Grand Continent Hotels Ltd Management Discussions

ANNEXURE - G

Overview

For Grand Continent Hotel (GCH) FY 25 was a transformative year, marked by its NSE SME IPO and a record addition of 8 new properties, taking its portfolio to 21 operational hotels across ve Indian states. With over 1,000operational keys, a solidfinancial base, and an asset-light model, GCH is strategically positioned in Indias mid-market hospitality segment.

A Resilient Indian Economy Supports the case for Growth

Indias economic outlook for 2025 remains positive, with projections indicating continued strong growth. Multiple sources project Indias GDP growth for 2025 to be around 6.3%, with some forecasts ranging slightly higher or lower. India is projected to surpass Japan to become the worlds fourth-largest economy by GDP in 2025. Strong private consumption and government investment are expected to be key drivers of Indias economic expansion. Global trade tensions and policy uncertainties could pose challenges to Indias economic outlook.

Hospitality and Tourism in India

As of mid-2025, Indias tourism and hospitality sector continues to exhibit robust growth, driven by favorable demographics, increased domestic consumption, strategic infrastructure investments, and a resurgence in both domestic and international travel. Despite of United States (US) taris our growth remains positive, global economic challenges, including in ationary pressures and geopolitical tensions, Indias tourism industry has demonstrated remarkable resilience and is poised for sustained expansion.

Economic Contribution and Employment

In 2024, the tourism sector contributed approximately 21.15 trillion to Indias GDP, marking a 21% increase from 2019 levels. This sector supported around 46.5 million jobs, accounting for 9.1% of total employment in the country. Projections indicate that by 2035, the sectors contribution to the national economy could nearly double, reaching just under 42 trillion, with employment potentially rising to almost 64 million jobs.

Foreign and Domestic Tourist Arrivals tourism, with foreign tourist arrivals (FTAs)India witnessed a signicant reaching 9.6 million in 2024, surpassing pre-pandemic levels. The government aims to double FTAs to 25 million over the next ve years, focusing on enhancing infrastructure and promoting sustainable tourism practices. Domestic tourism also experienced substantial growth, with 2,509 million domestic tourist visits recorded in 2023. This surge underscores the increasing propensity for travel among Indian residents, bolstered by rising incomes and improved connectivity.

Aviation and Connectivity

Indias aviation sector has emerged as the worlds third-largest domestic aviation market. In 2024, domestic air tra c reached 161.3 million passengers, marking a 6% year-on-year increase. The governments ambitious plans include expanding the number of airports from 157 in 2024 to 400 by 2047, aiming to enhance regional connectivity and support tourism growth.

Hospitality Sector Growth

The hospitality industry in India has shown remarkable resilience, with occupancy rates reaching 63.9% in 2024. The Average Daily Rate (ADR) stood at 7,951, and Revenue Per Available Room (RevPAR) saw a 10.7% year-on-year growth. Major cities like Bengaluru led this growth, with a notable 38.3% increase in RevPAR during the rst quarter of 2025. All Key Markets saw strong RevPar Growth.

Key Hotel Market Performance

Source : JLL Q3 2024, Hotel Momentum Monitor

International hotel chains are expanding their footprint in India to capitalize on the booming leisure travel demand. For instance, Hilton plans to quadruple its number of hotel rooms in India veyears, re over e the next cting strong investor condence in the sector.

Government Initiatives

The Indian government has undertaken several initiatives to bolster the tourism sector, including the Swadesh Darshan and

Prashad schemes, aimed at developing thematic tourist circuits and pilgrimage sites, respectively.

Additionally, signicant investments are being made to upgrade infrastructureandpromoteIndiaas a global tourist destination.

Future Outlook

Looking ahead, the Indian tourism and hospitality industry is expected to continue its upward trajectory, driven by strategic policy support, infrastructure development, and a growing middle class with increasing disposable income. The sectors robust performance positions it as a key contributor to Indias economic growth and employment generation in the coming years.

Budget Segment: Steady growth is anticipated, driven by increased domestic travel and the expansion of budget hotel chains into tier-2 and tier-3 cities.

