Robust Hotels Ltd Management Discussions

1. INDUSTRY STRUCTURE AND DEVELOPMENT

Investment information and credit ratings agency ICRA expects the revenues of the Indian hospitality industry to grow by 7-9% year on year in financial year 2025 and 6-8% year on year in financial year 2026, over a high base of financial year 2024. The average room rates (ARRs) for premium hotels in India are projected to rise to INR 7,800-8,000 for financial year 2025 (up 8% year on year) and subsequently improve further to INR 8,000-8,400 in financial year 2026.

The overall hospitality market in India is estimated to reach USD 281.83 billion in 2025 and is projected to grow at a compound annual growth rate (CAGR) of 13.96%, reaching USD 541.70 billion by 2030.This growth is driven by factors such as rising disposable incomes, urbanization, and a growing preference for experiential travel. Source / Read more at: https://economictimes.indiatimes.com/industry/services/hotels-/-restaurants/hospitality-industry-revenues-to-grow-by-6-8-in-fy26-icra/articleshow/117025495.cms?utm_source=contentofinterest&utm_ medium=text&utm_campaign=cppst Spiritual tourism, also known as religious or faith tourism, is a significant and growing segment of the Indian travel industry. It accounts for over 60% of domestic tourism and a substantial portion of overall tourism revenue. Key destinations include major pilgrimage sites and emerging cities experiencing infrastructure development to support this growth.

According to the latest news reports, there has been a 21.4% rise in inbound travel for spiritual purposes in India, according to Atlys, a leading visa processing platform. https://timesofindia.indiatimes.com/life-style/travel/news/maha-kumbh-2025-spurs-21-4-surge-in-spiritual-tourism-visa-applications-to-india-report/articleshow/117481624.cms

2. OPPORTUNITIES AND THREATS

Strong Business and IT Hub Demand:

Chennais status as a major IT and industrial hub, with areas like OMR and Guindy hosting tech parks, drives demand for mid-scale and business hotels. The rise of start-ups and SMEs fuels bleisure (business + leisure) travel, creating opportunities for hotels offering flexible, tech-enabled services.

New Hotel Developments:

Several high-profile projects, including Taj Ampa (235 keys), Grand Hyatt-Brigade ECR (250 keys), JW Marriott-Brigade OMR, Ritz Carlton MRC Nagar, and Marriott OMR Moxy (150 keys), are set to open within 2-3 years, enhancing Chennais hospitality landscape and attracting premium travellers.

Infrastructure and Connectivity Improvements:

Metro Phase 2 expansion and improved road/air connectivity are making Chennai more accessible, boosting tourism and business travel. Government initiatives like Swadesh Darshan support sustainable tourism, encouraging hotel development in niche areas like cultural and wellness tourism.

Spiritual Tourism: The government has taken steps to boost investments to facilitate spiritual tourism by enhancing infrastructure for pilgrims.

The budget also supports sustainable tourism with the Swadesh Darshan Scheme 2.0, promotes medical tourism under "Heal in India," revitalizes spiritual tourism, and preserves heritage through the Gyan Bharatam Mission, aiming to drive employment and economic growth. https://www.ibef.org/industry/tourism-hospitality-india

Threats:

High Operational Costs:

Rising land, labour, and energy costs in Chennai, a major urban centre, challenge profitability, particularly for new hotel projects requiring significant capital investment.

Competition from International and Domestic Chains:

The entry of global brands like Marriott, Hyatt, and Ritz Carlton, alongside domestic players like Taj, intensi_es competition, potentially leading to price wars and pressure on RevPAR, especially in the luxury and mid-scale segments._

Alternative Accommodations:

Platforms like Airbnb and homestays are gaining popularity among budget and millennial travelers, posing a threat to traditional hotels, particularly in the economy and mid-scale segments.

3. SEGMENTWISE OPERATIONAL PERFORMANCE

All segments—leisure, weddings, conferences and events, airline crew layovers, and corporate travel—are projected to experience continued growth in FY2025-26, building on the momentum of FY2024-25. The Indian governments "Wed in India" initiative, encouraging domestic weddings, is expected to significantly enhance the hospitality sectors contribution to the economy. Domestic tourism remains a cornerstone, with a growing preference for staycations driven by convenience, safety, and the appeal of exploring lesser-known destinations within India.

Chennais hospitality sector is bolstered by Tamil Nadus economic momentum, with investments of over INR 6.6 lakh crore pledged at the Global Investors Meet 2024, expected to create 26.9 lakh direct and indirect jobs. This economic activity will drive corporate and MICE demand.

Conclusion

Chennais hotel industry in FY2025-26 is set for robust growth, driven by domestic tourism, the "Wed in India" initiative, and infrastructure advancements. While leisure and weddings fuel volume and premium pricing, MICE, corporate travel, and crew layovers ensure diversified revenue streams. Strategic investments in technology, sustainability, and niche offerings will be key to capitalizing on this potential.

4. RISKS & CONCERNS

Chennais hotel industry in FY2025-26 faces risks from high operational costs, intense competition, labor shortages, alternative accommodations, and economic/environmental uncertainties due to the ongoing global tari_ concerns. These concerns could impact profitability and growth across segments, with budget and midscale hotels most vulnerable to pricing pressures and luxury properties facing cost and competition challenges. Strategic investments in technology, sustainability, and workforce development will be crucial to navigate these risks effectively.

