Broker’s call: Chalet Hotels (Buy)

In a recent investor meeting held in Singapore, Chalet Hotels' senior management presented their vision for the company's future growth. The management's primary focus is on constructing a scaled owner-operator ecosystem, which involves large-format asset ownership, strategic geographic expansion, and the growth of their owned brand, Athiva.

The utilization of franchise-led models is also being emphasized. These strategic moves have strengthened Chalet's operating credibility, as evidenced by partnerships with Marriott's Autograph Collection and IHCL's first Taj franchise with Chalet.

The company's strong foundation is derived from its commercial real estate (RE) portfolio, which generates ₹250-300 crore annually in EBITDA. This predictable cash flow not only bolsters Chalet's debt serviceability but also provides a stable base for future hotel expansion, ultimately diminishing reliance on the volatile hotel industry.

Chalet has also revealed plans to accelerate growth, targeting to elevate leisure revenue from the current 12-13 percent of total revenue to approximately 20 percent over time. This ambitious goal is facilitated by the rising demand for local stays, destination travel, and social events.

Despite the increasing focus on leisure properties, Chalet's core profit engine remains its business hotels. The company anticipates higher occupancies and recurring corporate demand to support its business hotel portfolio. As Chalet continues to implement its strategic plan, it is poised to expand its presence in the hospitality sector while maintaining a resilient financial base.