Brigade Hotel Ventures Limited (BRIGHOTEL) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Brigade Hotel Ventures Limited Q2 FI27 Earnings Conference Call. Before we begin, I would like to remind participants that this conference call may contain forward-looking statements which are based on the beliefs, opinions, and expectations of the company as of today. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity to ask questions after the presentation concludes. Should you require assistance during the call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. With this, I now hand the conference over to Ms. Nirupa Shankar, Managing Director of Brigade Hotel Ventures Limited. Thank you and over to you, ma'am.

Thank you. Good afternoon, everyone, and a very warm welcome to the Brigade Hotel Ventures Limited Q2 FY27 Earnings Conference Call. I'm joined today by members of our senior leadership team. First of all, our chairman, Mr. Jay Shankar, Mr. Vineet Verma, our director, Mr. Vinay Gupta, our CEO, Mr. Anand Natarajan, our CFO, Mr. Ryan Arhana, our vice president, Nikhil Jaju, senior business analyst, and now we're also joined by Amar Manish, our CEO, our CEO. I will now dive deeper into this quarter's performance compared to Q2 of FY26. Our growth for this quarter is rate-led. ADR for the portfolio grew by 11% from 7,100 to approximately 7,900. This is something we actively worked towards in the portfolio of the last three quarters to increase the ADR, and I am very happy that we achieved it. We are now working to increase the ADR of each of our individual hotels to above 7,500, which we are working to do over the next few quarters. Occupancy stays relatively flat for our portfolio at 75%, with 76% of our customers coming in from domestic demand, a Y1Y increase of just 1%. Our room revenue, F&B revenue, and total revenue increased by 10% for the quarter compared to Q2 of FY26. What we are very happy about is that EBITDA increased by 26% from 130 crores to 142 crores for the half year, thereby increasing our margins from 32% to 37%. We were able to sustain our margins through tight cost control, with employee and operating costs growing below the revenue growth. The margins increased substantially despite the GST 2.0 impact, with 1.6% impact on margins coming from the GST aspect. Profit doubled from 11 crores to 22 crores, and lower financing costs helped double this profitability. On the F&B side, the quarter marked a clear turnaround. After a muted Q1 impacted by dry events, calendar, and cancellations due to the West Asia crisis, MICE activity picked up meaningfully this quarter on the back of strong domestic demand. Large electronic conferences hosted in Bangalore in September contributed to both rooms and F&B, and F&B returned to double-digit growth for the quarter. Moving to market-wise performance, Bangalore developed a strong quarter with ARR growing 8% Y-on-Y to 9,400 ADR and an occupancy improving to 81% from 78% last year, resulting in 12% REVPAR growth to 7,600. Unlike the first quarter, when we chose to optimize for occupancy in a softer demand environment, this quarter we were able to grow both rate and occupancy, a reflection of the recovery in the corporate and mice demand in the city. Across our other markets, ARR grew by 13% Y-on-Y to 6,300, while occupancy moderated to 70% from 74% last year, resulting in a REFPA growth of 8%. This was a deliberate attempt to play on ARR in cities like Grand Mercure, Giv City, and Mysore. In Mysore, Grand Mercure, we were able to improve our ARR by 27% Y-on-Y, improving its positioning in the market. The IBIS-TALS-Mysore also recorded a healthy 68% occupancy in its second year of operations. At Grand Mercure, Ahmedabad, GIF City, ARR grew by 16% and Rev Park grew by 37% as the business ecosystem in GIF City continues to deepen. The Courtyard by Marriott, Kochi Info Park completed its first full quarter after rebranding with ARR growing by 17%. Occupancy is still on the way to increase. It declined for this quarter, but we believe that it is temporary, and we will see the uptake and the occupancy in the coming quarters. Looking ahead to the third quarter, we are encouraged by what we are seeing so far. October trends and forward inquiries indicate a strong Q3, supported by festive demand, the start of the wedding season, and healthy mice calendar across our markets. Industry outlooks also point to stronger growth in the second half of FY27 as corporate travel normalizes and international arrivals gradually recover. We also remain firmly on track with our portfolio expansion strategy. The courtyard by Mariette Chennai at World Trade Center, a 45-key hotel in one of Chennai's key business districts, is well on track to open in each two of FY27. In parallel, we are actively evaluating acquisition opportunities that fit our portfolio and return criteria. Together, these can meaningfully add to our growth in the second half over and above the performance of our existing portfolio. We have a clear growth runway with 1,700 keys under development, set to expand our portfolio to 3,300 keys by FY31, anchored by brands like Grand Hyatt, Intercontinental, and JW Marriott, and the Ritz-Carlton across markets of Chennai, Hyderabad, Kochi, and Bangalore. This will lift our luxury and upper upscale mix from 14% today to 31% by FY29 and 38% by FY31. Of our 3,600 crore planned capex for this expansion, 4.84 crores has been invested till September 2026. On the sustainability front, renewable energy now accounts for 67% of our total energy needs across the portfolio. With a strengthened balance sheet and clear development pipeline, we will remain well positioned to continue delivering growth in both revenue and profitability. With that, I would now like to hand over the call to our CFO, Ms. Anand Natarajan, to take you through the financial highlights in detail.

