Advani Hotels & Resorts India Ltd Management Discussions

The discussion covers the financial results between April 1, 2025 and March 31, 2026. Some statements may be forward-looking and other issues.

1. Global and Indias Economy

In July 2026, the International Monetary Fund (IMF), in its World Economic Outlook Update, projected global GDP growth at 3.0% in 2026 and 3.4% in 2027, compared with an average of 3.5% in 2024-25. The outlook reflects the impact of the war in the Middle East, partly offset by stronger momentum in the global technology cycle driven by advances in Artificial Intelligence (AI). Global headline inflation is expected to rise from 4.1% in 2025 to 4.7% in 2026, before easing to 3.9% in 2027. India remains among the fastest-growing major economies, with growth projected at 6.4% in 2026 and 6.7% in 2027, supported by strong private consumption and services activity. Key risks include renewed geopolitical tensions, higher commodity prices, trade fragmentation and a possible correction in technology-driven valuations.

2. Tourism and the Hospitality Industry in India and Goa

As per the World Travel & Tourism Council (WTTC), Indias Travel & Tourism sector contributed INR 23.0 trillion to the economy in 2025, representing 6.6% of GDP, and grew 7.3% year-on-year. The sector supported 46.2 million jobs, or 10.8% of total employment. For 2026, WTTC forecasts the total contribution to rise to INR 24.9 trillion, up 8.5%, with employment reaching 48.1 million. By 2036, the total contribution is expected to reach INR 45.9 trillion, or 7.0% of GDP, while the sector is forecast to support 63.5 million jobs. The sectors contribution is expected to grow at 6.3% annually between 2026 and 2036.

As per HVS Anarock, Indias hotel sector witnessed a slowdown in Q2 CY2026 compared with Q1 CY2026, primarily due to escalating global geopolitical tensions and seasonality. For Q2 CY2026, occupancy stood at 64% to 66%, while the average room rate was INR 8,100 to 8,300 and RevPAR was INR 5,184 to 5,478. On a year-on-year basis, ARR increased 6% to 8%, occupancy increased 2% to 4% and RevPAR increased 11% to 13%. In June 2026, the sector recorded stronger year-on-year performance, supported by resilient domestic demand and a weak June 2025 base. Goa recorded a 5% to 7% increase in ARR and a 5% to 7% increase in occupancy over Q2 CY2025. In June 2026, Goas ARR increased 7% to 9% year-on-year, and occupancy increased 5% to 7%.

The domestic market remains a key driver of Indias Travel & Tourism industry. WTTC data shows that domestic visitor spending stood at INR 17.7 trillion in 2025, accounting for 86% of total spending, compared with INR 2.9 trillion from international visitors. Leisure travel accounted for 94.5% of total internal travel spending, compared with 5.5% for business travel. For 2026, domestic visitor spending is forecast at INR 19.0 trillion, while international visitor spending is expected at INR 3.3 trillion. Domestic spending is forecast to grow at 6.8% annually between 2026 and 2036, compared with 3.2% for international visitor spending. This highlights the importance of domestic travel to the sectors growth.

The hotel supply pipeline is also expanding across India. According to HVS Anarock, branded hotel signings reached 28,268 keys across 259 properties by June 2026, representing an increase of 8% and 6%, respectively, over the previous year. During the same period, 6,269 keys across 83 properties were opened; while the number of keys declined 9%, the number of properties increased 2%. Tier 3 and 4 markets accounted for 45% of signings and 43% of openings by keys in 2026, compared with 40% and 38%, respectively, in 2025. Goa is classified among the Tier 1 markets tracked by HVS Anarock. WTTC also estimates that Travel & Tourism attracted INR 4.3 trillion of capital investment in 2025, highlighting continued investment in the sector.

3. Opportunities and Threats

Opportunities

- The hospitality industry is expected to grow as there is a supply-demand imbalance.

- Foreign tourist arrivals are likely to increase, especially if GST rates on hotels are reduced.

- The cost of land for building new hotels has increased. The cost of constructing and furnishing hotels has also gone up. Existing hotels have an advantage in that they can offer lower rates and still make reasonable profits. We are refurbishing 62 guestrooms in one of the Wings to current international standards.

