Royal Orchid Hotels FY26: Revenue up, but accounting and ICONIQA weigh on reported profits

Royal Orchid Hotels Limited ended FY26 with a clear split story. The operating platform expanded, but reported profits were pulled down by Ind AS accounting effects and the first-year cost structure of ICONIQA Mumbai.

On a consolidated basis, total income rose to INR 406.4 crore in FY26 from INR 343.2 crore in FY25. EBITDA increased to INR 110.6 crore from INR 96.8 crore. But PAT after associate declined to INR 33.3 crore from INR 47.5 crore. The investor presentation and management commentary repeatedly framed this as a function of notional Ind AS impacts, higher depreciation and finance costs, and the ramp-up phase of ICONIQA.

FY26 performance: strong topline momentum, softer reported PAT

The investor deck shows that revenue from operations increased to INR 384.2 crore in FY26 from INR 319.5 crore in FY25. Room revenue grew fastest, reaching INR 213.7 crore in FY26 versus INR 161.1 crore in FY25. Food and beverages increased to INR 120.5 crore from INR 112.3 crore.

In Q4 FY26, consolidated total income was INR 118.9 crore versus INR 92.3 crore in Q4 FY25. EBITDA grew to INR 31.3 crore from INR 25.5 crore. However, profitability metrics in Q4 were weaker than the growth in revenue would suggest. PBT declined to INR 9.0 crore from INR 16.4 crore, and PAT after associate was INR 8.2 crore versus INR 13.1 crore.

A large part of the explanation sits in the accounting bridge. The company stated that adoption of Ind AS led to a notional increase in depreciation and finance costs of INR 57.3 crore at the consolidated level for FY26, reducing PAT by INR 15.4 crore. The same dynamic is visible in the financials, where consolidated depreciation increased to INR 35.6 crore in FY26 from INR 20.7 crore in FY25, and finance cost increased to INR 38.8 crore from INR 16.6 crore.

ICONIQA Mumbai: scale asset, first-year drag

ICONIQA Mumbai is the biggest single swing factor in the FY26 narrative. The hotel is positioned as an upscale lifestyle property near Mumbai T2 airport with 292 keys. In the presentation, the company reported ICONIQA Q4 total income of INR 24.2 crore and stated a target annual run-rate of INR 80 to 100 crore.

However, ICONIQA’s FY26 financials under Ind AS show total income of INR 44.9 crore and a PAT loss of INR 22.1 crore. Management explained two drivers for the weak first-year profitability.

First, the hotel was affected by opening phase costs and disruptions. The CFO stated ICONIQA occupancy in Q4 was around 62 percent, with January around 80 percent and February around 73 percent, but March saw cancellations linked to the war situation. He also said that April and May occupancy was around 81 percent.

Second, the company had to take a pre-operating expense write-off. Management stated that auditors did not allow capitalisation of about INR 5.5 crore of pre-operating expenses, and along with an earlier INR 2 crore, the total write-off for the year was INR 7.5 crore.

The presentation also highlights how lease accounting changes the optics. It notes that during FY26, one subsidiary recognised right-of-use assets and corresponding lease liabilities, and recorded depreciation and finance cost of INR 13.3 crore in the quarter and INR 32.5 crore for the year ended March 2026. This is consistent with the broader Ind AS theme across the consolidated accounts.

Asset light expansion: management contracts at the centre

Royal Orchid’s “big picture” is built around asset light growth. The presentation reports 123 operating hotels and 52 plus upcoming hotels. Total keys including signed hotels were stated at 11,204, while operational rooms were 7,579.

The operational key mix also signals the business model. The company reported 403 owned keys, 1,039 leased keys, 221 JV keys, and 5,916 managed or franchised keys. This skews heavily to management and franchise, which management described as the primary scaling lever.

The investor deck also provides a segment revenue mix including associate. For FY26, lease or revenue share contributed INR 185.3 crore, owned contributed INR 121.0 crore, joint venture or associate contributed INR 76.5 crore, and managed hotels contributed INR 36.4 crore.

In the concall, management described the signing mix as largely management contracts, with a smaller share of franchise and a few flexi lease deals. They also highlighted that they have beefed up the development team and that inbound interest from owners has improved as the brand footprint expanded.

A useful disclosure on fee income came from commentary on Regenta Hotels Private Limited, the managed contracts business. The CFO stated this entity delivered around INR 55 to 56 crore top line in FY26 and around INR 20 crore EBITDA, with a 5 percent brand fee transferred to the parent.

What management focused on: growth visibility but no short-term numeric guidance

The management tone was confident on long-term objectives but cautious on near-term guidance. The company reiterated Vision 2030 targets of 345 plus hotels and 22,000 plus keys by FY30. It also highlighted a technology-led loyalty push through Regenta Rewards.

At the same time, management declined to provide FY27 to FY28 revenue and EBITDA guidance, citing geopolitical uncertainty, cost inflation, and potential wage increases. They referenced demand disruption in the last month of the year, pressure on ADR and occupancy, and construction delays affecting openings.

One strategic addition is the Hampton by Hilton licensing partnership. Management described it as a 10-year agreement for six states, with an ambition of 125 hotels over the period. They expect some signings in the current year but avoided a numeric ramp-up until they see early execution cycles.

Takeaways

Royal Orchid’s FY26 results show that the underlying operating business expanded, especially on room revenue, while reported profits were affected by Ind AS accounting and ICONIQA’s first-year ramp-up. The company’s growth plan is clearly anchored in an asset light model with a large managed and franchise base, a signed pipeline, and a stated Vision 2030 scale target.

The near-term investor focus is likely to stay on three items: ICONIQA stabilisation, the pace and quality of new openings across the signed pipeline, and margin protection in a cost inflation environment where management itself expects limited pricing pass-through.