Our hotel properties will go up to 75 by next year: CK Balaji, Royal Orchid Hotels Limited

Chender K Baljee, Chairman & Managing Director, Royal Orchid Hotels Limited, spoke about expansion plans of Royal Orchid and topline growth targets during an interview with Deepali Rana, Zee Business. Edited Excerpts: 

Q: What is your industry outlook for the next 2-3 years at a time when there is an increase in domestic travellers and occupancy in the hotels?
A: I have been saying that situations have improved in the last 2 years. There is a reversal in the supply and demand gap where supply has not increased in tune to the demand leading to a significant increase in occupancy as well as rates, which has increased the bottom line. The increased bottom line indicates that the industry will perform in a positive manner for the next 2-3years. Royal Orchid Hotels is trying to expand its business by adding more hotels to its portfolio. 

Q: What are your expansion plans and the strategy related to it?
A: We have 48 hotels with 3500 operational rooms in our list at present. Royal Orchid has signed 12 more hotels with 800 rooms which will be added in the list by Q2FY20. This means that we will have 60 hotels with 4300 functional rooms on our list. Apart from this, our developmental team is also functional in the market with an objective of adding more hotels (about 15) to the list. This gives me a sense that we, Royal Orchid, will be able to meet its target of having 75 hotels in its list by next year. 

Q: What is the occupancy ratio of the existing 3500 rooms that you have right now in your ambit?
A: The occupancy ratio has reached an optimum level of 77 per cent at present. I think that there is no scope for occupancy growth with a hope that the rates may see an upward movement from the current levels. It, the rates, will continue to grow on an annual basis.

Q: To what level?
A: This year, the rates have gone up by about 12 per cent and I think that it will increase by 12-15% in the upcoming fiscal year. 

Q: What is the average room rate (ARR) of your hotel in pricing terms?
A: Our ARR stands around Rs3,800 at present but it stood around Rs3,400 in last financial year. This is a something that makes us feel that the rates will go up in the same way. 

Q: What are your topline growth targets for FY19?
A: I feel that our top line will grow by 15-16% (YoY) and it will be supported by the food and business as well as banquet business that are doing well. In fact, we have renovated several hotels for the purpose as people spend a lot in the season, in short, wedding business is recession proof business in itself. 

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Q: What is your outlook for Q3FY19?
A: I feel that it, our business, will continue to grow and this growth will be supported by our spread out across South, North and West India. This spread is helping us to do well during holidays as well as non-holiday days as holidays have an impact on the city hotels but helps in increasing the business at the holiday destinations and vice versa. This is a reason that I feel that we will do well in times to come.