- The wedding segment is achieving a larger share of our profits partly due to the "WED IN INDIA" initiative started by our Prime Minister, Mr. Narendra Modi. Since large weddings require an alternate venue in addition to our beachfront lawns, our Company has initiated the process of building a larger banquet hall. This will also be useful in holding larger conferences, especially in the monsoon months.

- The road network within Goa has improved and reduced travel time from both Dabolim and Mopa airports.

- Expansion of Dabolim Airport terminal is nearing completion.

- Ro-Ro trains from Mumbai to Goa will commence in December.

- There are various world events, such as the "Chess Championship", which are scheduled to be hosted in Goa.

Threats

- Geopolitical tensions can disrupt travel flows and negatively impact traveller sentiment.

- Flight disruptions can adversely affect tourist arrivals and overall travel sentiment.

- Seasonality and adverse weather conditions can lead to fluctuations in tourism demand.

- Labour shortages and skill gaps could constrain the future growth of the tourism sector.

4. Segment-wise or product-wise performance

The Company is primarily engaged in the business of hoteliering, which the management recognises as the sole business segment.

5. Risks and concerns

The hotel business is dependent on global and domestic economic conditions, which may be adversely impacted due to war or a pandemic in any part of the World. Further, your Company has the risk of dependence on only one hotel in Goa. There is also the risk of dependence, mainly on the luxury segment. However, the Companys hotel enjoys a premium over many other competitors due to its repeat client base made over a period of 35 years, its beach-front location, service reputation and architectural design.

Our Company is totally debt-free and has ample liquid reserves. With debt-free status, we have reduced our risk profile and are more resilient to face any adverse economic condition when compared to other companies.

Risk Management is an integral part of the companys business process. The Company has a robust risk management framework to identify, assess, and mitigate potential threats. Risks are continuously monitored and effectively controlled through ongoing efforts to conceive and implement mitigation strategies. Pertinent policies and methods are being reviewed and modified to mitigate such risks. The Company has taken several measures to protect the safety and security of its customers, employees and its assets. In addition to the physical security measures, the Company, over a period of time, has taken varied and enhanced insurance covers to meet the financial obligations that may arise from any untoward incidents. To counter the risk of competition, your Company focuses on providing exceptional guest-centric services on a consistent basis.

6. Internal Control Systems and their adequacy

The Company has adequate Internal Control Systems with documented procedures for the main hotel operating functions. The Companys Internal Control System provide reasonable assurance of the effectiveness and efficiency of operations, reliability of financial controls and compliance with applicable laws and regulations.

The Companys Internal Auditors thoroughly examine various aspects of the Hotels operations and submit their reports to the Audit Committee on a regular basis. The Management takes necessary actions based on their observations. Since we have only one unit, the existing controls are adequate for safeguarding the Companys assets.

7. Financial performance with respect to operational performance

The detailed break-up of the financial performance of the Company during the last two Financial Years is shown below:

(Rs in million)

	Financial Year Ended
Particulars	March 31, 2026	March 31, 2025
Income:
Operating Income	1,067.06	1,074.07
Other Income	34.97	37.99
Total Income	1,102.03	1,112.06
Food and Beverages Consumed	80.25	79.74
Employee Benefits Expenses	348.27	336.51
Depreciation and Amortization Expenses	30.72	30.04
Other Operating and General Expenses	316.96	311.66
Total Expenditure	776.20	757.95
Profit Before Finance Costs, Exceptional items and Tax	325.83	354.11
Finance costs	0.69	1.13
Exceptional items	9.20	—
Profit Before Tax	316.05	352.98
Tax Expenses	77.41	88.62
Profit After Tax	238.63	264.35

Some of the key performance indicators of the Financial Year 2025-26 are below:

l Total Revenue of Rs 1,102.03 million, versus Rs 1,112.06 million in the previous Financial Year, reflecting a decline of 0.9%.

l Average Net Total Revenue Per Occupied Room (TREVPOR) at Rs 21,086 per room per night, versus Rs 19,725 per room per night in the previous Financial Year, reflecting an incremental growth of 6.9%.

