Ladies and gentlemen, good day and welcome to the Q1 FY26 earnings conference call hosted by Schloss Bangalore Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this call is being recorded. I now hand the conference over to Mr. Diwakar Pingle from Ernst & Young IR. Thank you, and over to you.
Thank you. Good evening, everyone, and welcome to the Q1 results for Schloss Bangalore Limited, India's only pure-play luxury hospitality company that operates the Leela Palaces Hotels & Resorts. The company has published its results and uploaded the investor presentation on exchanges earlier today, and you can also find it on our website. Before we start, a disclaimer: some of the statements made in today's earnings call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated.
Such statements are based on management beliefs and assumptions made by information currently available to management. Audiences are cautioned not to place any reliance on these forward-looking statements while making their investment decisions. On that note, let me introduce you to the management participating with us in today's con call. We have with us Mr. Anuraag Bhatnagar, Managing Director and CEO, and Mr. Ravi Shankar, Head Asset Management and CFO. We also have on the call, on behalf of the sponsor group from the Global Real Estate CIO and Head of APAC Region, Ankur Gupta. Without further ado, I'd like to hand over the call to Mr. Bhatnagar. Thank you, and over to you, Anuraag.
Hello, good evening, everyone, and thank you for joining us in our first global earnings call. I wanted to welcome you to this call with the service philosophy of Leela, which is rooted in Atithi Devabhava, "Guest is God." This philosophy has made the Leela brand synonymous with Indian hospitality and the highest level of luxury. Following our successful IPO on 2nd of June this year, we are delighted to share our first results, Q1 results. We are pleased to report very strong performance, delivering our highest-ever Q1 revenue, EBITDA, and margins. Let me briefly walk you through the structure of today's call over the next 15-odd minutes. I am joined by our CFO and Head of Asset Management, Ravi Shankar. We'll begin with an overview of the company's value proposition, followed by a detailed report of the quarter's performance.
We'll then share with you our growth strategy for the future before opening the floor to questions. The Leela Palaces Hotels & Resorts platform is truly a unique and special business. First, we have a proud legacy of a globally celebrated brand, which has been built over the past four decades. Second, we are the only listed player with a focus on the significantly underserved luxury segment in India. Third, we own iconic properties which are in high barriers to entry markets. Our chain of 13 hotels, which is contracted to go to 21 hotels across luxury destinations in India, gives us an unmatched national network. Our differentiated asset management practices are such that we consistently deliver superior EBITDA margins as high as 49.8% in FY25.
Last but not the least, post the IPO, we now have a strong balance sheet with 0.3x Net Debt to EBITDA, which positions us very well to execute on a robust pipeline. Taken together, all these five differentiators provide us with a platform to scale in a high-growth luxury hospitality market. I want to talk a little bit about the brand. The Leela brand has won not only national awards but is recognized as the top three luxury brands in the world by prestigious institutions such as Travel + Leisure and Condé Nast International. The Leela brand strength and our focus on customer service excellence helps us achieve best in industry net promoter scores and command the highest RevPAR premiums in the industry. Our net promoter score at 86 is 10 points higher than any other reported peer performance.
Our RevPAR is nearly three times that of the overall Indian hospitality average. We believe this is a real moat in our business. As we look at the market opportunity, the Indian luxury market remains significantly underpenetrated. There are only 29,000 keys out of 170,000 branded keys in the country which are categorized as luxury. The market is underserved, and this gap is increasing. While demand in the luxury segment is projected to grow at around 11% CAGR, supply is only coming in at around 6%. As the only pure-play luxury player in this underserved market, Leela is uniquely placed to capitalize on this gap. Since 2020, the Leela platform has had a track record of delivering on growth. We have delivered more than 15% CAGR in our revenue and have gone from 8 hotels to 13 hotels and added approximately 1,000 luxury keys.
The growth ahead is also equally exciting, with its signed pipeline taking us to a chain of 21 luxury hotels with more than 4,500 keys. Now I'll hand over to our CFO and Head of Asset Management, Ravi, to take us through the Q1 performance and balance sheet details.
