Royal Orchid Hotels: Q2 & H1 FY26 Performance Driven by Strategic Expansion and Asset-Light Growth

Royal Orchid Hotels Limited, a prominent player in India's hospitality sector, has reported a robust financial performance for the second quarter and first half of the fiscal year 2026. The company's consolidated revenues for Q2 FY26 stood at ₹86.8 crore, marking a significant 10.7% year-on-year increase. For the first half (H1 FY26), consolidated revenue reached ₹169.6 crore, reflecting an 8.7% growth compared to the previous year. This growth was underpinned by an 18% year-on-year increase in room revenue and a 34% rise in other services. The company's EBITDA for Q2 FY26 was ₹20.8 crore, a 7% year-on-year increase, and for H1 FY26, it grew by 9.3% to ₹44.5 crore. Net profit after associates for the quarter was ₹4.3 crore.

The company's performance highlights a strategic focus on expanding its portfolio and enhancing operational efficiencies. The revenue breakdown for Q2 FY26 shows Room Night contributing ₹48.2 crore, Food and Beverages ₹27.8 crore, Other Services ₹3.1 crore, and Managed Hotels ₹7.5 crore. This diversified revenue stream reflects the company's broad operational base across various hospitality offerings.

Strategic Expansion and Brand Architecture

A key driver of Royal Orchid Hotels' growth strategy is its ambitious Vision 2030, aiming to triple its portfolio from the current 119+ hotels to 345 hotels and expand its total keys to over 22,000. This expansion is powered by a clear brand architecture and a disciplined asset-light model, emphasizing management contracts and franchising to scale efficiently. The company's focus on Return on Capital Employed (ROCE) is evident, with a target of 25% for its portfolio, ensuring that investments are linked to strong returns.

In Q2 FY26, the company successfully added three new properties, contributing 388 keys to its system. These include ICONIQA Mumbai (292 keys, Leased), Regenta Central Solapur (65 keys, Managed), and Regenta Resort Tropical Village Mysore (31 keys, Franchise). The ICONIQA Mumbai property, a 292-key lifestyle landmark near Mumbai's T2 airport, was notably delivered ahead of time and within budget. This new property has already garnered significant positive reviews and achieved a #3 ranking among Mumbai hotels within two months of its opening, demonstrating strong execution and market acceptance.

Operational Excellence and Market Adaptation

Royal Orchid Hotels is also proactively addressing market dynamics and operational challenges. The company is transitioning into a technology-driven, asset-light hospitality powerhouse, maximizing reach while maintaining quality. This includes the extensive use of technology and AI across operations to improve efficiency, reduce costs, and increase sales and profitability. The Regenta Rewards program, a tech-driven loyalty initiative, is designed to boost guest engagement and drive repeat visits, reinforcing customer loyalty.

Management acknowledged certain headwinds during the quarter, such as lower occupancy in some regions due to seasonal rains in North India and local issues in Goa. Employee expenses also saw a sharp increase, attributed to the booming hotel industry and competition for skilled staff. However, the company is implementing measures like in-house management development programs and contract staffing to manage these costs. Furthermore, the company is undertaking a strategic review and revamp of its Food & Beverage (F&B) concepts across managed hotel partners to adapt to changing customer demands and maintain F&B's stable contribution of around 40% to total revenue.

Outlook and Future Initiatives

Looking ahead, Royal Orchid Hotels has provided clear guidance for its future performance. The company projects consolidated revenue of ₹450-480 crore for FY26 and an ambitious ₹550-600 crore for FY27. The ICONIQA Mumbai property alone is expected to cross ₹100 crore in revenue next year, targeting 70% occupancy and an Average Room Rate (ARR) of around ₹8,000. Renovation plans are also underway for the Goa hotel, expected to start in April, and the Central Hotel in Bangalore, with plans to be finalized within three to six months. These initiatives underscore the company's commitment to continuous improvement and strategic growth.

Royal Orchid Hotels Limited is poised for sustained growth, driven by its disciplined capital allocation, strong operational efficiency, and strategic expansion into high-growth markets. The company's ability to deliver superior financial performance while maintaining service excellence and guest satisfaction reinforces its position as a leading Indian hospitality brand.