Indian Hotels Company has announced a robust 20.8 per cent year-on-year increase in net profit for the first quarter of FY27, reaching Rs 357.9 crore, even as it navigates significant macroeconomic headwinds, including geopolitical tensions in West Asia affecting international travel demand.
Key Points
- IHCL's net profit for Q1 FY27 increased by 20.8 per cent year-on-year to Rs 357.9 crore, marking its 17th consecutive best-ever quarter.
- Revenue for the quarter grew by 14.6 per cent year-on-year, reaching Rs 2,339.19 crore.
- Geopolitical tensions in West Asia have led to elevated fuel prices, reduced airline capacity, and higher airfares, moderating international and long-haul travel demand.
- The company's international business, particularly in Dubai, has seen a recovery in occupancies after an initial sharp fall due to the West Asia conflict.
- IHCL signed 20 new hotels and opened 11 in Q1 FY27, expanding its operating portfolio to over 380 hotels, including new properties in key domestic and international markets.
Tata Group-owned Indian Hotels Company (IHCL) on Tuesday reported a 20.8 per cent year-on-year (Y-o-Y) rise in net profit for the first quarter (April-June/Q1) of 2026-27 (FY27) to Rs 357.9 crore, compared to Rs 296.4 crore a year earlier.
Revenue for the quarter stood at Rs 2,339.19 crore, up 14.6 per cent Y-o-Y, marking the company's 17th consecutive best-ever quarter.
Navigating Geopolitical Challenges
Chief executive officer and managing director Puneet Chhatwal cautioned that multiple macroeconomic headwinds, primarily geopolitical tensions in West Asia, have resulted in elevated fuel prices, reduced airline capacity and higher airfares, moderating travel demand in international and long-haul corridors.
He said these factors may continue to be an overhang in the coming quarters.
"There is a direct correlation between Dubai and the West Asia crisis.
"It also has an impact on our international business in the Maldives, because a lot of traffic to the Maldives, Sri Lanka, and even London and Cape Town is routed through Emirates.
"If people are psychologically afraid of going to that region, they will not connect through there. So we have some of these challenges which we need to navigate through," he said during the company's post results earnings call on Tuesday.
He also said that the banqueting business had remained subdued because of the West Asia crisis.
Reduced international and domestic flights during the April-June period lowered the earnings before interest, tax, depreciation, and amortisation of the company's airline catering business, TajSATS, slowing growth to 3 per cent from 13 per cent a year earlier.
"We have a 55 per cent share of all airline meals picked up in India, both domestic and international, so it does have an impact.
"However, we have been able to compensate to a great extent through non-aviation institutional catering. But it is still only 3-5 per cent," Chhatwal told Business Standard during a post-results audio call, responding to a question on potential headwinds in the coming quarters.
Strategic Growth and Market Recovery
During the earnings call, the top executive said the business vertical would grow rapidly and help cushion any weakness in the airline catering business.
"It's maybe three months or six months away from getting into a double-digit number," he added.
The country's largest hospitality company by number of keys and market capitalisation said its international business had seen a recovery, with occupancies across its three Dubai hotels rebounding after falling sharply because of the West Asia conflict.
"Dubai occupancy is back. At Business Bay, total revenue may be around 80 per cent of what it used to be.
"At Jumeirah Lakes Towers, it is around 60 per cent, but leisure is still under a lot of pressure.
"Taj Exotica on The Palm is not even at 50 per cent of the revenue it used to generate," he said.
Occupancies at its San Francisco property also recovered following the completion of repairs.
The hospitality company, which had gross cash reserves of more than Rs 4,400 crore as of June, said it signed 20 hotels in Q1FY27 and opened 11, taking its operating portfolio to more than 380 hotels.
The new openings included Taj Frankfurt, SeleQtions properties in Ayodhya and Mumbai, and hotels in the emerging markets of Bharatpur, Tiruchirappalli, Sindhudurg, Jawai, and Wayanad.
Revenue from the hotel segment and domestic revenue per available room (RevPAR) grew 17 per cent and 14 per cent, respectively.
In absolute terms, RevPAR grew to Rs 8400/night in quarter ended June versus Rs 7300/night in the same quarter last year.
Seasonal Fluctuations
Sequentially, net profit declined 40.3 per cent from Rs 599.9 crore in the fourth quarter (January-March/Q4) of 2025-26.
Revenue from operations also fell 15.4 per cent from Rs 2,765.29 crore, which the company attributed to the seasonality of the hospitality business, with revenue and profit typically skewed towards the second half of the financial year because of the wedding season, state visits, and other events.
