Leela Palaces Hotels & Resorts Limited (THELEELA) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Q4 FY26 earnings call of Leela Palaces Hotels and Resorts Ltd. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Abhishek Agarwal from the LEELA. Thank you, and over to you, sir.

Thank you, operator. Good evening, everyone. I'm Abhishek Agarwal, Senior VP, FTNA and Investor Relations. Welcome to the Global Earnings Call for the Q4 and FY26 results of Leela Palaces, Hotels and Resorts Limited, India's only pure-play luxury hospitality company. We have published our results and uploaded the investor presentation on exchanges earlier today, and you can also find it on the company website www.thelela.com slash investors. Before we start, a disclaimer. We would like to inform you that the management may make certain comments on this call that one could deem forward-looking statements. Specifically, the financial guidance and procoma information that we will provide on this call are management estimates based on certain assumptions and have not been subjected to any audit, review, or examination procedures. The company does not guarantee these statements and is not obliged to update them at any time. Participants are cautioned not to place undue reliance on these forward-looking statements while making the investment decisions. To answer your questions and you take you through the story, we have the senior management of Lalila on the conference call. Joining me today are Mr. Anurag Bhatnagar, Co-Time Director and CEO, and Mr. Ravi Shankar, Head of Asset Management and CFO. Without further ado, I would like to hand over the call to Mr. Bhatnagar.

