Royal Orchid Hotels is aggressively looking to expand into the smaller tier II cities. The group currently manages 43 hotels out of which they own 10. The company has registered 313 per cent growth in net profits in Q1FY 2017-18 compared to same period last year.
Speaking about the expansion plans Chender K. Baljee, Managing Director, Royal Orchid Hotels said, “We started aggressively, going forward for getting management contracts. In the last one year we have added about 12 hotels in our portfolio and this trend will continue over the couple of years. Today we have about 43 hotels in our portfolio 33 are managed hotels. So these 33 hotels will go up to definitely 45 hotels in the next one year.”
“In this management contract business, we are trying to see that we should cover most of the cities, well, maybe not Tier III cities but at least Tier II cities and areas where we are not present. We are present now in North, West and the South. On the East, we are lack presence, in South also states like Andhra Pradesh and not much in Tamil Nadu, so we would like to see ourselves growing in the cities where we are not present,” he added.
Earlier, this year the group acquired Amartara Hospitality by buying additional 24.9 per cent stake in it. Divulging more information on M&A and future plans Baljee said, “We acquired Amartara Hospitality for various reasons and the prime strategy behind this move was to buy out our partner so that we can have a full control over the operations and management of the property and to keep the performance in profitability higher. We are looking for M&A’s if it comes with a good price and scope.”
Last year, the group witnessed an average occupancy of around 69 per cent and expect a marginal increase this year. “In ARR, there is an increase of only Rs.120-Rs.140 of the increase. So that’s why if you see the growth in the revenue is somewhere around four per cent. Rooms margin are higher which can fetch around 35 to 36 per cent margin overall. In F&B, margin is very low somewhere around 15 to 18 per cent,” he added.
The group also caters extensively for the weddings segment with their ‘Wow Weddings’ product. When asked about the growth in this segment Baljee said, “Wedding segment has grown exponentially from last year and expecting the same trend going forward. Every enquiry we take on wedding products comes with something new to it which shows that how vast the segment is and what is its potential in future.”
On CSR front, the company’s main strategy is to generate maximum employment. The group has partnered with AHLA (American Hotel & Lodging Association) for various courses which can be availed for free of cost, which is a part of their skill development programme. “Apart from providing short term skill development programmes, we are currently extending support to old age homes, & orphanages in Bangalore, Nightingale Dementia Care Centre Bangalore, training & IT tuitions to AMBA a centre for mentally challenged children. Also, every year all employees’ avails school fees reimbursement for their children through Baljee foundation and skill development operated by National Council Women India, Shimla (NCWI) by donating sewing machines every year,” Baljee added.
