Viceroy Hotels Ltd Management Discussions

1. Economic Review

India remained the worlds fastest-growing major economy in FY2026, demonstrating resilience amid global uncertainties, trade disruptions and external shocks. Real GDP grew at 77% in FY2026, compared with 6.5% in FY2025, supported by robust domestic demand, particularly private consumption and fixed investment, both of which grew by more than 7.5%.

The Government continued to strengthen Indias long-term growth foundations through investments in infrastructure, urban development, digital transformation and manufacturing competitiveness. Policy reforms focused on improving the ease of doing business, encouraging private investment, and strengthening logistics and connectivity. A resilient financial system, expanding innovation ecosystem and favourable demographic trends further support Indias growth trajectory, reinforcing its position among the worlds fastest-growing major economies.

Outlook

Indias growth outlook remains constructive, with FY 2027 GDP growth expected at around 7%, supported by continued public capital expenditure, improving private investment intentions, tax rationalisation, resilient domestic consumption and healthier household, corporate and banking balance sheets. Moderating inflation and stable financial conditions are further supporting economic momentum. However, geopolitical tensions, trade disruptions, fragmented supply chains and volatility in global capital flows remain key external risks. With domestic consumption and investment continuing to anchor growth, India is well positioned to sustain its position among the worlds fastest-growing major economies and advance towards its Viksit Bharat 2047 vision.

2. Industry Review

2.1 Indian Hospitality Sector

Indias hospitality sector is experiencing robust growth driven by a diversified demand mix, moving beyond traditional leisure and business travel to include MICE, weddings, domestic tourism and experiential travel. Strong demand, coupled with a measured pace of room supply additions, is supporting healthy occupancy levels and improving room rates. The sector is also benefiting from rising consumer spending, expanding air connectivity and increased corporate and event activity, creating a favourable outlook for sustained growth.

As per the HVS ANAROCK Monitor, Indias hospitality sector began 2026 on a strong footing, with national hotel occupancy at 67-69% in Q1 2026, while Average Room Rates (ARR) stood at around H10,000-10,200 and RevPAR at H6,700-7,038. The performance reflects sustained pricing power and healthy demand across key markets, supported by corporate travel, MICE activity, events and resilient domestic tourism. ARR increased by 6-8% YoY, indicating that hotels were able to command higher room rates even as occupancy remained broadly stable.

The underlying demand environment is becoming increasingly diversified. Corporate travel supports weekday occupancy, while leisure travel, weddings, MICE and social events strengthen weekend and seasonal demand, creating a more balanced year-round revenue mix. Domestic travellers continue to be the dominant demand driver, while younger consumers are increasingly seeking experience-led, design-focused and digitally enabled hospitality.

The sector is also witnessing opportunities beyond the major metros, with Tier II and Tier III cities such as Jaipur, Kochi and Nashik emerging as important growth markets as connectivity and infrastructure improve. Indias branded hotel supply pipeline has crossed 100,000 rooms, with approximately 20,000 rooms expected to be added across Tier II and III locations, highlighting the industrys expanding geographic footprint.

Overall, the Q1 2026 performance points to a structurally stronger hospitality market, supported by multiple demand streams, improving connectivity and constrained supply in several markets. While geopolitical developments, operating costs and evolving guest expectations remain key monitorables, the combination of healthy occupancy, rising room rates and diversified demand provides a favourable foundation for continued industry growth through 2026.

Source: https://www.theweek.in/news/biz-tech/2026/08/10/ india-hospitality-growth-mice-ibis.html

Key trends

- Al-Powered Travel Planning: A is transforming travel discovery and booking through personalised recommendations, real-time itineraries and vernacular search.

- Rise of Domestic Leisure Travel: Growing demand for premium experiences and emerging destinations is driving domestic tourism, supported by better connectivity and expanding hotel supply.

- Experience-Led Travel: Travellers are taking shorter, more frequent trips and prioritising quality stays, wellness, dining and curated experiences.

- Domestic Demand Fuelling Growth: Leisure, business travel, MICE, weddings and spiritual tourism continue to support hospitality demand, occupancy and pricing.

- Multi-Modal Connectivity: Investments in airports, highways, railways and regional connectivity are improving access to established and emerging destinations.

- Regional Tourism Circuits: Hub-and-spoke tourism is gaining momentum, encouraging m u 11i -dest i nation travel and broader regional development.

- Events Driving Hotel Demand: Concerts, sports, exhibitions, conferences and festivals are emerging as significant drivers of hotel occupancy and revenues.

- Infrastructure Expansion: Rising travel demand is encouraging investments in hospitality infrastructure and quality accommodation across emerging markets.

- Resilient Domestic Tourism: Geopolitical uncertainties, aviation disruptions and higher travel costs are reshaping global travel patterns, while domestic tourism remains resilient.

Outlook

The Indian hospitality industry is expected to maintain its growth momentum, with \CRA projecting revenue growth of 7-9% in FY2027, following 9-12% growth in FY2026. Demand is expected to remain robust, supported by domestic leisure travel, MICE, weddings and business travel. Premium hotel occupancy is likely to remain stable at 72-74%, while ARRs are projected to rise to H8,600-8,800 from H8,200-8,500 in FY2026. Cost rationalisation and operating leverage are expected to sustain operating margins at 34-36%, well above pre-Covid levels.