l EBITDA Margin of 31.5% versus 34.5% in the previous Financial Year. l EBITDA of Rs 356.6 million versus Rs 384.2 million in the previous Financial Year. l PBT Margin of 28.7% versus 31.7% in the previous Financial Year. l PBT of Rs 316 million versus Rs 353 million in the previous Financial Year. l Cash Generated from Operations (before tax) of Rs 308 million versus Rs 301.6 million in the previous Financial Year. l Earnings per Share of Rs 2.6, versus Rs 2.9 in the previous Financial Year,

An analysis of major items of Financial Statements are given below:

(a) Income

The summary of Total Income is provided in the table below:

	Financial Year Ended
Particulars	March 31, 2026	March 31, 2025	% Change
Room Income	612.43	615.07	–0.4%
Food, Beverages & Banqueting Income	361.52	365.84	–1.2
Other Operating Income	93.11	93.16	—
Non-Operating Income	34.97	37.99	–0.8
Total Income	1,102.03	1,112.06	–0.9
Statistical Information:
Total Revenue Per Occupied Room (TrevPOR)	21,086	19,725	6.9

(i) Room Income remained highly resilient, declining by a nominal 0.4% to stand at Rs 612.43 million compared to Rs 615.07 million in the previous year.

(ii) Food, Beverages and Banqueting revenues registered a mild dip of 1.2%, moving to Rs 361.52 million from Rs 365.84 million in FY 2024-25. The marginal reduction indicates intense competition in the local banqueting landscape and slight adjustments in corporate/social event volumes, offset partially by robust menu pricing strategies.

(iii) Other Operating Income remained completely flat at Rs 93.12 million (as compared to Rs 93.16 million in FY 2024-25, demonstrating a reliable and highly predictable baseline flow from ancillary resort operations (such as spa and health club, laundry, guest transportation, telephone, among others).

(iv) Non-Operating Income declined by 0.8% to Rs 34.97 million from Rs 37.99 million, reflecting normal cyclical variations in treasury yields and interest income earned on corporate cash surpluses.

(v) The Total Revenue Per Occupied Room (TrevPOR) registered an impressive expansion of 6.9%, climbing significantly to Rs 21,086 in FY 2025-26 from Rs 19,725 in FY 2024-25.

(b) Total Expenditure

Total Expenditure increased by 2.4% from Rs 757.95 million to Rs 776.20 million during the current year, mainly due to higher variable costs.

Variances under major expenditure heads are explained below:

(i) Food and Beverages Consumed

(Rs in million)

	Financial Year Ended
Particulars	March 31, 2026	March 31, 2025	% Change
Food and Beverage Consumed	80.25	79.74	0.6%

Food and beverages consumed increased marginally by Rs 0.51 million, from Rs 79.74 million in FY 2024-25 to Rs 80.25 million in FY 2025-26, representing an increase of 0.6%. The increase was primarily attributable to the corresponding movement in business operations and consumption levels during the year.

(ii) Employee Benefit Expenses

	Financial Year Ended
Particulars	March 31, 2026	March 31, 2025	% Change
Employee Benefit Expenses	348.27	336.51	3.5%

Employee benefit expenses increased by Rs 11.76 million, from Rs 336.51 million in FY 2024-25 to Rs 348.27 million in FY 2025-26, representing an increase of 3.5%. The increase was primarily attributable to annual increments and revisions in employee remuneration, changes in employee-related costs, and the impact of incremental provision arising due to the implementation of the new labour codes, as applicable during the current Financial Year.

(iii) Depreciation & Amortisation Expenses

(Rs in million)

	Financial Year Ended
Particulars	March 31, 2026	March 31, 2025	% Change
Depreciation & Amortisation Expenses	30.72	30.04	2.3%

Depreciation and amortisation expenses increased by Rs 0.68 million, from Rs 30.04 million in FY 2024-25 to Rs 30.72 million in FY 2025-26, representing an increase of 2.3%. The increase was primarily due to depreciation on additions to property, plant and equipment during the year and the impact of assets capitalised and put to use during the year.