Over to you, Anurag. Thank you. Thank you, Vishay. Pleased to have you with us as we further strengthen how we engage with our stakeholders alongside the next phase of Lila's growth. Good evening, everyone, and thank you for joining us. Lila, for FY26, has been a transformational year. Defined by strong financial and operational performance, disciplined and consistent execution, and sustained leadership in Indian luxury hospitality, we have outpaced the industry in growth and margins, and also had the highest ever annual key expansions in our portfolio. Importantly, this performance was delivered in a year, characterized by elevated external volatility, underscoring the resilience of both our brand and our operating platform. Let me begin with the macro context and the key performance highlights in that context. FY26 was the year in which the Indian hotel industry navigated multiple hazard winds across aviation disruptions and geopolitical events. Against the backdrop of the Middle East conflict, in Q4 FY26, the Leela delivered double-digit growth in operating revenue and operating EBITDA. This performance was underpinned by a 15% year-on-year increased area. Reflecting the Leela's strong consumer pull, brand, pricing power, and disciplined execution. Together, these results reaffirm the brand's premium positioning. Thank you. Business has been rooted in the thesis that our demand is more... If demand remains robust, and we have focused. In past instances of disruption like operations endured, occupancy bounced back quickly to previous levels, and we remain confident that the current impact will get mitigated once the situation normalizes. The structural drivers of luxury hospitality demand in India remain firmly intact, and the outlook continues to be compelling, supported by rising aspirational spending, wealth creation, and a growing cohort of experiential luxury consumers. Importantly, new luxury supply in the Leela's key micromarket remains constrained. This has enabled us to consistently outperform the market, drive market share gains, and sustain improvements in both occupancy and pricing. Together, these factors underpin strong same-store growth over the medium to long term. Taking you through the highlights of FY26, at the Leela, Guest experience is the bedrock of all performance outcomes and our defining differentiator. For FY26, we recorded a net promoter score of 86, maintaining our position as the highest-rated luxury hospitality brand in India. Importantly, we extended our lead to 12 points above the Asia-Pacific luxury industry average. This sustained multi-year outperformance. Reflect the consistency of her service delivery and the depth of her brand equity, directly supporting long-term pricing power. Continue to outperform the broader luxury sector. Translates into a ref bar premium of approximately 6,000. Overall, in NL526, our same-store ref bar increased 14%, supported by double-digit growth across all five owned palaces and an overall 13% increase in ADR. The operating leverage from this pricing-led growth resulted in a 19% year-on-year increase in operating EBITDA with margin expanding by 167 BIFs to a best-in-class 49%. This operating momentum culminated in a record profit after tax of 403 crores in F526, representing a decisive turnaround from a pack of 48 crores in F525. This 8.5x increase in profitability underscores the structural strengthening of the business, driven by sustained same-store rep power growth, targeted asset enhancements, key portfolio additions, and reduction in finance costs. From an expansion standpoint, FY26 marked Leela's fastest pace of expansion ever, with 23% growth in keys, totaling to a visibility of 966 additional keys. These additions came across Mumbai, BKC, Dubai, Jaisalmer and Kirk, and will strengthen our presence across marquee urban and leisure destinations. Our net debt reduced by 50%. With net debt to EBITDA now at a conservative 1.6x in FY26, supported by a strong AA credit rating and strong cash conversion, we now operate in meaningful financial debt room to fund expansion and manage future capex, whilst maintaining flexibility across cycles, giving you some more color into our operating performance and growth plans. Our non-room revenue, our focus on F&B excellence, continued to deliver results in FY26. F&B revenues grew 15% year-on-year, driven by strong performance across both restaurants and banqueting. This growth was supported by approximately 13% increase in non-resident footfalls across the city hotels, reflecting the increasing relevance of the Lila as a destination for dining, events, and experiences beyond resident guests. Consequently, non-resident covers now constitute 54% of the total cover mix at our city hotels. We have continued our progress on strategic growth and expansion of the Rila footprint. This hotel will offer multi-day experience. High return expansion into premium leisure destinations, and underscores our focus on value-ecurative growth. In addition, we are all set to open the Leela Jaisalmer and the Leela Luxury Residences, Mumbai, in FY27. We continue to deliver growth in our portfolio additions. The Leela Hyderabad, a managed hotel which opened in FY2025, demonstrated strong operating leverage by achieving healthy margin. We continue to actively evaluate value-egrative opportunities that complement our portfolio and reinforce Alila's positioning. Our greenfield development agenda continues to progress steadily. Construction activity and execution milestones are advancing on plan across Bandhavgarh, Srinagarh, Sikkim, Agra, Ayodhya, and Ranthambore. With progress across design development, Dalila continues to be recognized as the leader in luxury hospitality across global and domestic platforms. We are once again... We received the Michelin Keys 2025 for the Gila Palace New Delhi. On the FMV front, ZLB 23 at the Leela Palace Bangoru continues to feature across 30 best bars in India and Asia's 50 Best Bars 2025, alongside continued recognition for Le Cirque, the Library Bar, and Magoo. Overall, these recommendations reinforce the strength of our brand and the consistency of our delivery across key experiential pillars. People remain at the heart of our success. During F526, he reinforced our position as an employer of choice through industry-leading talent development initiatives and onboarded 45 future leaders through our Leela leadership development programs. This year, we also achieved great praise to work recognition. We are also preparing for the launch of the Leela Center of Excellence, our dedicated learning infrastructure. So, thank you. Thank you very much. This is a very important year for us. As we enter the new financial year, we are very pleased to share with you that the Leela has now completed four years. The 40th year serves as a strategic platform to reinforce the brand's leadership in true Indian luxury, leveraging four decades of heritage and excellence. We will deepen guest engagement, strengthen brand visibility, and accelerate premiumization.

