Apeejay Surrendra Park Hotels Limited (PARKHOTELS) Q3 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Apeejay Surrendra Park Hotels Limited Earnings Conference Call. [Operator Instructions] I now hand the conference over to Mr. Anoop Poojari from CDR. Thank you, and over to you, sir.

Thank you. Good afternoon, everyone, and thank you for joining us on Apeejay Surrendra Park Hotels Q3 and 9M FY 2026 Earnings Conference Call. We have with us Mr. Vijay Dewan, Managing Director; and Mr. Atul Khosla, SVP, Finance and CFO of the company. We'll begin the call with opening remarks from the management, following which we'll have an interactive question-and-answer session. Before we start, I would like to point out that some statements made in today's call may be forward-looking in nature, and a disclaimer to this effect has been included in the earnings presentation shared with you earlier. I would now like to invite Mr. Vijay Dewan to make his opening remarks.

Thank you, Anoop. Good afternoon, everyone. A warm welcome to our Q3 FY '26 earnings call, and thank you all for joining us today. On behalf of the entire leadership team at Apeejay Surrendra Park Hotels, I appreciate your continued interest, engagement and support. Firstly, a new chapter begins this month with the project launch of The Park Unizen, serviced residences and The Park at EM Bypass Kolkata. This signature project is designed to shape the future of luxury living and hospitality in the country. The Park Unizen brings together 2 iconic brands of Kolkata, The Park and Ambuja Neotia. The Park Unizen will be an iconic brand and at an iconic location, providing iconic luxury living. The sale of these serviced residences over the next 3 years will add INR 300 crores to INR 350 crores in cash flow and will further strengthen the balance sheet of Apeejay Surrendra Park Hotels. The third quarter was a positive and defining one for the company, marked by steady operating momentum and consistent outcomes across our portfolio. We delivered our best Q3 performance with consolidated revenues crossing INR 200 crores for the first time, reflecting disciplined execution across the markets in which we operate. This is our best ever and first ever Q3 at INR 200 crores. We recorded healthy growth across key financial and operating parameters during the quarter, supported by positive trends across both business and leisure segments. Our hotels continue to outperform the market, maintaining leadership in occupancy and RevPAR with -- in the upper upscale segment. During Q3 FY '26, consolidated revenue stood at INR 200 crores, while EBITDA was at INR 71 crores, translating into an EBITDA margin of 35.3%. This performance was supported by industry-leading occupancy levels of 90%, along with year-on-year improvement in ARR and RevPAR of 11% and 9%, respectively. These trends reflect sustained pricing discipline, resilient demand across our core markets and the strength of our brands and operating model. A healthy mix of corporate travel, weddings and leisure demand supported performance during the quarter. Our continued focus on differentiated guest experiences, strong F&B offerings and consistent service standards translated into robust operating outcomes. Our flagship hotels continue to deliver strong operating performance during the quarter. The Park Kolkata once again achieved 100% occupancy, which is a world benchmark, followed by The Park Chennai at 96% and properties at Bangalore and Navi Mumbai recording over 90% occupancy. In addition, hotels across Delhi, Hyderabad, Goa, Vizag and Indore outperformed their respective markets, reporting occupancy premiums of close to 25% compared to competitors, underscoring the strength of our brands. We continue to invest selectively across our portfolio through ongoing refurbishments and targeted F&B enhancements. During the period, several key properties, including New Delhi and Chennai, underwent room and venue upgrades, ensuring that our hotels remain contemporary, competitive and well positioned to capture evolving guest preferences. During quarter 4 this year, we plan to add 6 hotels totaling to 234 keys with properties opening at Vizag, Darjeeling, Katra, Kochi, Goa, and Dharamsala. Out of the 234 keys opening this quarter, 57 keys would be on lease, 14 under ownership and 163 keys under management contracts. During '26-'27, we plan to add 438 keys. In total, we will add 17 hotels totaling to 672 keys over the next 14 months, taking our overall room count to -- in '26-'27 to 56 -- to 3,219 (sic) [ 3,209 ] keys with 56 hotels. Alongside expansion, we continue to maintain a strong and prudent financial position. Our balance sheet remains comfortable, supported by healthy cash flows, a net worth of about INR 1,329 crores and mutual fund investments of nearly INR 58 crores. The financial flexibility backed by disciplined capital allocation enables us to pursue growth opportunities, both at the inorganic and organic levels. During the quarter, we made meaningful progress on our inorganic growth road map with a series of strategic developments. We completed the acquisition of 76% stake at Juhu, Mumbai. This stake will go to 90% in '26-'27 with the property expected to open towards the end of March 2027. We also marked our entry into Kerala through the acquisition of the Malabar House and Fort Kochi -- at Fort Kochi and Purity at Vembanad Lake, strengthening our presence in the luxury and leisure segment under The Park Collection. The acquisition of both Purity and Malabar House are being done in a staggered manner at a cost of INR 64 crores. These acquisitions completed in Q3 of 2025 are well aligned with our strategy of adding high-quality experience-led properties in high-demand business and leisure destinations. Our 2 heritage Palace hotels launched last year continue to gain traction in the luxury segment with Ran Baas completing its first anniversary during the year. The Lotus Palace Chettinad recorded an average room rate of close to INR 3,000 -- INR 13,376 while Ran Baas The Palace, Patiala achieved an ARR of around INR 31,967, reflecting growing brand recognition and demand in the experiential luxury space. Ran Baas The Palace was awarded the One MICHELIN Key, a high honor in October '25, and Prix Versailles featured Ran Baas in its global list of World Architecture and Design Award in December '25. Our iconic brand, Flurys, continues its journey of reinvention and growth with 104 operational outlets across flagship cafes, kiosks and tearoom formats. During the quarter, Flurys recorded a healthy top line growth of 19%, supported by steady traction across both existing stores and newly opened cafes. The brand also delivered record high single day sales with INR 1 crore at Flurys on December 24, highlighting strong consumer resonance during peak festive periods. In Q4 '26, we plan to add 14 new stores, while '27 is expected to mark a phase of accelerated store additions as the brand continues to expand its national footprint. Turning to our performance on a 9-month basis. Consolidated net revenue for 9 months ending FY '26 grew by 15.3% to INR 524 crores compared to INR 454 crores in 9 months ending FY '25. EBITDA stood at INR 165 crores, up 12.8%, while profit after tax was at INR 54 crores during the period. This performance reflects the strength of our diversified portfolio supported by sustained demand across key segments. Innovation and digital adoption remains central to how we enhance guest experience and monetization. During quarter 3, we launched NOR1, the industry's most widely applied and profitable AI-based upselling platform across our portfolio. In addition, we continue to deploy AI-led solutions such as digital check-ins, intelligent guest engagement tools and automation-driven back-end processes to maintain our superiority in the business. Equally important, our growth remains anchored in a strong people-first and now AI-first culture. We continue to leverage technology and AI not to replace people, but to enable them to perform better and grow alongside in the organization. As we move ahead, our focus remains on sustaining growth, deepening guest engagement and creating long-term value for our shareholders. With a clear growth road map, a robust financial position and a committed team, we are well placed to carry forward the momentum in the periods ahead. I would like to thank our shareholders, our customers, our team members and our business partners for their continued trust and support in us. Thank you. I will now request the moderator to open the line for question and answers.