(iv) Other Expenses

(Rs in million)

	Financial Year Ended
Particulars	March 31, 2026	March 31, 2025	% Change
Other Operating Expenses	316.96	311.66	1.7%

Other operating expenses increased by Rs 5.30 million, from Rs 311.66 million in FY 2024-25 to Rs 316.96 million in FY 2025-26, representing an increase of 1.7%. The increase was primarily attributable to higher operating and maintenance costs, utilities, repairs and maintenance, housekeeping and other hotel-related operating expenses, in line with the normal course of hotel operations and business activities during the year.

Cash Flow

(Rs in million)

	Financial Year Ended
Particulars	March 31, 2026	March 31, 2025
Net Cash from / (used for) Operating Activities (after tax)	234.03	211.99
Net Cash from / (used for) Investing Activities	(162.46)	46.14
Net Cash from / (used for) Financing Activities	(165.27)	(177.21)
Net Increase / (Decrease) in Cash and Cash Equivalents	(93.71)	80.93

Operating Activities

Net cash generated from operating activities (after tax) increased from Rs 211.99 million in FY 2024-25 to Rs 234.03 million in FY 2025-26, reflecting an increase of Rs 22.04 million. The increase was primarily attributable to improved cash generation from the Companys hotel operations and effective management of operating working capital during the year.

Investing Activities

Net cash used in investing activities amounted to Rs 162.46 million in FY 2025-26, as against net cash generated from investing activities of Rs 46.14 million in FY 2024-25. The movement was primarily due to higher investment in fixed deposits and investment of surplus funds in secured Liquid Funds during the year, as compared to the previous year.

Financing Activities

Net cash used in financing activities amounted to Rs 165.27 million in FY 2025-26, as compared to Rs 177.21 million in FY 2024-25. This outflow was primarily due to dividend payout of Rs 173.9 million and other financing-related activities during the year.

8. Material developments in the Human Resources / Industrial Relations front, including the number of people employed

Your Company strives to attract the best talent available in the Hospitality market, which helps the Company to achieve high performance and excellence in hotel operations. The Company has an effective customer feedback monitoring system, with which high-performing employees are given incentives and also awarded with an employee of the month and quarter recognition. This platform helps the team to align all their efforts in delivering high-quality services to the guests whilst seeking to constantly improve standards.

Industrial relations throughout the year were cordial.

As on March 31, 2026, the total manpower was 619 (including contract labour and fixed-term contract employees).

9. Details of significant changes in key Financial Ratios / Return on Net Worth

	Financial Year Ended
Ratios	March 31, 2026	March 31, 2025	% Change
Debtors Turnover Ratio	1.89	1.95	–3%
Inventory Turnover Ratio	NA	NA
Interest Coverage Ratio	459.18	312.67	46.9%
Current Ratio	3.27	3.05	7%
Debt Equity Ratio	0.25%	0.00%	100%
Operating Margin Ratio	28.7%	31.8%	–9.7%
Net Profit Margin	21.7%	23.8%	–8.9%
Return on Net Worth	27.1%	32.5%	–16.6%

1. Debtors Turnover Ratio decreased marginally from 1.95 days in FY 2024-25 to 1.89 days in FY 2025-26, representing a decline of approximately 3%. The movement indicates a broadly stable collection cycle.

2. Inventory Turnover Ratio has not been given since the Company holds inventory for consumption in the service of food & beverage, and the proportion of such inventory is insignificant to the cost of goods sold.

3. Interest Coverage Ratio has improved and is substantially high due to negligible Finance Cost (Finance Cost is there due to Ind AS accounting of Lease).

4. The increase is primarily attributable to an increase in the current assets at the end of the current Financial Year compared to the previous Financial Year, mainly due to an increase in investments in mutual funds during the year.

5. Debt-Equity Ratio increased marginally from nil to 0.25%, primarily due to availment of borrowings at the end of the year.

6. Operating Margin Ratio, Net Profit Margin Ratio, and Return on Net Worth have decreased due to an increase in the Operating costs during the year.

	For and on behalf of the Board of Directors of
	Advani Hotels & Resorts (India) Limited
	Sunder G. Advani
Place: Mumbai	Chairman & Managing Director
Date: August 14, 2026	DIN: 00001365