Thank you, Anurag. Good evening, everyone. Let me take you through the financial performance for the quarter and the year ended 31st, March 2026. Quarter for FY26 months again highlighted the strength, efficiency, and the resilience of the Leela platform in line with the strong I'll give you a moment. Operating revenue increased 12% YOY to 484 crores. While the operating EBITDA rose 13% YOY to 266 crores, delivering a best-in-class EBITDA margin of 55% and expansion of 57 basis points. Fat increased from 117 crores in quarter-four FY25 to 172 crores. Turn into F526 performance. The company reported a robust all-round performance driven by improvement in both area and occupancy. Strong momentum in the retail and group segments supported a double-digit repart growth across both city hotels and resort properties. This drove operating revenue up 15% YOY to 1527 crores. Operating EBITDA rose 19% YOY to 743 crores. With margin expanding by 167 BIPs to 49%. Again, best in class. Over 60% of the incremental revenue converted to operating EBITDA, reflecting robust operating leverage and disciplined cost management. Active asset management continues to be a key pillar of value creation at the Leela, with a focus on enhancing guest experience, unlocking incremental revenue streams and EBITDA, and improving the asset level returns. During FY26, we progressed multiple value accretive initiatives across the portfolio, including launch of the ARC by the Leela at the Leela Palace, Bangalore, our invite-only ultra luxury membership club, With the development work at advanced stages, ARIC is plated to open in New Delhi in Q1 FY27, and in Chennai in Q2 FY27, followed by Mumbai in the later part of the year, expanding this high-engagement platform across key markets. We also refurbished and added 7 F&B outlets across the Leela Palace, New Delhi, Chai Phu, another location. We relaunched of approximately 334,000 square feet of high-end retail space at Leela Palace, Bangalore. 100% occupied. We imagine spa and wellness offerings at the Leela Palace, Jaipur. Our wellness initiatives are being expanded to Bangalore as well. Introduction of exclusive kids' clubs at Leela Palace, Jaipur and Udaipur. Conversion of select villas into premium private villas catering to a multi-generational travel at the Leela Palace, Jaipur. These initiatives are being executed with disciplined capital allocation and are targeted to deliver a projected yield on cost of across 25%. Reinforcing our focus on driving higher returns from existing assets while strengthening the long-term quality and durability of the earnings. To summarize, FY26 demonstrated the Lila ability to outperform the industry with resilience and consistency despite geopolitical challenges. The continued expansion of the Lila footprint takes our portfolio to over 5,200 luxury keys across 24 properties, spanning 15 operational hotels and 9 in the pipeline. Our college mix of owners and managers enable disciplined chapter deployment while expanding its region scale. Before concluding, we would like to thank all our associates for their unwavering commitment to excellence and guest delight.

Thanks, Anurag and Ravi. Operator, we can start the Q&A session now.

Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Binay Singh from Morgan Stanley. Please go ahead.

Hi, team. Congrats for a good set of numbers given the environment we are in. Could you throw a bit more light on how were trends in March? Because we see quite a sharp drop in occupancy, whereas the war impact would have been only there for one month. So could you specifically share some trends on March and how is April, May also trending? That will be the first question.

Hi, Vinay. Good evening. The West Asia war has had an impact on travel, as we all know, both inbound and outbound. So, just to give some context, Leela has almost a 50-50% share in terms of both international and domestic business. We have not been impacted at all, and why is some part of our international business... I love you. We control nearly two thirds of our revenue, which comes from our direct channels. We continue to be very nimble, keep watching the situation very closely, and keep working with agility on all the segmentation, and we expect the domestic market to remain a strong opportunity for future growth as well as we approach the holiday season, while the inbound presents a future opportunity given the strong brand recall and the brand love that we have from our key source markets.

Thanks for that, but just to sort of, any numbers on how March is and how, like, so March would have been down double digit for us, and then April, are we talking about high single digit lab power growth?

So March, yes, there was an impact on occupancy, I would say, because some of our key sports markets like US and UK, there was an impact in terms of occupancy, but our resilience on our pricing power and all that allowed us to mitigate that impact of occupancy through our ADR. But as I mentioned, in April, we have seen the pace come back to same time last year levels, but we definitely expect maybe a high single-digit or early double-digit growth in the month of April.

Okay, so we are saying that the high single-digit REVPAR growth in the month of April, which in a way is a good outcome compared to March.

But Vinay, just to add May and June will be a very exceptional performance month for us, and for the quarter, we will do double-dig growth in Red News and EBITDA.

Also, Vinay, for context, if you look at it, the only segment for us that was impacted was international, and H1 typically, if you talk for the next six months, is almost one-third of H2, you know, in terms of the impact that it has on our overall business plan. So we are meeting in that sense, yeah.

And international contribution also would be lower for you in this quarter, right, given the weather?

So it's dropped from a 50% share to around 40 odd percent share, where domestic has risen to approximately 60.