[Operator Instructions] The first question is from Archana Gude from IDBI Capital.

I have a few questions. Sir, firstly, on The Park Pune, with this increased FSI, how that would translate into increased number of rooms?

So Archana, thank you for the question. Park Pune, we have -- we are really excited about it now because the FSI has increased due to us falling into the metro corridor and new concessions have been given because of other reasons. So our FSI today has increased from 2.5 lakhs to 6,72,000 square feet. So currently, at the moment, we are going ahead with the project of 250 rooms. And at the same time, we are reassessing in terms of how do we -- we would like to monetize this asset and bring in additional values to our shareholders. It could happen that it could become a residential come hotel. It could also happen that it could become a commercial or an IT park come hotel. Now should it become an IT park come hotel, the FSI is even more for your information, we would be entitled to over 8 lakh square feet of FSI. So this addition, firstly of FSI is going to, over a period of time, add enormous shareholder value. So at the moment, we are assessing various opportunities, but let me assure you at this stage, there is a substantial gain, and we will ensure that maximum shareholder value gets created because of the new situation in Pune because us falling into the metro corridor and being entitled to additional FSI.

Sure, sir. Sir, on this acquisition of Malabar House at Fort Kochi and Purity at Vembanad, so like what kind of ADR can be expected there? Some guidance on that front would be helpful.

