term Growth:** Phased upgrades, including Courtyard completion by **Q3 FY26**, are designed to boost ADR, occupancy, and revenue growth while minimizing disruption. * **Seasonal Leverage Ahead:** Business is positioned to capture significantly stronger demand in **Q3 and Q4**, with Q2 strategically used to absorb renovation impacts ahead of expected rebound. * **Outperformance Ambition:** Despite near-term headwinds from renovations, company targets to exceed industry growth trends over the medium term through enhanced asset quality and operating leverage. ## C. Margin Expectations * **Margin Expansion Pathway:** Targeting EBITDA margins above **30%** driven by back-of-the-house efficiency gains and reduced cost outliers from modernized infrastructure. * **Long-Term Asset Enhancement:** The upgraded **463-room facility** with a modern convention center is expected to structurally support higher margins and sustainable profitability.