Right, right. Secondly, team, could you share the management fees number for the quarter and the year?

So, the management fees for the quarter, for the full year, we have done across management fees of 25 crores, we have done, and we are looking to, for the next year, we will have a growth again, because our managed hotels will have ramped up, so, we will be doing around. There will be an improvement in the whole man-made fees because the Hyderabad portfolio, Hyderabad hotel has ramped up to almost 63% occupancy when the managed hotels, now the key hotels are doing well. So that will have a double-get growth in our man-made fees as well moving forward.

Thank you. The next question comes from the line of Karan from Ambit Capital. Please go ahead.

Yeah, thanks for the opportunity. Just a couple of questions from my side. Firstly, have you seen any meaningful cancellations or postponements in nice events due to the evolving geopolitical environment? And are these events getting deferred into upcoming quarters or being lost altogether?

So Karan, thanks. Great question. We obviously had cancellations and mice events that were booked across the portfolio in the month of March because of all the geopolitical tensions. What we did, we have given them credit notes and deferred them between the next six to nine months. So we expect many of them, a very high percentage of them coming back to us in the next few quarters.

And then secondly, on the Kurg acquisition, how has been the initial response and when you run 70 crores of stabilized revenue, what kind of ARRs are you penciling in for that number? And also, does that include the 19 villa expansion in phase one?

So, Kaur, Karan, just to take you back, it's like we have recently acquired Kaur on 18th of March, as you know. So, right now, our focus is to, whilst the real estate is amazing and the asset quality is extremely good, it's fully built up on NILA standards with a seven-acre lake and an all-villa property. Right now, there's a lot of work happening, a lot of training happening in terms of soft aspects, something that NILA is known for. This is our first foray into a forest century experiential destination product. Hence, we are very, very excited about it. These are right now simulations and early guest feedback has been very, very positive on the asset. And we have not rebranded it yet. There is a site visit and evaluation happening as we progress. And we are looking forward to rebrand it at the end of this quarter or early next quarter as a full-fledged Leela Forest Century. And that is when we expect all our distribution to start kicking in and with all the Leela, you know, in terms of loyalty programs and, you know, key customers and all of that. The initial response and the guest feedback has been very, very encouraging, although it's not yet to be rebranded. Several touch points and experiential which are catering to the next generation travelers, mice, wellness-seeking travelers, and even people who are seeking longer itineraries to experience the entire ecosystem and the destination. This is the kind of funnel that we are already building up going forward. And to your question, in terms of expansion, once we open the hotel and stabilize, we'll definitely evaluate because, just to remind you, only 20 acres out of the 76 acres has been used right now. So we definitely see an opportunity to do that, but we'll come back to you at the right time because right now, our focus is to open it on brand and open it soon as the leader.

And last question to you Ravi, for Ayodhya, Agra, and ransom board, we are now looking at CY28 instead of FI28, so is there a slight delay here, and also if you could talk a bit about the cost inflation that you might be seeing in terms of construction costs, and then how are you looking at the KPH number for FI27 and FI28?

So, just to answer in terms of these three hotels, we have just, you know, put CY. Basically, one or two quarters of construction, it has always moved because of the approval when you open the hotel. But we have all the approvals of all these three hotels are already in place. The funding is already in place. The construction has started. So, that's the reason we have, you know, it's all on pace. The capex numbers for these hotels remains the same. There is no installation in the cost binet. So, numbers remain the same.

Great. Thanks, Navi. Thanks, Anurag, and all the best.

Thank you. The next question comes from the line of Deepak Saha from Ashika Institution Equities. Please go ahead.

Hi, thanks for the opportunity. So, first question is, if you can highlight, I mean, overall revenue growth, you know, mid-double-digit and REPA growth 6%. So, the faster element of growth is coming from F&B or a management piece for the quarter?

So, you know, FNB also contributes 40% of the hotel revenue. You see our FNB bank would grow by more than 10%. FNB is close to a double-jitter growth. And even our managed hotel income has also improved with Hyderabad property ramping up to the full potential of almost 63% and ADR growth almost 1.2x of the market. And we also got additional, you know, HMA fees from our hotels because of the contractual As a result, we have been able to get a double-digit revenue and EBITDA growth.