So these -- both these properties, they are in the luxury space in this powerful -- in this powerful resort destinations of the country. The Malabar House is in Fort Kochi. It is once again a Relais & Chateaux hotel, enjoying currently ARRs of close to INR 15,000. And then Purity, which is even at a higher luxury level, which is 17 rooms and a boat at Vembanad Lake. This property is currently enjoying ARRs of around INR 14,000, but has a much higher potential of adding additional rooms. So the ARR -- the ARRs are currently at INR 14,000 and INR 15,000 in these properties, but the big opportunity is also on the side of occupancy because there lies our biggest strength. Without compromising on -- on ARR, we expect that the occupancy at these properties to significantly improve from where they are at the moment.

Okay. And sir, lastly, maybe I'll again come back in the queue. On this Flurys, the number of addition of new outlets has been slightly subdued, though the slate for Q4 looks pretty promising. So what really has gone there, sir? Why were we slow in adding the new outlets in Flurys in Q3?

2, 3 reasons for it. Firstly, the revenue allocation -- the -- sorry, the capital allocation during this quarter has been more towards the acquisition of the Zillion Hotel & Resort at Juhu, Mumbai and then the acquisition of Purity and Vembanad at Cochin. So we are known for prudent capital allocation. So one reason is that allocation of capital has significantly grown towards the side of the hotel expansion. Also at the same time, because of India's growth story has slightly slowed down and particularly, you would know that the F&B retail space is experiencing a slight slowdown, particularly many of the competitor stores of even international brands, as you are based in Mumbai, you would know that they have been shutting down. So our focus during this quarter and as well as in quarter 4 has been more on revenue growth rather than on store growth and revenue profitability. This will -- this has -- during the 9 months ending, our growth in the Flurys business on the top line has been 33%. It has been 19% during the quarter. The 19% looks a little bit less compared to 33%, but that is largely for the reason because quarter 3 falls into the high festive season of Flurys and this has a higher base. So our objective would be definitely to open more stores on one side, but also ensure that we have -- we are able to maintain the kind of revenue growth which we are giving to our investors. So there is a little bit of recalibration at the moment, but the -- there will be a very high focus on revenue growth of a similar kind, which we have delivered for 9 months ending. And of course, there will be increased focus on opening more stores. So during quarter 4 now, we plan to open 16 stores to take the number to about 120 stores with high revenue growth and then go on a faster and an accelerated pace as India's story improves. The story is likely to improve, as you know, because of various changes which have happened, particularly now in the last -- in this month or the last month itself with the improved relations with the United States in particular, with the signing in of the India, EU trade. So the economy is -- which is going to be back on a faster growth track. And with improved economic conditions, we would also put -- we will also grow at an accelerated pace in Flurys.

Sure, sir. Sir, any updated numbers you'd like to give us for number of Flurys stores like for '27 and '28?

Number of stores, we plan to take the number of stores from current, which will -- we will conclude at 120 stores. We plan to take it to about 100 -- anywhere between 150 to 160 stores. All these new stores, that also recalibration has been done. In terms of earlier, our expansion was a mix of kiosks and cafes. But now the focus is going to be very heavy on opening more cafes. So expect 30 to 40 cafes opening in '26-'27.

So you said 30 to 40 new cafes...

I'm really sorry to interrupt...

Okay. I will come in the -- no worries, no worries. I will come in the queue.

The next question is from Jinesh Joshi from PL Capital.

Sir, on EM Bypass Calcutta, earlier the plan was to open 250 rooms and construct 100 apartments. But now we are saying that there will be 218 rooms and 69 apartments. So can you please explain what has changed in the plan?

So there is -- firstly, simply to first explain the hotels, there is no change in the FSI, which is being allocated to the hotel, which is roughly about 3,10,000 square feet, and what is being allocated to these serviced branded residences, which is a little short of 3 lakh square feet. So the overall development continues to be 6 lakh square feet. So in the hotel, what has happened that we -- looking at the market, we have given more allocation to banqueting and conferencing facilities rather than just to the rooms, and it's a function of design and planning. So in the final, because the Calcutta market is also very strong in both weddings and on the MICE side. So we have sort of allocated more at this point of time to banqueting and conference facilities, which will actually significantly help the revenue model of the hotel going forward. The good thing about the residences is that we are still constructing in the residences. And to be exact now, because we are exact -- to be exact now, we are constructing 2,93,000 square feet. So what is -- it's a marginal reduction. In fact, the original plan was 3 lakhs as the design got implemented with the various kinds of rules and regulation. Finally, the saleable area has come to 2,93,000 square feet. And what we have done is that we have, again, reconfigured the apartments. Earlier, there was a mix of apartments of 2 sizes of 3,500 square feet and 4,000 square feet. Now all the apartments are going to be of 4,000 square feet. And it's now a combination of apartments and duplex. So as a result of that, the number may look to be reduced from 100 to about 70, 71 apartments or 69 as appearing in the document. But that is all related -- the entire saleable area has not reduced. The marketing plan has gone through a change because of market conditions so that we are able to maximize on the revenue for the promoters as well as for our shareholders.