Thank you, Nirpa, and good afternoon, everyone. I will take you through the key financial highlights for the quarter. On a consolidated basis, total income for Q2 FY27 stood at 142 crores, up by 10% year-on-year. Room revenue grew 10% to 87 crores and F&B revenue grew 10% to 46 crores. Consolidated EBITDA for the quarter came in at 52 crores compared to 41 crores in Q2 F526, translating to an EBITDA margin of 36.7%. GST 2.0 had an impact of 1.4% on our EBITDA margin for the quarter. Finance cost declined to 9.7 crore from 13.5 crore in Q2 FY26, following the debt repayment from our IPO proceeds. Profit after tax stood at 22 crore, compared to 11 crore in Q2 FY26, growing 105% YOY. On the operating side, ARR for the quarter stood at 7,876, up by 11% year-on-year, with occupancy at 75.2%. This translated into RRF 5,922, a growth of 10% year-on-year. For H1 FY27, total income stood at 273 crore up by 7% YOY. EBITDA grew 18% to 98 crore with a margin of 35.8% and GST 2.0 had an impact of 1.6% on EBITDA for the half. stood at 39 crore compared to 18 crore in H1FY26, growing 122% YOY. Error for H1FY27 stood at 5,559, up 9%, with occupancy at 75.4%, translating into rev bar of 5,702, up by 9% YOY. As on 30th September 2026, our net cash position stood at 29 crore. On debt and deleveraging, post-IPO, we deployed 468.1 crore of the proceeds towards debt repayment. The benefits are already visible, declining by over 28% to 9.7 crore in Q2 FY27, compared with 13.5 crore in Q2 FY26. We have also further optimized our cost of debt by refinancing our loan from an unsecured facility at 10.25% to a secured facility at 8.1%. After approximately 3,600 crore capex plan for our upcoming projects, 484 crores has been deployed in H1 FY27. We expect to deploy a further 400 to 450 crores in H2 year 527, including capital year 1 unidentified acquisition. I conclude the financial highlights for the quarter. We will now be happy to take your questions.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchtone telephone. If you wish to remove yourself from the question queue, you may be a star and two. Participants are requested to use answers while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Karan Kangdar from Choice Institutional Equities. Please go ahead.

Hello. I hope I'm audible. Yeah. Congrats on a great set of numbers. My first question is on the differential in occupancy drugs in Bangalore and non-Bangalore. So, what happened there, and can you throw some more color on, will this normalize, and will both reach some equilibrium, or what is our strategy there?

Thank you for your question. This is Vinay, responding to you. Thank you. Bangalore we have, however, in other cities, Ibis Tiles in Mysore is a two-year-old hotel where we are price-positioning, and it's expected to reach its stabilized occupancy next year. In Gucci, we rebranded our hotel only four months ago from four points to where we took the rate positioning by 17% rate increase. Again, as a result, we displaced a lot of low-paying accounts, which will stabilize overcoming two to three quarters, leading to the full potential of the occupancy. Similarly, in Gift City, the market's showing greater strength and growing rapidly towards a higher 70s occupancy. So, putting them all together, we would be leading to higher occupancy in other states, similar to Bangalore, in coming few quarters to 12 months.