Okay, just a follow-up on that, sir. Then on the F&B growth side, the non-guest footfalls are higher, I mean, are quite significant in alignment with what we saw last quarter?

Yes, our non-resident covers have increased by almost 9 to 10 percent for the quarter, and for the full year, they have almost grown by 12 percent. So, and our focus continues in driving both non-resident covers and growing our in-house capture ratio.

See, Mr. Shahar, we… Sorry, I'd just like to add something to what Ravi mentioned. If you recollect, in every quarter, we have been saying that Leela, our biggest differentiator is the luxury ecosystem. We give as much importance to food and beverage experiences and dining programs as we do to the rest of our business. F&B is nearly 40% of our business, which has grown by 15%, as Ravi mentioned, and a very high percentage of non-resident food falls across all our events and spaces and restaurants.

Got it. That's helpful. So, one last question. On the Dubai side, I know it's very early and dependent on a lot of things beyond our control, but just from taking over that particular property, do we have any plans in terms of fast-forwarding or delaying? What's the status there in terms of taking it over and upgrading it to Adela brand? Is there any change compared to where we were earlier?

No change in our plans. Firstly, I'd like to just remind everyone that everyone is safe on the ground, and our physical asset has not been impacted at all. It's also worth noting that we are 25% shareholder there, and impact to our larger business plan is minimal. We are also fortunate to have a strong capital partner, Brookfield, who is the remaining 75% owner. So none of our plans have been impacted because of these geopolitical events. It's very hard to predict how these events will pan out in the future and what the recovery will look like, but one thing we are very clear about is that the new supply in Dubai is going to be very muted in the near and long term, which will eventually create a very positive fundamental in the long term. I'm sure you've seen a lot of headlines in the market regarding hotels shutting down in Dubai or refurbishments in the near term and long term. While our hotel contributes to remain operational and we are focused on breaking even operationally at this stage, there could be an opportunity for us to take a larger market share when the market recovers. Anyway, our plan is to start a refurbishment work. This was our original plan as well. By the end of this calendar year, which we would then accelerate and reopen and launch the property in 2028 under the Leela brand. By this time, we are hopeful. I mean, we are talking about like significant 12 to 15 months from now that we are hopeful that this market would have seen a recovery. Regarding residential sales, which was a part of our business plan, we had budgeted sufficient time to execute the sales over the next two, three years.

All right. Thank you. That's really helpful and all the best. Thank you.

Thank you. The next question comes from the line of Girish Choudhury from Aventus Park. Please go ahead.

Hi. Good evening. Thanks for the opportunity. Firstly, on code, I mean, regarding assumptions of 165 to 175 crore stabilized revenues, When do you think this can be achieved in year 1 or year 2 and as a follow-up for the 19 villas which are expected to come up any any CAPEX number and when will that be spent?

So, the 165 crores of revenue numbers includes the 19 villas that we had planned for phase 2. This number will be achieved in the year 4 when those 19 villas will also come into play. The capex that we have planned for those additional villas are around 21 crores that we would spend to make those 19 villas.

And just on the occupancies, how should we look at for fiscal 27 and the blended occupancies for the year fiscal 26 were 69 percent. So how should we see between your city properties and the resource for fiscal 26 we saw a meaningful improvement in occupancies for resort property. So how should we see for effect on this one?

So occupancy for FY27 will be in early 70s for sure, as the city hotels will be in mid-70s and resorts will be in mid-60s to mid-60s.

Okay. Thank you. The next question comes from the line of Akash from Nomura Holdings. Please go ahead. Hi, am I audible?

Yes.

Yes, Aakash.

Yeah, hi. Congratulations on great performance, sir. Just to run again on the 4QF526 numbers, I think this time room and FNB revenue numbers were not penned down in the PPT. Could we just get the exact room and FNB revenue for 4QF526, room, FNB, and HMN?