Sure, sir. And in response to previous participant's question, you mentioned that we are slightly slow on Flurys because the capital allocation is more towards Zillion and some of the other acquisitions that we did. But if my understanding is correct, Flurys is typically a rental model and where not much of CapEx is required. Also for furniture, et cetera, I think for Flurys, the maximum CapEx that we spend is about INR 1 crores. So effectively, the model is not that capital intensive. So just wanted to get some sense as to why are we slow if not much capital is required.

No, no, it's -- at the end of the day, if I am opening 50 stores, it's an allocation of INR 50 crores in a year. And during particularly only in this quarter, there has been a very high allocation on acquisition towards on the hotel side because of the Juhu, Mumbai property as well as the properties in Vembanad. So the allocation has moved more towards quarter 4 and into the next year to actually ensure that our balance sheet remains significantly strong. So that is one. And on the other hand, as I did explain that there is a general slowing down on the F&B retail restaurant business in India with many of our competitors shutting down their stores. So we are not in that situation. We are in the business of giving -- providing to our customers high growth in Flurys, which we are providing and also ensuring at the end of the day that we have industry-leading margins in our Flurys business. So we continue to be on track. So it's a combination of how the market is, and it's a combination of fund allocation and how the market is behaving. I strongly feel, obviously, that the market is going to become stronger now here on with the relations improving with the United States and the new trade agreement, hopefully to be in place by the end of March. We are seeing that also in the markets over the last week that things have started changing and more buoyancy is coming into our own capital markets. So with increased improvement in markets all along and a higher growth in India's economy, we feel that we will be once again on a much faster growth track for Flurys. It's going to be absolutely there. We won't fall short in our growth plans for Flurys in '26-'27 as the market improves.

One last question from my side. In the opening remarks, you mentioned that Delhi and Chennai have undergone some kind of a renovation. So if you can just share what kind of ARR uptick can we see because of that? And also, if you can give some indication as to out of the 1,100 keys that we own, how many require renovation -- how many rooms require renovation and what will be the renovation CapEx?

So renovation, firstly -- to answer your last question first, firstly, as you know, that we have about 1,100 now -- 1,115 keys now without, of course, adding the property in Juhu because it will get operational during the course of the next financial year. Typically, what we do is that we renovate about 10% or try to renovate about 10% of our inventory because we would like to refurbish and renovate more, but we don't have that kind of bandwidth because we are operating at 90-plus percent occupancy across all our properties. Typically, the renovation cost is roughly about INR 25 lakhs per room. So that remains -- that will remain. We will stay in that limit of INR 25 lakhs per room as far as the CapEx is gone and adding -- doing about 100 room per annum. During the course -- last year at Park Delhi, we had renovated 28 rooms. And this year, during the financial year, renovating some of the public spaces, which includes 2 restaurants and 1 bar. So the focus in Delhi this year has been on F&B, and we expect that Delhi revenues will definitely improve on the whole on the F&B side, Delhi is INR 100-plus crore hotel. We expect at least 10% improvement on account of renovation at the Delhi hotel.

So we will have a 10% rental on account of Delhi hotel. Also, you mentioned Chennai as such is performing very well. In the month -- in the Q3, the Chennai had an increment of -- did have an incremental revenue of about 8% to 10%.

Chennai at the moment, because of the renovation being carried out in that hotel during the course of the year -- the previous year and this year has now emerged as one of our second sort of best-performing hotel with ARR on a YTD basis during the course of the year, increasing by 15% and the F&B food revenue increasing by 12% and the beverage revenue improving by about 21%. If at Park Chennai, the growth rate during the course of this year has been up to December has been close to 18%.

And Q3 was 20-plus percent -- 20-plus percent. So there is a renovation impact.

Okay. Any more questions, Mr. Joshi, and thank you very much. Anoop, we are getting some disturbance from some of the participants. So I don't know what the procedure is. So if some -- maybe 2 or 3 lines are open at the same time. If people can switch off after asking the question, that will sort of make a big difference.