Okay. Okay. Great. Sir, we saw a couple of announcements from Brigade Enterprises regarding two hotels. Both of them in Bangalore, and we've read in the news that Brigade has signed a contract with Grand Hyatt for management. So, any strategy or plans for Brigade Hotels in participating in these assets?

Yeah, yes, we made two hotel announcements yesterday, both with Hyatt Regency brand, not Grand Hyatt. Both are with SPVs in Bangalore for Brigade. So, we made one with Brigade Estates Projects Private Limited, which is a 100% owned subsidiary of Brigade Enterprises. This is a larger mixed-use development of 25 acres, and it will have about a 350-room hotel there, a Hyatt Regency Hotel. Being KIDB land, it's not something that BHPL can buy at the moment, But maybe at a later date, once maybe the warm shell or something has been built by BEPBL, at a later stage, BHBL will get involved. With regards to the other in another SPV called Anante Properties Private Limited, there we are creating a 250 key hotel. That is a much larger township of around 40 acres, where 7.6 million square feet is being built. Out of the 7.6 million, 6.3 million is residential. We have 4,000 plus homes there. And 1.3 of commercial development, which will include, you know, retail of 2.5 lakhs, office of 4.2 lakhs, hospital of 3 lakhs, and the hotel also 3 lakhs square feet. So, we are creating, and it will be developed by the SPV, and maybe at a later date, you know, BHVL could look at getting the hotels into their portfolio. I think this is a key strategic call that we have taken as Brigade Enterprises and BHVL. Brigade Enterprises will be developing a lot of mixed-use townships. We are doing this in multiple cases, and everything need not come under BHVL at this particular moment because BHVL also has a considerable pipeline to be built, and we have the funding for the current pipeline, but at a later stage, you know, when the current development pipeline is completed, when we have a lot of future cash flows, spare future cash flows, we do plan to bring all these hotels under the BHVL pipeline. We've also done this. Previously, we mentioned in a Brigade Vibrancy SPV, where we have tied up with Bain Capital, which will have 2 million square feet of office, and also a hotel there, 250 key hotels. So, the strategy is that we will be building a lot of mixed-use townships under Brigade Enterprises. It will have hotels, but at a future date, these hotels will come under BHVL.

Okay, that's great to hear and very heartening. Any timeline you could give on the construction? I don't want a timeline on when BVHL would get these assets because that could be uncertain, but what construction timeline if you could provide for both of these assets or other three assets?

We are looking to start construction for these two hotels within the next two to three quarters.

Got it, got it. Yeah, please go on, sorry, yeah, please.

It's under design development, and once we get the approvals, we will start construction for it.

Got it, got it, thank you. One last question on some accounting entries. So, other non-current financial assets have jumped from 60-odd crores to 61 crores in the first half. Can you help me with the breakup and where have we spent that money? Non-current financial assets, 615 million, 3 FDs. So, this is deposits? Should I consider them like deposits for electricity or something like that?

Yes. No, no, no. This is part in long-term deposit.

So, should I consider 177 plus 62 as total FDs for Brigade Hospital? Okay, got it, got it. Thank you so much. I'll get back in the queue.

Thank you. Reminder to all participants, you can press star and one to ask questions. The next question is from the line of Abhidesh Chathopadhyas from ICICI Securities. Please go ahead.

Yeah, good afternoon, everyone. Thank you for the opportunity. The first question is related to the second half of the year. What is any sort of guidance on the REFPA, growth, what you would like to share? Any range?

Yeah, we see currently for the first half of the year or this quarter has been about 9% for the REFPA. For the second half of the quarter, we are expecting it to grow from this. We have tried to maintain a double-digit growth mid-teens when it comes to EBITDA and when it comes to the overall revenue growth. So, REBPA should be in line with this. This quarter, we did about, sorry, 10%, and for half year, it was 9%. But we expect the second half of the year to be better. I can't get into the specific number, but our intention is that it will grow in mid-teens range.

Okay, mid-teens range. Okay, okay. Second question is, is the CapEx? This would help us understand where the CapEx, which assets were spent in the H1, And for balance year and next year, what is the total capex we are looking to spend now? I think it was 1100-1200 crores, right? Over 2728. So just wanted an update whether the number has any change to that number or is it?

