Royal Orchid Hotels Ltd. plans to expand its portfolio to 200 properties by FY27, focusing on tier-two and tier-three cities across India to capitalise on the growing domestic travel demand. The company, currently operating over 107 locations, will open 35 new hotels this year, with 30 in smaller cities. Despite a 19% drop in profit after tax to INR 8.72 crore and rising costs, total income rose by 5.34% to INR 77.66 crore. The expansion aligns with India's strong GDP growth and increasing local tourism, positioning Royal Orchid for future growth in the evolving hospitality sector.
Royal Orchid Hotels Ltd., based in Bengaluru, is making ambitious plans to expand its hotel portfolio to 200 properties by the financial year 2027. The company aims to tap into the growing demand for domestic travel and enhance its presence in tier-two and tier-three cities across India. President Arjun Baljee shared insights on the company's growth strategy, noting a focused approach to enhance regional footprints in light of the increasing trend of Indians travelling within the country.
The anticipation of growth in domestic travel is supported by various factors. India's strong GDP growth, projected at 7-8 percent, is a robust backdrop for the tourism sector. Additionally, the global narrative surrounding travel is shifting, creating new opportunities for domestic tourism. Baljee pointed out that government initiatives and the rising inclination of Indians to explore local attractions are also vital to this expected surge. "With these three factors aligning, we can expect a significant boost in domestic travel and tourism," he remarked.
Royal Orchid Hotels is strategically launching its new properties, with 35 planned openings this year. Out of these, five will be situated in tier-one cities, while the remaining 30 are targeted for tier-two and tier-three cities. Baljee emphasised that this strategic move is designed to maximise the potential growth in domestic travel, catering specifically to areas with rising tourism demands. The company currently operates in over 107 locations, and this expansion plan reflects its commitment to strengthening its market presence.
However, the recent financial performance indicates that challenges lie ahead. The company reported a 19 percent drop in its consolidated profit after tax (PAT) for the first quarter, down to INR 8.72 crore from INR 10.73 crore in the same period last year. This decline has been attributed to several factors, including the impacts of ongoing heatwaves, upcoming elections, and rising costs due to repairs and maintenance. Chander K Baljee, Chairman and Managing Director, noted that the increased expenses for refurbishing assets and additional hiring played a role in this downturn during a recent post-results conference call.
Despite these challenges, Royal Orchid Hotels remains optimistic about its future. The total income for the quarter ending June 30 saw a modest increase of 5.34%, reaching INR 77.66 crore, compared to INR 73.72 crore during the same quarter last year. This positive revenue growth, despite pressures on profits, signals the company's resilience and potential recovery as the travel sector rebounds.
The hotel industry is witnessing a transformation, driven by changing consumer preferences and economic factors. As more people opt for domestic travel in search of safety and convenience, hotels in tier-two and tier-three cities stand to benefit significantly from this trend. Royal Orchid Hotels, with its proactive expansion strategy, is poised to become a key player in this evolving landscape.
In summary, Royal Orchid Hotels Ltd. is gearing up for significant growth in the coming years, aiming to build a network of 200 hotels by FY27. While current financial results show some hurdles, the company's strategic focus on expanding into smaller cities and its confidence in rising domestic travel position it well for the future. As India continues to recover and grow economically, the hospitality sector is expected to play a crucial role in the overall tourism landscape.
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