Actually, that was from the participant who is asking the question. We'll move to the next question. The next question is from Vaibhav Muley from Haitong Securities (sic) [ YES Securities ].

Congratulations on a good set of numbers. My first question was on our expansion pipeline. For the last 2 quarters, sir, we have actually consistently seen delays in our time lines. Now [ Mumbai Plus ] has been delayed from Jan 2029 to Jan 2030. Pune has seen 6 months delay. I can understand for Pune due to change in the FSI. But for again, Juhu, we have seen 3-month delay, given Navi Mumbai is now from 2029 has moved to 2030. So question is how -- since now the pipeline seems more back-ended, how do you manage to -- how do you plan to manage growth for FY '27 and '28, especially given our key projects are now looks slightly back-ended for operationalization? And along with that, if you can provide for Q4 and FY '27, the 672 keys that we plan to open, the breakup in terms of managed and owned keys and also the brand-wise segmentation? That's my first question.

So thank you, Vaibhav. First thing, of course, is that if we were to look at Pune, Pune, what has happened is that, as you yourself said that there is a change in FSI and this is by itself going to create value as we go forward. When we look at our project in Juhu, when we had acquired Juhu, we had 60,000 square feet of development, and we were having just 66 -- 60 keys. So now the good news again for Juhu is, which is pushing it back by a few months, that we are actually -- we have been able to take out more area for customer use. And as a result of this, we are actually going to get 88 keys. So the designers and architects and all other things are being -- are appointed and they are doing the work. So as of now, the work is about to begin. And there is a good chance that the work may finish within this calendar year itself. But on the safer side, we have said that we will be able to launch it towards the end of the financial year. We would be happy to launch it during the peak season. But the good news on Mumbai is that the number of rooms are going up. And not only that the number of rooms are going up, we have been able to create new spaces also for F&B. It now -- with still the things are under finalization, it looks that we will have a front-facing Flurys restaurant and we will have an exciting restaurant on the rooftop. Along with that, we will have -- with a retractable roof, we will have one of the best bars opening in the Juhu area. So the revenue model will be what was envisaged at the time of the acquisition. The revenue model by the time we open is going to be significantly higher because of the changes which we are able to make with our expertise and of course, with the help of the architects and designers. So this is going to be an ultra-luxury boutique hotel where you will actually arrive into an area of entertainment. What we are conceptualizing at and what is going to get finally for you to see is it's going to be a great boutique hotel, a super luxury boutique hotel with everything getting highly differentiated, your arrival experience being differentiated, your F&B experience getting totally differentiated. So coming to your question on Navi Mumbai, Navi Mumbai, again, because a good thing about the governments at the moment across India is that they are giving significant importance to tourism. So there is FSI changes virtually every year. So now it looks that not only 250-room hotel at Navi Mumbai, it will be a 300-plus room hotel at Navi Mumbai as we go and start construction. So again, greater value will be added. On the other hand, in our project in Visakhapatnam, the permissions are almost done. It is going to be within the next -- this month or early next month or by next month, we should be able to do the groundbreaking and start the construction at the hotel in Vizag. We are fully in control of the development. And we will -- as we go along, we will deliver iconic properties, the new ones, and refurbish and renovate our existing properties to give enormous value to our promoters and shareholders. The room breakup is in terms of our expansion, as we mentioned, 434 keys are coming up right away. And we are going to have about 104 keys under lease and that keys are going to be under management contract. So this is how the distribution of the keys are going to be. So 57 keys are going to be on lease, 14 are under ownership, as I mentioned in my opening statement, and 163 keys are going to be under management contracts out of the 254 (sic) [ 234 ] we open now during the course of this financial year. And out of the 438, which we open in the next financial year, that is '26-'27, the keys are entirely under management contract, plus 85 keys of the Mumbai property.

Understood, sir. That was very helpful. My second question was on Flurys. We have now reduced our store guidance to 130 stores for FY '26 and 150 to 160 stores for FY '27. So when do you expect the target of taking the store count to 200 to be achieved now?