5. BUSINESS OUTLOOK

To bolster investment in the hospitality sector, the Government of India continues to permit 100% Foreign Direct Investment through the automatic route, fostering growth and modernization. According to industry projections, the Indian hotel market is expected to expand from USD 24.61 billion in 2024 to USD 31.01 billion by 2029, achieving a CAGR of 4.73%. For FY2025-26, ICRA forecasts a revenue growth of 6-8% for the Indian hotel industry, following an estimated 7-9% growth in FY2024-25, driven by sustained domestic demand and controlled supply growth.

As travellers seek more immersive experiences, especially at leisure locations beyond metro cities, the hospitality industry is increasingly shifting its focus to tier 2 and tier 3 cities, driving hospitality investments. A recent report by real estate consultancy JLL revealed that about 13,274 rooms were signed in tier 3 locations last year, up from 7,267 in 2023, highlighting the immense growth potential these regions hold for the hospitality sector. https://hospitality.economictimes.indiatimes.com/news/speaking-heads/beyond-metro-cities-the-next-wave-of-hospitality-growth-in-india/120300008#:~:text=With%20improved%20infrastructure%20and%20 connectivity,prime%20destinations%20for%20hospitality%20expansion

6. EFFICIENT INTERNAL CONTROL SYSTEM AND ITS ADEQUCY

The companys internal control system remains adequate and effective, with well-documented procedures, independent audits, and rigorous oversight ensuring operational excellence, asset protection, and regulatory compliance. In Chennais thriving hotel market, these controls are poised to support projected growth, navigate challenges like high costs and competition, and leverage opportunities driven by domestic tourism, FDI, and infrastructure development. Ongoing updates and diligent implementation will ensure the systems continued adequacy in this dynamic environment.

7. DEVELOPMENT IN HUMAN RESOURES AND INDUSTRIAL RELATIONS

As of March 2025, our total workforce stood at 385 employees, including contracted staff, with a gender mix of 20% female and 80% male. We are committed to creating a happy, healthy, and inclusive work environment, guided by our purpose: "We care for people so they can be their best." To support this vision, we organize a wide range of employee engagement activities, beginning with the Celebrating Our People and our weekly Happy Hyatt Fridays. Prioritizing health and wellness, we conduct medical camps, host wellness talks, and have recently launched our in-house gym, HyFit, exclusively for colleagues. In addition, the Heart of the House has been revamped with enhanced facilities to ensure greater comfort and functionality. We also encourage team bonding through outdoor sports such as cricket, basketball and other activities. Our year-round HyCare Rewards & Recognition program celebrates the dedication and achievements of our team, fostering a culture where everyone feels valued, motivated, and empowered.

In line with our commitment to inclusivity, we proudly support and engage with diverse communities, including the LGBTQ+ community and individuals who are differently abled, ensuring that all voices are heard and respected.

Through Hyatt Thrive, we also extend our impact beyond the workplace by actively supporting local communities and driving positive change where it matters most.

8. DISCUSSIONS ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

S. No Ratios	Basis	31-Mar-25	31-Mar-24	Variance (in %)	Reasons
1. Current ratio	Current Assets/ Current Liabilities	5.11	4.37	17.44	NA
2. Debt Equity ratio	Total Liabilities/ Shareholderfunds	0.22	0.23	-5.25	NA
3. Debt service coverage ratio	Earning for Debt Service /Debt service	2.47	0.89	177.50	Increase in Profitability and Reduction in Principal Repayment in CY Compared to PY.
4. Return on equity ratio	Net profit after taxes/ Average shareholders equity	2.32	0.68	1.64	NA
5. Inventory Turnover ratio	F&B Sales/ Average Inventory	59.72	67.03	-10.91	NA
6. Trade receivable turnover ratio	Net Credit Sales/ AverageAccounts Receivable	16.97	17.25	-1.64	NA
7. Net Profit ratio	Net Profit/Total Income	10.54	3.62	6.92	NA

9. DETAILS OF SIGNIFICANT CHANGES IN FINANCIAL RATIOS

Particulars	FINANCIAL YEAR
	2024-25	2023-24
Debtors Turnover Ratio	17 Times	16 times
Inventory Turnover Ratio	60 Times	67 times
Current Ratio	5.11	4.37
Debt/Equity Ratio	0.22	0.23
Net Profit Margin (Profit Before Tax) %	10.54	3.62
Interest Coverage	3.47	2.32

10. DETAILS OF CHANGE IN RETURN ON NETWORTH

Particulars	FINANCIAL YEAR
	2024-25	2023-24
Net worth (Rs. Crore)	717.29	700.73
Return on Net worth (EBITA) %	5.36	2.29

Disclosure of Accounting Treatment:

Accounting treatment as per Indian Accounting standards has been followed in the preparation of financial statements.

Cautionary statement

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

For and on behalf of the Board of Directors

Umesh Saraf	Arun Kumar Saraf
Director	Director
DIN: 00017985	DIN: 00339772

 

Place : Chennai

Date: 27th May, 2025