See, as we mentioned, we've already spent 484 crores. In this year, we had allocated to spend about 450 crores. Now half year, we've spent only 84 of that. So, I think we can expect a similar number, but it may be slightly reduced because of maybe slight, I would say, delay in where we currently are at. But I would say the pace will pick up in the second half of the year. So, we have still maintained that maybe instead of 450, we might spend 400-odd crores for the coming year. And then in 28 is when we expect the construction to significantly pick up. So then we have allocated a larger amount. Currently, it's been allocated at 700 crores for FY28.

Okay. And any hotel openings for next year which are scheduled, do you think in second half of 28, which is possible, or it will all be 29 and beyond?

So, for this year, like I mentioned, it's the courtyard, the 45-key courtyard in FY27. Next year, we have allocated the two Fairfields, which is Fairfield by Marriott in Vial and Fairfield by Marriott in Brigade, Valencia. Both are in two different micro-markets of Bangalore.

Yeah, so just to do the hotels, the structure will be ready by this year for both of those, or the...

It's getting ready, it's getting... Yeah, what was the question? Once the schoolwork is done, we will need about some of the work can also happen in parallel.

Okay, so just to understand, correcting the second half of 28 is when these hotels would open, right?

Yeah, it's towards the end. Yeah, yeah, it's back-ended.

Okay, okay, fine. Okay, yeah, thank you. I'll come back in the queue with more questions. Thank you.

Thank you. A reminder to all participants, you can press star and one to ask questions. The next question is from the line of Karp from IDVI Capitans. Please go ahead.

Hi. Congrats on a good set of numbers. So, my question was on the food and beverage revival in Q2. So, I think they're still down for around 3% in H1. So, how do we see it moving up from here, and how sustainable is our mice recovery as such? Hello.

However, Q2 numbers that you're seeing, we are back to know.

We already mentioned in Q1 that we did have an impact of nearly 14 crores due to the West Asia crisis that impacted almost 10% of the top line. There were a lot of cancellations in Q1. However, Q2, we've seen, as Vinay mentioned, the bounce back of the F&B business and the MICE business. And Q3 and Q4, we are expecting this to only improve upon. So, Q3, there will be a lot of good wedding dates. Q4 as well, there are a lot of large conferences. So, the hotels are quite showing very buoyant business for Q3 as of now, with a lot of large city-wide conferences already that have sold out the hotels. So, we are expecting a good Q3 from an F&B perspective.

Got it, got it. Also, another question on our peak net debt to EBITDA. So, I am assuming that we will reach our peak debt in FI29 or FI28 maybe. And what will be the net debt to EBITDA figure that we see in those years?

Net debt to EBITDA is in FI29, it will be slightly less than FI29.

So, around 3.5 is safe to assume?

Yes. Yeah. Okay. Yeah.

But I think I want to add that our BSTR will always be around two to two and a half. So that in terms of servicing the debt, it will not be a problem.

Okay. Okay. Understood. Thank you.

Thank you. The next question is from the line of Heer Gogri from Choice Institutional Equities. Please go ahead.

Hello. Thank you for the opportunity. Congratulations on a great set of numbers. I wanted to know how has October performed so far in terms of ARR occupancy compared to the previous year?

So far, October has been quite good. We've had some holidays with the Dasara break, etc. But overall, it's trending quite well. What we are more excited after Diwali, again, Diwali, there are quite a few holidays in the first week of November. So, we believe that from the second week of November onwards is when we will really see a very vibrant business, I guess, in all the hotels. But I think October is still good, but I would say the main business will come in after the first week of November.

Okay, got it. And any update on the acquisition that we have said? We've got some unidentified IPO proceeds for that position, and I think, Nirukha, you mentioned in your interview as well today that you might be looking at some opportunities outside of South India as well. Any update on that front?

We are actively looking at multiple opportunities. We've looked at quite a few. I think the hotel industry, since it's also doing well, it's hard to get something with the right value and an asset that will give us the right kind of return. We are still actively looking, yet to finalize on this unidentified opportunity, but hopefully we can do that. I mean, this is also top priority for us in the next, maybe in the next two, three quarters. This is something that's a top priority to us. Of course, because we are doing a lot of development in the markets where we already operate, we are looking to buy something or look at an opportunity in markets where we don't already exist.