2028, we should be -- not should be, we will be at the 200 mark. And we remain committed to our overall plan of having 500 stores -- 450 to 500 stores to be precise by '29-'30. So there is no change in plan on that front. So we -- on the other hand, there is no change in the revenue growth plan. As I mentioned, we -- more than the store growth, we are absolutely focused on revenue growth and ensuring high profitability in our stores. The same-store growth where the bulk of the properties are, the Flurys outlets are, they are experiencing a 9% same-store growth, which is truly remarkable in this market. And the success of Flurys, as I mentioned again in my opening statement, comes for the fact that people believe in Flurys by the fact that on the 24th of December, we clocked Flurys on the whole INR 1 crore of revenue. So this demonstrates the strength of our brand and also the commitment of our -- to our customers, our loyal customers of Flurys. So we really thank them for that.

So we are going to same revenue target [ INR 500 crores ] by 3 to 4 years. So [ INR 500 crores ] target remains the same. That's where concentration has been done to improve the revenue.

How was the EBITDA margin, sir, for Flurys this quarter?

It was in the range of 12%, Q3.

This is pre-Ind AS?

Post Ind AS -- if you want, pre-Ind AS -- this is pre-Ind AS. Yes.

The next question is from Vinit Bajaj from Nirmal Bang Institutional Equities.

My question is regarding Kolkata market. The company has reported close to full occupancy along with ARR levels that are marginally higher than industry average. Could you please help us understand the key drivers behind the sustained performance versus the market? Additionally, could you please provide some color on how room rates in the Kolkata market currently trending?

So Calcutta for the last 10 years has been our flagship performing hotel. It's always been our flagship hotel, but has been doing 100% occupancy over the last 10 years, except in the 2 COVID years. Even in those 2 COVID years, it had India's highest occupancy of close to 70%. The large part of this success in Calcutta firstly goes to the team, which is managing this hotel, both on the room side of the business as well as on the F&B side of the business. In terms of ARR growth up to YTD level, this hotel has recorded an 11% growth in ARR, which is in line with the market as per the HVS report of 11% to 13% growth in ARR. But since occupancy is 100%, this could be the only hotel in India and possibly in the world where the RevPAR growth is also 11%. Because if occupancy is 100%, then RevPAR and ARR, they come together. So this is the highest RevPAR growth in the Calcutta market, whereas for the HVS report, the growth is only in the range of 6% to 9% because Calcutta's occupancy in the branded hotels is somewhere between 70% to 71%. So this hotel has always outperformed the market, and it will continue to do so because it has, of course, a highly committed and motivated team. Second most important thing why occupancy and performance is high is because this hotel is at a great location, like being present if it was to be taken somewhere else, it could be on Oxford Street or on Times Square. So it has a great location. It is in the heart of the central business and entertainment district. It is the #1 street of Calcutta. Third is that we have not only a unique revenue management system now, we have NOR1, which is an AI-based system attached to revenue management, which helps us in [Technical Difficulty]. And lastly, why occupancy is high or at the highest level in Calcutta is that it has -- typically in business hotels, what tends to happen is that business travelers, they are there during the weekdays from Monday to Thursday and the weekends, where generally the occupancy dips. That is why you see in Calcutta, the overall city occupancy is around the 70% mark. But this hotel is unique. It has great F&B. It has great night clubs and bars. It uses entertainment as a source of creating customer value. And that key differentiator of creating customer value through entertainment has a magnetic impact on customers to come and stay at this hotel on the weekends. So generally, in this hotel, what tends to happen because of high level of entertainment, fashion shows, bands, various other DJs playing at this hotel, the occupancy tends to be -- the demand on this property is higher on the weekends than even on the weekdays. So the higher demand on the property itself creates higher ARR. So not only the occupancy is 100%, because of the higher demand on the property itself, it amazingly creates a higher ARR for this property, purely because of this unique entertainment position, which, again, very few hotels or no hotels have it in India. Occupancy management is an art by itself. One has to look at not only the demand in the city, then you have to look at the demand on -- in terms of demand on -- in the micro market. The micro market in Calcutta will be the central businesses trade. And lastly, one has to carefully manage the demand on the property itself. So demand is not just demand supply, it's demand on the city, demand in the micro market and finally managing the demand on your property itself so as to arrive at a significant ARR or one of the best ARR performances. I hope that answers all your questions.

Yes.

Any other question, Vinit? Okay, we can -- Anoop, I'm sure we move on to the next.

The next question is from [ Madhav Agarwal ] from SKP Securities.

Yes. I wanted to know which are the hotels we are planning the renovation work. As you mentioned, Delhi -- in Delhi, it is, like complete in Delhi and Chennai. Chennai is ongoing, right? And apart from that, which are the hotels?