Please.

We contribute deep-time numbers on the rooms and F&B and HMA, but what we had spoken earlier that rooms grew by, you know, for the quarter core by almost 6%, F&B grew by almost double-digit numbers, and HMA's other income also grew by double-digit numbers.

Understood. And how much would the… How much revenue would we get from the Korg acquisition in FY27? What kind of top line are we seeing from that hotel specifically?

So this will be our first operating year, where we are right now working on the rebanding process, and we'll be doing the occupancy, you know, in early 40s, and for the first full year, we'll do somewhere around... Around 65 to 70 crores will be the first year of revenue and very healthy EBITDA margins will do as we do in our Lira portfolio.

Which we understood.

Almost 55% which we do for other resort hotels in our portfolio.

Understood. That's all the question I have. Thank you.

Thank you. The next question comes from the line of Abhay Kaithan from Access Capital. Please go ahead.

Yeah, thank you for the opportunity. Firstly, on the full queue performance, if you can help break the ref car growth of 6% in city hotels and resort hotels. And also for April, you mentioned that the growth is actually tracking for a single digit growth. So there also are we seeing like a broad based growth across city or resort or is this one segment better than the other?

If we talk about the occupancy, Abhay, you know, we did an occupancy, you know, growth at quarter for FY26, we were 22 percent. Last year we did 78, that was 6 percent. That was mainly because of the war impact. If the war cancellation would not happen, we would have done similar occupancy, little more than what we did for quarter for FY25. But if you look at the ADR, ADR grew by almost 15 percent. Number 27,000, we went to 32,000. As a result, then F4 was 6 percent because of the occupancy drop.

And the occupancy has dropped in a city hotel, which had a larger share of international business. So, I just want to reiterate that the only sub-segment of demand that got impacted because of the war was our international business from a key source market. But we see that dampening as we go forward and we see that not reflecting in the future pace of bookings. Our resorts were insulated and resorts continue to, like Ravi mentioned earlier, May and June, we see a very strong rebound happening in resorts. And even in April, we see that You know, this compression getting offset, even in a city hotel.

Understood. That is very cool. My second question is, again, follow up on what you mentioned right now. So given that, if the international travelers are sort of offset by higher domestic, do we see some risk to other revenues or the F&B revenues and therefore on the margin side, or do we expect that to remain the same YOY?

Not really. What we have seen in the last few years, especially at the Leela, we can talk with confidence, this is our last eight quarters, that our domestic travelers travel as much, they stay as long. Why is the international business that has a larger, longer length of stay? Because typically, if you come from long haul markets like the U.S., you could probably stay for three and a half to four nights, where the average domestic traveler would stay for two, two and a half nights. But the spending on F&B, the spending on S&E revenue is the same. But, you know, going back, given the brand love and the recall that we have in international markets, Leela has always been voted as one of the finest luxury brands in the world consistently by the users and the customers. We expect when the international business starts coming back to its normal state, we'll be the first to pick up and bounce from there, which adds us, gives us another layer of opportunity.

And also, if you see our non-resident covers, those are growing almost 12% by your wife. That also helps in driving your FNB revenue, even if you have a slightly lower international mix.

Yes, that is very helpful. Thank you.

Thank you. The next question comes from the line of Vaibhav Mule from Hightong India Securities. Please go ahead.

Hi, sir. Thanks for the opportunity. And congratulations on a strong set of numbers, especially in a weak demand period. My first question was on our revenue growth. We reported REVPAR growth of 6% while revenue has grown by 14% year on year. I just wanted to understand the bridge between the room revenue growing by 6%, F&B growing by 9% to 10%, while HMA again is, as you said, would be in low double digits. So, have we seen additional data coming in from Kuruk Resort, which is pretty significant? And is there also data that's coming in from our commercial leased area in Bangalore property?

