Viceroy Hotels Limited (NSE: VHLTD, BSE: 523796), the Hyderabad-headquartered leisure hospitality operator with marquee properties under the Marriott and Courtyard by Marriott brands, has reported a mixed start to FY26 as ongoing renovations at its Courtyard property constrained room inventory and temporarily weighed on performance.
For the quarter ended 30 June 2025, the company’s revenues from operations stood at ₹ 25.37 crore, down 6.4 percent from ₹ 27.10 crore in the same quarter last year and 28.2 percent lower than ₹ 35.33 crore in Q4 FY25. Profitability came under sharper pressure, with profit after tax swinging to a loss of ₹ 3.02 crore compared to a profit of ₹ 1.72 crore a year earlier. The management attributed the downturn to the temporary closure of multiple floors at the Courtyard by Marriott as part of a multi-phase expansion and refurbishment programme.
Despite the near-term softness, Viceroy Hotels is positioning itself for higher room yields and an expanded service offering from Q3 FY26 onwards, when new inventory and upgraded amenities are due to come online. The company’s 407-room portfolio, located in Hyderabad’s central business district, caters to a mix of luxury, business, and destination travellers—a segment that has historically benefitted from the city’s strong corporate presence, technology sector growth, and rising domestic leisure travel.
How did Viceroy Hotels Limited’s Q1 FY26 financial performance compare with prior periods?
EBITDA for the April–June 2025 quarter was ₹ 4.82 crore, down 13.6 percent from ₹ 5.58 crore in Q1 FY25 and more than halved from ₹ 10.84 crore in Q4 FY25. The EBITDA margin contracted to 19.0 percent from 20.6 percent a year earlier, reflecting the negative operating leverage of lower occupancy on a largely fixed cost base.
Profit before tax dropped to ₹ 0.38 crore versus ₹ 1.29 crore in Q1 FY25 and ₹ 7.07 crore in the preceding quarter. A tax expense of ₹ 3.40 crore in Q1 FY26—up sharply from ₹ 0.23 crore a year earlier—pushed the company into a net loss position. PAT margin was negative 11.9 percent, compared to a positive 6.3 percent last year.
On the operating side, the hospitality segment’s occupancy fell to 54.9 percent from 63.0 percent in Q1 FY25, with the Courtyard’s occupancy plunging to 41.5 percent from 72.7 percent due to floor closures. Average daily rate (ADR), however, rose 14.7 percent year-on-year to ₹ 6,952, aided by the Marriott property’s premium positioning. Revenue per available room (RevPAR) was essentially flat at ₹ 3,814 as ADR gains were offset by the occupancy decline.
Food and beverage (F&B) revenues, which form a significant portion of ancillary income, fell 14.3 percent year-on-year to ₹ 10.20 crore, reflecting reduced banquet and restaurant capacity during the renovation phase.
What are the details of Viceroy Hotels Limited’s multi-phase expansion programme?
The company’s current expansion strategy is structured into three major phases, with Phase I already underway and targeted for completion in Q3 FY26.
Phase I focuses on the Courtyard by Marriott, where 56 additional guest rooms are being built across the 6th and 7th floors. These rooms are designed to command higher ADRs in line with market trends for upscale business hotels in Hyderabad. A new spa with seven treatment rooms and a fully equipped gym is being developed on the 8th floor, while the 9th floor will feature a rooftop bar with 70 covers, offering panoramic views of Hussain Sagar Lake and the property’s swimming pool.
Phase II will address the Marriott property, upgrading 168 guest rooms to contemporary designs with modern bathrooms, and expanding the convention centre to 20,000 sq ft of divisible banquet space to capture more meetings, incentives, conferences, and exhibitions (MICE) demand.
Phase III will involve upgrading F&B outlets, enhancing the Marriott lobby with a new grand entrance through the “elephant garden,” refurbishing an additional 127 guest rooms, and converting the “Altitude” venue into a high-end Pan-Asian restobar.
Beyond the current properties, a greenfield development in Madhapur is in the pipeline under the Courtyard brand. Planned to feature 200 rooms on a 7,000 sq yd site, this project aims to tap into the tech-hub demand of Hyderabad’s IT corridor.
How are institutional investors and analysts interpreting the Q1 FY26 results?
Investor reaction to the Q1 FY26 numbers is expected to focus on execution discipline and the timeline for new capacity to start generating returns. Analysts covering the hospitality sector often view short-term renovation impacts as a necessary trade-off for longer-term ADR and RevPAR expansion, provided cost overruns are contained.
The 14.7 percent ADR growth in Q1 FY26 despite inventory constraints could be interpreted as a positive sign of pricing power, particularly in a competitive urban market. However, the steep decline in Courtyard occupancy underlines the importance of quickly bringing new rooms online to restore revenue scale.
Institutional sentiment is also influenced by sector fundamentals—India’s hotel industry remains under-supplied in many markets, and Hyderabad’s sustained corporate travel demand provides a favourable demand backdrop once renovations are complete.
What sector trends are shaping Viceroy Hotels Limited’s growth prospects?
According to industry data cited in the company’s investor materials, India’s travel and tourism industry contributed approximately $ 199.6 billion to the country’s GDP in 2024, with the sector expected to grow at an average of 7.1 percent annually over the next decade.
The hospitality industry in India currently comprises around 212,000 rooms, equating to an estimated ₹ 82,000 crore market size, but remains under-penetrated compared to global benchmarks. Occupancy rates are forecast to improve by 500 basis points over the next few years, with ARR projected to rise at a 7–8 percent CAGR.
The MICE segment is a particularly strong growth driver, with the Indian MICE market expected to grow from $ 3.3 billion in 2023 to $ 10.5 billion by 2030. This growth is fuelled by corporate sector expansion, government-backed infrastructure projects, streamlined visa processes, and India’s cultural appeal as a business event destination.
Hyderabad stands out within this broader trend, having ranked among the leaders in RevPAR growth across Indian cities in recent years. The city’s strong IT corridor presence, increasing air traffic, and proximity to global tech campuses such as Apple, Google, and Microsoft underpin sustained demand for upscale hospitality.
What is the outlook for Viceroy Hotels Limited in the coming quarters?
Viceroy Hotels’ management expects the financial impact of Phase I Courtyard expansions to begin from Q3 FY26, with the additional 56 rooms, spa, gym, and rooftop bar driving both occupancy and average rates. The completion of Phases II and III over the subsequent periods is intended to consolidate the Marriott flagship’s position as a premier corporate and leisure destination in Hyderabad.
The Madhapur greenfield project adds an additional growth lever, allowing the group to target the high-volume corporate travel segment in one of the city’s most dynamic commercial zones.
Execution challenges include ensuring renovation timelines are met, managing cost inflation in construction, and maintaining service quality during periods of reduced capacity. However, the combination of upgraded facilities, premium ADR positioning, and a supportive demand environment could enable the company to return to double-digit revenue growth and potentially expand margins above pre-renovation levels.
Discover more from Business-News-Today.com
Subscribe to get the latest posts sent to your email.
