Kamat Hotels (India) Navigates Q3 FY26 with Strategic Focus and Expansion

Kamat Hotels (India) Limited, a prominent name in the Indian hospitality sector, recently shared its performance for the third quarter and nine months ended December 31, 2025 (Q3/9M FY26). The company reported a consolidated revenue of INR 117.7 crore for Q3 FY26, marking an 11.6% increase year-on-year. For the nine-month period, revenue stood at INR 275.5 crore, a 4.1% rise from the previous year. However, profitability metrics saw a decline, with Q3 EBITDA at INR 39 crore (down from INR 44.2 crore) and Profit After Tax (PAT) at INR 19.1 crore (down from INR 26.2 crore). The management candidly acknowledged the challenges faced during the quarter, attributing them to a confluence of external factors and the inherent dynamics of their expansion strategy.

The hospitality chain operates across various categories, from luxury to value-for-money, with a diverse brand portfolio including The Orchid, Fort JadhavGADH, Mahodadhi Palace, Toyam, Lotus Resorts, and IRA by Orchid. The revenue mix for FY25 indicated that Room Revenue contributed 65% and Food & Beverage accounted for 35%. Geographically, the company maintains a strong presence across Maharashtra, Orissa, Himachal, Gujarat, Uttar Pradesh, Telangana, Chandigarh, and Goa, with plans to expand into new states. The 'Orchid' brand, notably, holds the distinction of being Asia's first chain of 5-star Environment Sensitive Hotels, boasting over 95 national and international awards.

Operational Headwinds and Strategic Adjustments

The Q3 performance was impacted by several operational headwinds. The management highlighted the significant effect of aviation disruptions and severe road conditions, particularly in Himachal Pradesh, which adversely affected their Shimla-Manali properties. The previous year's Q3 had also benefited from the Mahakumbh event, creating a higher base for comparison. Furthermore, several new hotel openings, including Dehradun, Gwalior, Bhavnagar, Nashik, Rishivan, Puri, and Hyderabad, experienced delays. These delays, often due to dependencies on property owners for completion and clearances, resulted in initial operational expenses without corresponding revenue generation, impacting short-term profitability.

Kamat Hotels employs a unique accounting practice where initial opening costs for new properties are expensed as Operating Expenses (OPEX) rather than being capitalized. This approach, while affecting immediate profitability, provides a transparent view of operational performance from day one and aids in better cash flow management. The management emphasized that this strategy, adopted during the COVID-19 pandemic, helps in understanding the true cost of operations and ensures accountability for general managers.

Growth Drivers and Future Outlook

Despite the challenges, Kamat Hotels demonstrated several strengths and strategic initiatives. The company boasts significant brand loyalty, with 65% of its sales generated from repeat customers. It has also achieved substantial debt reduction since FY24, nearing its FY26 target of INR 50 crore, reflecting disciplined financial management. New properties, once stabilized, are showing promising returns; for instance, the Chandigarh hotel, after initial struggles, has achieved a 98% occupancy rate. The Mumbai market remains buoyant, supported by developments like the Jio Convention Center, NESCO, and the upcoming Navi Mumbai Airport, which helps insulate the company's properties from increased supply.

The company's