This can be in prime Okay, but the acquisition, you say, can we look for the year of FF27 as well?

Trying to, trying to, but, you know, I think with documentation, due diligence, it might roll into another quarter or so.

Okay, thanks. And one last question. I think we guided the mid-term growth for FF27, so I wanted to know what's the guidance right now. I think we guided a mid-seam growth for F527, revenue growth. So, wanted to know what is the guidance now and the EBITDA guidance for the year 27 and 28.

Yeah, it's similar. I don't want to change the guidance at this point in time, but I am happy about the EBITDA increase for Q2, which is very encouraging. So we will try to maintain that because it is a like-to-like growth. Even the Quotard by Marriott, which we're adding, it will come into the market, you know, mostly in Q3, end of Q3 or early Q4, and it's only 45 keys, and it will be in a ramp-up stage. So I want to maintain that guidance for now, and obviously we will try to enhance the EBITDA wherever possible.

Okay, got it. Thank you so much and all the best.

Thank you. A reminder to all participants, you can press star and 1 to ask questions. The next question is from the line of Archana Gude from IDVI Capital. Please go ahead.

Hi, thanks for the opportunity. Most of my questions have answered. There's two call-ups. First of all, Rhaepard. So, we're going to compare Rhaepard with, you know, because there are some recent famous numbers.

Hi, it's not very clear. It was a bit muffled. Would you mind repeating the question, please? Is it better now? Like I said, we have grown at 10% compared to last year, even for the quarter, it's grown at 9%, for the half-year, it's grown by 9%. Sometimes, I think like Vinay mentioned earlier, there is one or two hotels that have brought the occupancy down. For instance, the Four Points, which got branded to a courtyard, we were trending at mid-80s occupancy. And in the first half of the year, because of the rebranding, it fell to 40%. And then in the second quarter, it's gone up to 66%. So you know that 20% to 40% drag of one hotel has brought the overall average of the portfolio down a bit. But we are seeing a very healthy trend with the ARR increasing because we're changing the entire positioning of the hotel. So once these one or two laggards come back up, you will see the rev par increase to that mid-teens range, which I'm hoping that it will happen in the next couple of quarters. Because, like I said, with the change in brand from 80%, it dropped to 40%. Then it picked up to 66%. And then hopefully in the next two quarters, I expect it to go back to the 80%. And then you will see the average of the occupancy increase, because currently the occupancy is flat at 70%. Rate also, most of our hotels have shown a very healthy rate increase. One or two cases, it's decreased, but overall, I would say there's a decent rate increase. One of the key hotels in our portfolio is the Sheraton Grand, and they showed a decent occupancy increase, but the rate increase is very marginal. So that brings down the average. Otherwise, some of the smaller hotels have shown very healthy, 20%, 30%. In the second half, we will see some better info numbers.

Okay, great. And the second question is it?

Yes. ...dates are much more than last year, so that should also help our business. And also, a lot of large businesses are slated to happen in Q4 of this year, so hopefully, again, that should really improve the overall business for our hotels.

We have seen a strong object, particularly continues for Q2 quotas. As you know, H2 in hotel industry is always stronger than H1.

Right. Hirupai, he said that maybe, you know, in H2 there could be some positive surprise on the improved occupancy. He said that given that we have this wedding calendar and everything, so can we positively surprise the street on this mid-stream guidance we are giving? Okay. Any thought on that?

Right now, I want to maintain the guidance. If, you know, if we do manage to do better, I'll let it remain as a positive surprise. But right now, I would, I mean, see, because the first quarter impacted our top line. So, we were down by 10%. So, we have to make up that 10% as well. So, I would like to just maintain the guidance we've kept.

Sure, Nirapath. Thank you so much.

Thank you. A reminder to all participants. You can press star and 1 to ask questions. I now hand the conference over to the management for closing remarks.

One of our general managers of Holiday Inn Chennai was also recognized for being a best general manager by BW Hotelier. With that concludes my remarks today and I would like to thank all our shareholders, analysts, and the new trust.

Thank you. On behalf of Brigade Hotel Venture Ltd., that concludes this conference. Thank you for joining us, and you may now disconnect your lines.