Midscale Segment: This segment is expected to benefrom a surge in business travel and MICE (Meetings, Incentives, Conferences, and Exhibitions) events, leading to higher occupancy and ARR.

These projections are supported by industry analyses indicating a positive trend in the hospitality sector, with occupancy rates and ARRs expected to rise due to sustained domestic demand and limited new supply addition.

Opportunities and Threats

Business Travel

Business travel in India has shown a strong recovery post-pandemic and continues to expand rapidly, fueled by the countrys growing economy, infrastructure development, and increasing corporate activity across Tier-1 and Tier-2 cities. As India emerges as a global hub for IT services, manufacturing, and startups, there has been a notable rise in intra-country corporate travel, MICE (Meetings, Incentives, Conferences, and Exhibitions) tourism, and executive mobility.

According to industry estimates, India is projected to become the 6th largest business travel market globally by 2030, growing at a CAGR of 8 10%. Metro cities like Mumbai, Bengaluru, Delhi NCR, and Hyderabad continue to be the top destinations for corporate stays, while cities like Pune, Ahmedabad, and Coimbatore are witnessing a surge in business travel due to industrial and tech park expansions.

Spiritual Travel

Spiritual tourism in India has witnessed robust growth in recent years, emerging as one of the key pillars of the domestic travel economy. Rooted in the countrys rich spiritual and religious heritage, destinations such as Varanas i, Rishikesh, Haridwar, Tirupati, Amritsar, Bodh Gaya, and Shirdi attract millions of pilgrims and seekers annually. This se gment has been further bolstered by government initiatives like the Prashad Scheme (Pilgrimage Rejuvenation and Spiritual Heritage Augmentation

Drive), aimed at infrastructure development around key religious sites.

The rising interest in wellness, yoga, and meditation particularly among younger and urban travelers has also redened spiritual travel as an experience-driven pursuit beyond traditional pilgrimage. International interest has grown, too, with India being recognized globally as a hub for spiritual learning and retreats.

According to industry estimates, spiritual tourism contributes nearly 60 70% of domestic tourism tra c and is expected to grow at a CAGR of 10 12% over the next decade. This surge is supported by improvements in connectivity, budget accommodation, and the digital promotion of spiritual circuits.

Leisure and Wellness

Leisure travel in India has emerged as a major growth engine for the tourism and hospitality sector, driven by rising disposable incomes, greater awareness of domestic destinations, and a growing aspiration for travel among the m iddle class. Post-pandemic, there has been a clear shift toward short-haul, experience-led holidays, with travelers increasingly exploring obeat and regional locations across India.

Popular leisure destinations such as Goa, Kerala, Himachal Pradesh, Rajasthan, Uttarakhand, and Northeast have seen strong demand, especially during weekends, holidays, and school vacation periods. This growth is therfur supported by improved road and air connectivity, enhanced digital access to travel planning tools, and the rapid rise of online travel agencies (OTAs).

According to industry estimates, Indias leisure travel market is expected to grow at a CAGR of 12 14% over the next ve years. Government initiatives like Dekho Apna Desh, promotion of tourist circuits, and investment tourism infrastructure in are enabling this boom.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

Financial Year Ended

Consolidated Results

Income

The Gross Revenue of the company increased by 132 percent from Rs. 31.53 Cr to Rs. 73.23 Cr in FY 20 25.

• Operational revenue increased from Rs. 31.23 Cr to Rs. 72.62 Cr was due to increase in operating inventory from 532 Keys to 956 Keys with opening of new hotels. The number of operating hotels increased from 12 in FY24 to 20 at end of FY25.

ARR of the company grew from Rs. 3,410 in FY 24 to Rs. 3,830 in FY25.

Occupancy in FY25 was at 61% versus 66% in FY 24. The drop in occupancy was on account of new hotel openings / increase in inventory in the second half of the year. Inventory grew from 531 Keys to 956 Keys . Of this 425 keys growth almost 300 Keys went live in H2 period. These keys did not achieve operational e ciency within the scal year. While the 531 keys delivered optimal occupancy and revenues, the new properties caused the enterprise occupancy to drop.