The sector is also benefiting from a persistent demand- supply imbalance, with premium room inventory expected to grow at 5-6% CAGR during FY2025- FY2028, compared with 8-9% demand growth. This imbalance is likely to support occupancy and pricing over the next 2-3 years, while stronger cash accruals continue to strengthen hotel companies balance sheets. However, potential cost pressures and any prolonged impact of the West Asia conflict on travel sentiment remain key monitorables.

2.2 Hyderabad Hospitality Sector

Hyderabad is emerging as a high-potential hospitality market, supported by rapid real estate development, a growing commercial ecosystem and sustained infrastructure investments. The citys expanding Grade A office space and GCC ecosystem are driving demand for business hotels, extended-stay properties and branded residences across key hubs such as Gachibowli, Kokapet and the Financial District. Rising integrated townships, premium housing and mixed- use developments are further creating opportunities for upscale and luxury hospitality. Improved airport connectivity, metro expansion and urban infrastructure, combined with limited quality hotel supply and strong corporate, MICE and leisure demand, position Hyderabad for sustained hospitality growth and longterm investment opportunities.

3. Company Overview

Established in 1965, Viceroy Hotels Limited (VHL) is a premium hospitality company with a legacy of delivering quality guest experiences. Through its enduring partnership with Marriott \nternational, the Company operates Marriott-branded hotels in Hyderabad, serving business and leisure travellers. With strategically located properties, globally recognised hospitality standards and a strong commitment to service excellence, Viceroy Hotels has built a trusted presence in one of Indias most promising hospitality markets.

4. Financial Review

Financial Summary

(H in Lakhs)

Particulars	FY26	FY25
Total Revenue	13,909.9	13,602.13
Total Expenses	9,650.2	11,552.21
Profit/(Loss) before exceptional items and tax	2046.5	2,049.92
Add: Exceptional items	-	66
Profit/(Loss) before income tax	2,046.5	2,115.92
Less: Tax Expense	239.7	(5524.66)
Profit/(Loss) for the year	1,806.8	7,640.58

ii. Material developments in Human Resources / Industrial Relations front, including number of people employed: The total number of employees on roll of the company as on 31-03-2026 is 356.

iii. Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefor:

Key financial ratios:

Ratio	March 31, 2026	March 31, 2025	% Change Reason for variance (for change >25%)
Current ratio	1.21	2.87	- 58% Due to decrease in current investments and increase in current maturities of long term debt
Debt equity ratio	0.85	0.21	297% Due to increase in borrowings for capex and acquisition of subsidiary
Debt service coverage ratio	1.98	7.51	-74% Due to increase in borrowings for capex and acquisition of subsidiary
Return on equity ratio	0.07	0.31	-78% Since the deferred tax impact was given in the previous year on the unabsorbed business losses and unabsorbed depreciation
Inventory turnover ratio	26.30	23.98	10% Not applicable
Trade receivables turnover ratio	25.08	19.88	26% Efficient receivables management
Trade payables turnover ratio	2.62	2.94	-11% Not Applicable
Net capital turnover ratio	19.44	3.60	440% Since there was change in working capital due to decrease in investments and increase in current maturities
Net profit ratio	0.13	0.56	-77% Since the deferred tax impact was given in the previous year on the unabsorbed business losses and unabsorbed depreciation.
Return on capital employed	0.17	0.21	20% Not Applicable
Return on investment	0.04	0.04	-6% Not applicable

5. Risks and Opportunities

VHL operates in a dynamic environment shaped by economic volatility, regulatory changes and geopolitical developments that may influence travel demand. The Company addresses these risks through disciplined risk management, operational efficiency and cost optimisation. At the same time, opportunities across emerging markets, digital transformation

and innovative service offerings provide avenues to strengthen competitiveness and respond to evolving guest expectations.

6. Future Outlook

The Company remains optimistic about its long-term growth prospects, supported by favourable industry fundamentals and sustained demand for premium

Corporate Overview Statutory Reports Financial Statements hospitality experiences. With the successful integration of Marriott Executive Apartments, ongoing asset enhancement initiatives and a continued focus on operational excellence, the Company is well positioned to strengthen its market presence and elevate guest experiences. Going forward, it will evaluate expansion opportunities across Hyderabad and other key markets through a balanced mix of greenfield and brownfield developments, complemented by selective strategic acquisitions, while maintaining disciplined capital allocation and execution.

7. Internal Control

We have established an adequate internal control mechanism to safeguard all our assets and ensure operational excellence. The mechanism also meticulously records all transaction details and ensures regulatory compliance. We have multiple policy frameworks to ensure adequate controls on business processes. Further, Risk and Control dashboards have been defined and are periodically updated for all important operational processes. At periodic intervals, the management team and statutory auditors ensure that the defined controls are operative. Reputed audit firms also ensure that all transactions are correctly authorised and reported in accordance with the relevant regulatory framework. The reports are reviewed by the Audit Committee of the Board. Wherever necessary, internal control systems are strengthened, and corrective actions are initiated.

8. Cautionary Statement

Certain statements in the Management Discussion and Analysis describing the Companys objectives, and predictions may be forward-looking statements within the meaning of applicable laws and regulations. Actual results may vary significantly from the forward-looking statements contained in this document due to various risks and uncertainties. These risks and uncertainties include the effect of economic and political conditions in India, volatility in interest rates, new regulations and Government policies that may impact the Companys business as well as its ability to implement the strategy. The Company does not undertake to update these statements.