So the planning is, as we said, that we will be looking at -- always looking at -- as far as renovation is concerned, renovation is a process where the rooms go in for a larger period of shutdown, which could be about a period of 6 months or so. So what we are doing this year is that we are going to undertake a renovation of roughly about 80 keys or 90 keys on the whole. 28 keys are going to be further renovated at New Delhi. 30 keys are getting renovated in Chennai and 20 keys are going to be renovated in Bangalore. On top of that, there are going to be 60 rooms, which will be refurbished in Calcutta. So it will be -- in Calcutta, there is going to be a mixture of renovation and refurbishment. So at one given time, we would have not more than 100 rooms under renovation plus refurbishment, which will continue at Calcutta. The challenge, of course, would be -- the challenge is that we cannot give -- we would love to renovate and upgrade more rooms, but because of very high occupancy experienced in our hotels, it's virtually impossible to renovate more than 10% of the inventory. We have -- we are committed to give you India's leading occupancy. We are committed to give you the best RevPAR or market-leading RevPAR in the upper upscale segment and of course, high ARR so as to lead the market on a continuous basis. That we have been doing for the last 10 years, and there is no reason why we would not be able to do that in the next decade as well.

All right. Very helpful, sir. Just one last question. What is the estimated CapEx and year-wise CapEx what you have planned for next 3 years, if you can share? Because now, as you mentioned, the FSI for several properties have increased. So there is -- so if you can share the -- like the breakup, the year-wise breakup, estimated CapEx and like -- yes.

See, as we have stated earlier also, the inventory coming is expected with Pune, 200 rooms, Mumbai, 250 rooms, Vizag, 100, EM Bypass, 250, and Jaipur 150. So roughly at [ INR 1.2 crores per annum ], it's INR 950 crores CapEx. Out of which EM Bypass, now [ INR 300 crores ] may become [ INR 350 crores ] as the -- is the receivable from the sales proceeds. So that -- Kochi is around [ INR 60 crores, INR 64 crores ] and Zillion is [ INR 210 crores ], with [ 16 ] on renovation, INR 330 crores, plus -- which is INR 330 crores. So it's roughly INR 800 crores plus INR 330 crores is the acquisition cost. Average CapEx per year if you do, [ INR 40 crores to INR 45 crores ] for operational CapEx, which is like 100 rooms going every year and Flurys about INR 180 crores to INR 200 crores over a period hopefully. So around -- our total CapEx of this [indiscernible] is INR 70 crores. Out of which if you see what the addition is coming is coming from one aspect. One is the proceed of EM Bypass that we're receiving, which was earlier estimated at [ INR 300 crores ] is now [ INR 350 crores ]. Second is that we are reimagining Pune will be above 2.5 lakh square feet of FSI, which is going to, I think be monetized and will generate a cash inflow rather than cash outflow as we get into the new model. So for that, it should help in further cash flow. Plus if I take an average EBITDA of INR 250 crores, INR 260 crores for 5 years, I do have a [ INR 1,300 crores ] cash and the balance still -- remains funded through the lines of credit, which already is there, about INR 250 crores to INR 300 crores. But the basic -- so this new Pune is also going to lead to some monetization, substantial monetization like EM Bypass. So that will help in my acquisition further cash flow available for inorganic growth acquisition. I think we had answered your queries.

Okay. Why I asked this question was -- see, as you mentioned that the monetization of this Pune, which we will be monetizing with the commercial or the residential and this EM Bypass, both of these will be -- like the EM Bypass you mentioned in early 2030 and Pune also early 2030. So my question is like before that, like is it going to happen that your net debt is going to like rise significantly or is it any capping you have got in your mind? Because before that -- before this monetization starts to accrue in your financials, before that, I assume that now your net debt is expected to rise in the next 2 years.

So firstly, even without this, our net debt is not going to increase. Because in case of EM Bypass also, the money is going to start coming now. Now the money which I'm getting from the sale of apartment is already reducing my net debt. So that is going to come over a 3-year period, INR 350 crores. So it's not going to -- this only is building up the construction of EM Bypass. So it's not -- so in a way, the money is coming even before the construction starts. In case of Pune, we are still reimagining, but whether you say commercial or other, that will actually start funding the hotel portion also, which, let's say, you reimagine 1 model of -- no EM Bypass is 1 at Pune. So that -- how it will be monetized will also come in picture. So it will give some advance or some other cash flow, that options will work out. So that will add to the -- in terms of construction -- help even in the construction of the Pune hotel. So in a way, it will help in increasing the amount -- reducing the amount.