Other Income increased by 109% to Rs. 61.60 L in FY25, driven by addition of inventory and share of remuneration from JVs of the company.

Expenses

Total Expenses of the company increased by 131 percent to 60 Cr in FY25 versus 26 Cr in FY24. The increase in cost was largely attributable to business expansion of the company as compared to the previous year.

Raw Material Costs increased by 174% to 6.32 Cr in FY25 v/s 2.30 Cr in FY24 in line with increase in turnover and higher consumption for premium/leisure properties.

Due to signing/ commissioning of new hotels and increase in lease rent of existing properties as per agreements.

Employee BeneExpenses increased by 128 percent to 12.47 Cr from Rs. 5.47 Cr in FY24 driven by increase in head-count to 626 from 407 iwith increase in the number of hotels and expansion of corporate teams. It may also be prudent to note that in FY 24 the employee headcount had increased only towards the last quarter of the scal year, therefore not rendering a true average employee cost for the year and hence the cost parameters are not directly comparable.

• Other expenses comprising of Power and Fuel costs, Stores and Supplies administrative costs, commissions increased by

158% to Rs. 20.51 Cr in FY25 versus Rs. 7.95 Cr in FY24 in line due to increase in number of operating hotels and in line with turnover.

The Earnings Before Interest, Tax and Depreciation (EBITDA) of the company grew by 139% to 13.22 Cr in FY25 to from

5.50 Cr in FY24.

• Depreciation & Amortisation increased to 1.47 Cr in FY25 from 1.12 Cr in FY24 from capitalization of refurbishment expenses incurred during the year, primarily on account of business expansion.

Finance cost increased by 44% to 5.09 Cr in FY25 from 3.52 Cr in FY24 due to loans / ICD availed to open new hotels. The companys net worth increased signicantly to 113.14 crore (from 30.94 crore). Proceeds of 70.74 crore were utilized toward debt reduction (46%), hotel expansion (23%), and general corporate purposes.

Overall Debt reduced to 11.08 Cr in FY25 from 33.23 Cr in FY24 by repayment of debt to the tune of 34.08 Cr from its IPO proceeds. Debt-equity improved to 0.1x from 0.8x. Cash & equivalents grew to 32.76 crore, ensuring healthy liquidity.

GCH Strategy

Presence in the Right Market(s)

The company intends to focus and establish its brand in established hotel markets of India and also overseas locations in the near future.

* Source : CoStar

Source : CoStar and Horwath HTL

Notes:

Top 10 Markets comprise: Mumbai, Delhi NCR, Bengaluru, Chennai, Hyderabad, Kolkata, Ahmedabad, Pune, Goa, Jaipur.

Key Leisure Markets comprise: Rajasthan, Kerala, Goa, HP, Uttarakhand, Agra, Amritsar.

Outlook and Sector Alignment

The Indian hospitality industry is projected to see a 10.6% CAGR in demand vs 6% in supply through FY27, creating room for ADR improvement and occupancy gains.The companys product mix aligns with this shift, especially in the underpenetrated mid-market and spiritual zones.

With Indias GDP growth at 6.8% and increased spending on lifestyle, mobility, and experiences, GCH is poised to benefrom the shift away from unorganized stays toward branded, tech-enabled accommodation models.

Conclusion

By focusing on its three strategic verticals — business, spiritual, and leisure — Grand Continent Hotels is building a scalable and resilient hospitality brand. Its ability to combine operational e ciency, segment diversication, and customer places it on a strong footing for FY26 and beyond.

Risks & Concerns

Midscale hotels in India face risks arising from demand volatility, seasonal dependence, and heightened competition in saturated urban and leisure markets. Revenue is vulnerable to price pressure, high OTA dependence, and limited ancillary income. Rising payroll, utility, and compliance costs can compress margins, while expansion into Tier-2/3 cities carries project-execution and oversupply risks. Regulatory complexities, including multi-state licensing and potential tax changes, add operational uncertainty. External factors such as economic slowdowns, health crises, climate events, and shifting travel patterns can materially impact occupancy and protability. Maintaining service consistency and brand equity is critical to sustaining growth in this segment.