We have already explained the rationale for the increase in double digit numbers. If you look at the room revenue growth hasn't been impacted by 6% occupancy track due to the war. F&B contributes 40% of the total hotel revenue which grow by double digit. We have also seen the HMA fees grow double digit in some of our managed properties based on our management contracts and ramp up of recently open hotels like Hyderabad. Also, we have seen a strong growth in HMA fees in this quarter and expect this trajectory to continue. This is on the back of the ramp-up in our performance across several managed properties along with the ability to charge higher fees in some cases where we are in a street key.

Understood, sir. And secondly, on Dubai asset for Palm Jumera Resort, since current environment is uncertain and we have seen real estate prices plummeting in Dubai market itself, is there a possibility that we may have to take any sort of write-offs on our investment in Dubai in the near term if the situation persists for a longer period? Is that a possibility?

We are evaluating the situation, but we don't see any such possibility. And as we had said, that the basis on which we had underwritten this asset in terms of our real estate pricing was very conservative. And it's too early for us to say how the situation will pan out, and we'll evaluate it. We are very, very strong asset management focus, and we'll keep everybody posted as the situation and the market evolves. We're evaluating the situation literally every day, and we'll block and tackle as required.

Understood, sir. And lastly, on the weddings portion, did we see any benefit in March in terms of shift from some of the weddings which were planned outside India, which were shifted into domestic leisure markets? And going forward in Q1 and Q2 as well, do you expect more traction coming in from weddings?

So, yes, that's correct. There were some of the weddings that were booked in the Middle East. We were able to take three of such weddings in our hotels in the month of March, and that varies also in the month of April and May for some of such weddings, which will also have to tie incremental revenue on the wedding segment.

Understood, sir. Thank you so much and all the best.

Thank you. The next question comes from the line of Archal Kumar from HSBC Bank. Please go ahead.

Hi. Thanks for the opportunity. First of all, I wanted to move away from revenue and just want to understand about the cost. So basically, in this Q4, I think most of the costs were sort of quite inflicted.

Sorry, Archal, you are not clear. Can you repeat that?

Hachal, please unmute your line in case if you are on mute. Since there is no response from the participant, we will move to the next participant, that is Karan Kamdar from Choice Institutional Equities. Please go ahead.

Hello, sir. So I had a question on the cost side only. Now that we are facing some disruption in the Dubai property, are we expecting any cost overruns to impact margins or will that not be a huge cost overrun for us?

It will not be a huge cost impact for us. Anywhere, you know, the operator who will manage the hotel will continue to manage till the end of this year. And our plan was that we will get the handover on 1st January 2027 and we will refook the hotel by end of this year and rebrand 1st January 2028. The plan remains the same and there is no cost over and on that front.

Okay, great. Sir, secondly, can you maybe detail out what plans we have for the ARQ, ARQ franchise, and what is sort of our revenue model? Are we sort of going for a membership model, and what are our revenue expectations there for 27-28, maybe?

Thank you for the question. ARK is really a great milestone achievement in our asset portfolio. We opened the first ARK Club in Ila Perez, Bangalore. In the last financial year, which is F526, and we are opening two art clubs in this financial year. These are great members-only clubs and very rarefied spaces, which create a compounding impact. HNI and HNI customers. There is an initiation fee model for which a member has to pay. Membership is only by invite, so they have to pay an initiation fee, and then there's a run rate fee that they have to pay every year. The memberships are currently either for 10 years or for lifetime. This is what we are doing for our founding members. And eventually, as we grow, we will also evaluate other membership models so that we can, you know, whilst we are being very, very relevant when it comes to the quality of the real estate and the privileges and programming, and then we can scale up to have the larger share of memberships.

Got it, sir. Any idea on what kind of number are you targeting, if not the revenue number, but what kind of membership number are you targeting?

See, the current initiation fee is 45 lakhs plus GST. As I said, this is only through Invite. We have a waiting list and a funnel of memberships across all the major metros. We are meeting them. Our overall goal on stabilization, once we have all the clubs open, and let me also tell you, in addition to Bangalore, Chennai, and New Delhi, we are also looking for the ARC club in Mumbai as well, and this has also come on the feedback of our guests. We are looking at an overall stabilized number of 2,000 members because at that number we feel is the right fit where we can serve them, take care of them, and give them that kind of luxury experience.