So business resilience -- building business resilience is also part of our strategy, and it is also part of our strength. So currently, as you know, the gross debt is INR 236 crores, but the net debt is only INR 150 crores -- INR 154 crores because there is large mutual fund investment of close to INR 60 crores. With the funds coming in and as EBITDA continues to improve, hopefully, by the end of this financial year itself, the investment in mutual fund should be closer to INR 100 crores. So our focus is to keep on, of course, continue on the path of growth, both inorganic and organic. But at the same time, keep a focus on correct capital allocation and building business resilience, which is hard to do. But if a company has business resilience, it is able to overcome any kind of downside in the market. So that continues to be our game plan and our strategy. So we will continue to ensure that the net debt to equity is on the lower side and always much -- much, much lower than that of our competitors. Currently, it is at 0.11, and we would like to be in this kind of range only from 0.1 to 0.2 and in our entire cycle of this growth. More -- and more importantly, we are very focused in terms of the return on capital employed as well. And as these land parcels they get monetized, particularly beginning of the EM Bypass, expect the return on capital to be significantly higher than our competitors once EM Bypass is sort of capitalized -- monetized or ready. More importantly, in EM Bypass, we -- as we are now just about to launch the project in this month, which is -- which we are all excited about, the cash flows have been completely worked out. So in the first year itself, which means now this calendar year, we would be expecting 30% cash flow. In the second year, we would expect out of this INR 350 crores as estimated by the 2 powerful brands will be 20% in the second, followed by 30% in the third year and the remaining in the final fourth year of the handover. So this cash flow is also being worked out to the last detail now as the project is about to get launched. So 30% -- 20%, 30%, and 10%. So very strong cash flows are expected over the next 3 years, which will help in maintaining our debt to equity position strong. It will propel both organic and inorganic growth.

And further to add on that, our internal target is always to keep debt to EBITDA below 2. So that we have a sufficient cushion. So we will not be exceeding that.

Very helpful, sir. Just the Ran Baas, Patiala, sir, my calculations, I believe in the third quarter, the revenue, it [ clocked ] somewhere around INR 6 crores. Is it -- can you confirm or give some directional, if not exact number?

So this Ran Baas Palace Patiala got launched in January this year. This -- your numbers are close to being absolutely correct. And we hope to actually further improve on these numbers of INR 6 crores, which we have mentioned as we go forward. Because it is getting not only recognition domestically, it is getting widespread international exposure and branding. Today, it has got covered in all the top magazines, whether it is the Conde Nast Traveller India or whether it's Conde Nast International, it features in the hot list of the Conde Nast Traveller for the year 2025. More importantly, it is the One MICHELIN Star. There were 24 hotels in India, which have got classified in the One MICHELIN Key hotel by MICHELIN, which is reflecting -- reflects on its high quality of product as well as very high quality of food and beverage services and offering unique service experiences. Only then you can get a MICHELIN Key or a MICHELIN's -- you have become a MICHELIN Star. So MICHELIN has started classifying Indian hotels for their product quality and service excellence and food excellence. So we expect because of all this recognition, this hotel to significantly outperform in this quarter itself in quarter 4 as well as in the quarters ahead. More importantly, since we have acquired Malabar House -- we have acquired Malabar House because it's also a high-quality hotel. It's a running hotel. The full benefits of Malabar House are going to come again in the next financial year because this year, it has sort of just got acquired. A high ARR hotel with good international support and now with domestic support. More importantly, again, a Relais & Chateaux hotel, which is a mark of quality and service excellence. So with all these properties, which we have acquired and with the opening of Bombay, we expect excellent results and the growth momentum to continue in the years ahead.

That was the last question in queue. I would now like to hand the conference over to the management team for any closing comments.

So as we move ahead, our focus would remain on sustaining growth, strengthening margins and creating long-term value for our shareholders through a balanced mix of expansion, asset optimization and innovation. So at the end, I would like to thank everyone for attending this call and for showing interest in Apeejay Surrendra Park Hotels. I hope we have been able to answer all your questions. And should you need any further clarification or would like to know more about our company, please feel free to reach out to us directly or to CDR India. Thank you once again for taking the time to join the call, and we look forward to engaging with you again in the next quarter. Over to you, Anoop.

Thank you very much. With that, we conclude today's conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.