E cient Internal Control System And Its Adequacy

The Company has established adequate internal control system designed to ensure the accuracy and reliability of financial reporting, safeguard assets, and ensure compliance with applicable laws and regulations. The internal control framework is periodically reviewed by management and tested by the Internal Audit team, with ndings and recommendations placed before the Audit Committee. Continuous monitoring, process standardization, and technology enabled controls further enhance the adequacy and eectiveness of the system. The Board believes that these controls are commensurate with the size and nature of the Companys operations.

In accordance with Section 134(5) of the Companies Act, 2013, the Company has also laid down Internal Financial Controls

(IFC) to ensure the orderly and e cient conduct of its business, including adherence to policies, safeguarding of assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records, and timely preparation of reliable financial information. These controls are periodically assessed for both design and operating eectiveness through internal audits and management evaluations. Based on the results of these assessments, the Board conrms that the Companys internal financial controls over financial reporting were adequate and operating eectively year under review.

DEVELOPMENT IN HUMAN RESOURES AND INDUSTRIAL RELATIONS

Human Resource Development at Grand Continent Hotels Limited is focused on enhancing the knowledge, skills, and competencies of employees so that they can perform to the best of their potential while meeting the evolving needs of the organisation. Our HR framework ensures that candidates are selected with the right set of competencies, or with the ability to develop them through structured training, thereby aligning with the culture and service thos of the hotel. We e believe in employing individuals who re ect our mission of providing authentic hospitality, with emphasis on adaptability, teamwork, eective communication, and service orientation. Employees are expected to be proactive, emonstrate strong d interpersonal skills, and contribute eectively in a collaborative work environment. , we have developed an To support this extensive training and development model that equips employees with the required operational and service standards.

Employee Engagement

We recognise that employee engagement directly contributes to superior guest satisfaction and business outcomes. Engagement is fostered through initiatives that emphasise connection, recognition, communication, and care. Celebrations of birthdays and festivals, contests, sports and cultural programs are organised across units to build a sense of belonging among employees.

Inclusive and Empowered Workforce

Our workforce is diverse, covering operations, culinary, technical, front o ce, and corporate roles, each contributing uniquely to the guest experience. The company is committed to being an equal opportunity employer and continues to expand inclusivity eorts, including opportunities for persons with disabilities. We remain supportive of blue-collar talent by ensuring fair compensation, dignity of labour, and structured career growth. A culture of accountability and ownership is encouraged across all levels, empowering employees from the frontline to leadership roles.

Learning & Development

The company invests signicantly in learning and development to shape industry-ready professionals.Our training eorts include technical workshops in housekeeping, front o ce, food and beverage, and engineering to strengthen functional expertise. In addition, certication programs in collaboration with Hotel Logix and hospitality institutes are provided to enhance technical knowledge. Soft skills and leadership development programs are tailored for middle and senior management to prepare them for greater responsibilities. Industrial training tie-ups with leading hotel management institutes ensure a steady pipeline of trained talent for the future.

Talent Management

Our talent management strategy is designed to attract, develop, and retain high-potential employees with a future-focused approach. A robust performance management system linked with goal setting and annual appraisals drives accountability and ensures alignment with organisational objectives. Career pathing and internal promotions are prioritised over external hiring, re ecting our commitment to developing talent from within. Succession planning for key roles is undertaken to ensure business continuity. Employees are also encouraged to gain cross-functional exposure to become multi-skilled professionals, while regular talent reviews and personalised development plans help in identifying and grooming the next generation of leaders.

Details Of Signicant Changes In Financial Ratios (I.E. Change Of 25% Or MoreAsComparedTo The Immediately Preceding Financial Year) In Key Financial Ratios, Along With Detailed Explanations Thereof:

Details Of Change In Return On Networth :

CAUTIONARY STATEMENT

The Management Discussion and Analysis Report, may be forward looking statement made with based on current trends and available information to the Management. Hence, the actual results might dier from those either expressed or implied.