Thank you so much.

Thank you. Ladies and gentlemen, due to time constraints, we will take the last question from Vinamra Herawatt from Jeffrey's Group. Please go ahead.

Hi, sir. Am I audible? So, congratulations. Good. Sir, please.

Vinamra, you are not audible now.

1.8 versus FY25 and 26 block, whereas last year this was 2.5%. Is there a reason for this? And do we see any spike in this going forward?

So, our net debt to EBITDA is 1.66 as of FY26, and we expect a similar, you know, net debt to EBITDA in the next year as well, and this would go down to 1x and even a lower number as we move forward.

Sorry, sir, I was talking about depreciation, not net debt.

So, depreciation will almost 100 crores will remain in the same line in the next 2-3 years. Only when we have the new hotels operating, then only the depreciation numbers will start to increase marginally.

Thank you. The next question comes from the line of Achal Kumar from HSBC Bank. Please go ahead.

Yeah, hi. I'm sorry, my line was disconnected. So, as I started, I wanted to understand about the costs. Basically, if I look at all the costs, you know, all looks insulated. So, for example, employee cost, F&B cost, everything is as a percentage of revenue are significantly above the Q4 last year. So what's the reason? Is it like only impact on March revenue had such a big impact? And then going forward, are you thinking about taking any steps to cut down your cost to product your margins? So that's my first question. Could you please give a bit of a color understanding on that?

We have a very active approach in cost management, a very efficient cost sector. Most of our costs have just grown by inflation. Only there have been cost increase in sales and marketing and sales commission for a new reason. If you see, the flow through has been 60%. This is the industry-leading flow through margin. Even if you look at our EBITDA margin, we are operating at a 49% EBITDA margin, which is 167 dips, better than same time last year, full year. If you look at all the cost, all the cost is a lower percentage to a GOR, except for the Thank you. Otherwise, all other costs is a percentage of revenue is lower than.

But Ravi, I mean, if you see employee costs, in Q4 last year, it was 15.9%. In Q4 this year, it's 16.6%. Similarly, your other costs are up 70 bips. So, I mean, you know, not only the marketing costs, looks like all the costs have gone to that. That's where I wanted to understand what the reason for that.

I'll tell you, in payroll, obviously, there has been the whole impact of taking an actual on the, for the new labor code, where we have taken an impact on the, both the leave in cashmere and gas duty. That has been an exception item in the payroll code that has come in. Other, we have added few employees for the new value drivers that we have added as a result of that cost. This year, we will see the value drivers firing in full cylinders and the revenue impact will come. But those people have already been hired for the simulation and the training piece.

Should we expect these costs to go down as a percentage of revenue going forward? It should, it should. Okay. My second question is about the NetJet to EBITDA. Of course, you're at 1.6, which looks very comfortable. Going forward, how do you see in FI27? Do you think it's stable? Do you think it's going down further? Or do you think because of the capex coming through, it could go up a bit? So what is your color? Any thoughts on that, please?

So, I'll tell you, obviously, our debt will increase for the CapEx that we do for the pipeline asset, but since our EBITDA will increase, our net debt to EBITDA will remain in the similar levels of 1.66, and moving forward will come down to lower to 1.4 and then come to closer to 1. Obviously, if we do more acquisitions, then it will go a little higher, but once all these assets start generating EBITDA, it will come to a very comfortable level, even below 1.

Right. Okay. And my last question is on your comment regarding the city hotel versus resorts. So, it would be great if you could give a bit of a color in terms of performance, ARRs, and occupancy by different cities like Delhi, Bangalore, and all. That would be very helpful, please.

So, that, Achal, we can connect separately and we can give you, you know, documents. Sure.

Sure. Sure. Perfect. Perfect. Thank you so much, Jayali.

Thank you. Ladies and gentlemen, in the interest of time, that was the last question for today. For any further queries, please reach out to the Investor Relations team at Leela. Thank you for joining us. You may now disconnect your lines.