Thank you, Anuraag. Good evening, everyone. Post our IPO, we now have a strong balance sheet poised for growth, with only INR 227 crores of net debt on our books, which translates to a 0.3x net debt to EBITDA. This positions us well to execute on our robust pipeline. Our ratings have also improved to AA stable. Now we will deep dive into the Q1 financial and the business highlight in more detail. We had a very strong quarter, with a total income increase by 25% YOY to INR 301 crore. EBITDA grew by 63% to INR 128 crores, with margin expanding 980 basis points to 42.5%. Our best-ever quarter performance. This strong performance, despite the headwinds of the geopolitical tension and operations in Jaipur has delivered on the back of our platform strength and the strong asset management focus on the team.
We are also pleased to report that we are TAC positive for this quarter. Lower leverage and robust operating momentum supported a positive TAC quarter. We have grown from a loss of 75 crores in Q1 2025 to a profit of 8.7 crores. This turnaround was driven by two key factors. First, a 49-crore boost from business momentum and EBITDA growth, and a 33-crore reduction in finance cost. The revenue growth for our platform came on the back of both occupancy and ADR increase. While the occupancy increased by 4% from 59.7% to nearly 64%, the ADR has increased by 13%. This resulted in a RevPAR increase of 20%. The revenue growth has been delivered across segments. We had a double-digit growth, upward of 15% or more in all our markets. Leisure hotel-led growth, while metro demand continues to stay healthy.
We have maintained or enhanced market share in all our cities. In terms of composition, retail continues to be our strength, and a dominant segment contributing 55% of the total business. We delivered 17% growth in this segment on the back of our dynamic pricing and focus on direct sales channel, which has always been our strength. Most importantly, our RevPAR growth has outpaced the industry. According to STR, the Indian luxury hospitality segment is estimated to have grown at 10%, whereas RevPAR has grown by 20%. As we look at the revenue growth, F&B, which is an important pillar of our total RevPAR and a differentiator for the Leela platform, has grown at a healthy 16%. With nearly 39% of our revenue coming from F&B, we at Leela are very focused on constant innovation and market leadership in our F&B offering.
Our HMA fees, which are capitalized, have also grown at a healthy 20%. In this quarter, we have three big operational updates. First, we have unveiled our new website, which is a true reflection of luxury. With best practice on SEO optimization and website conversion, we have witnessed a 72% increase in revenue from website. Second, we have relaunched our fine dining restaurant, The Qube, in the Leela Palace, New Delhi. We are proud to report that we completed the renovation in 21 days in an operational hotel, and third, we are ready to open doors to the new invite-only membership club proposition, The Arc, in the Leela Palace, Bangalore. In terms of growth, the Leela platform has signed a definite agreement to expand into Mumbai commercial epicenter, BKC, with an owned hotel, the Leela Palace, Mumbai, with 250 keys.
BKC has huge untapped demand for hospitality, with no new hotel supply since 2011. The market has only 39 keys per million sq ft of office space, while Delhi has almost 6x, and that at 230. We have secured this land at an attractive basis, and we will be leveraging partnership synergies with Brookfield such that it will provide development support to the project. We have also completed statutory acquisition of 1.8 acres of land in Udaipur, adjacent to our existing hotel, Leela Palace, which will allow us to expand with nearly 33 keys and add 10,000 sq ft of banquet space. This will give us an advantage in targeting the luxury wedding and the MICE segment in Udaipur. We also continue to ramp up our capital-light expansion into Hyderabad, through a ramp-up of the hotel, the Leela Hyderabad, in the Banjara Hills.
Overall, as we look ahead, we are confident in delivering double-digit EBITDA growth in FY26. The Leela platform has strong embedded growth on the back of four pillars. First is the same-store growth in our business. Second is our entry into new verticals. Third is the expansion of owned hotel through the development pipeline, and the fourth pillar is the expansion through HMAs. We are confident in delivering double-digit same-store growth in our existing market. In the cities where we own hotels, there is a strong demand for luxury keys and virtually no upcoming supply till FY28. In addition, we consistently invest strategically behind asset enhancement with high ROI such that we are able to command higher than any competitor in the segment. For example, we are investing in adding propositions such as family villas, kid clubs, and state-of-the-art spas to attract more luxury family travelers to our hotels.
To supplement our same-store growth, we are also entering into strategic verticals. We'll be launching the invite-only membership club offering Arc, which will extend the Leela brand into the ultra-luxury and deliver high-margin growth, leveraging existing infrastructure and cost. The Arc is positioned to have 2,000-plus paying members on stabilization. We'll have five club offerings across Bangalore, Chennai, Delhi, and Mumbai over the past few years. We are also launching the Leela Luxury Residences, starting with Mumbai, where we'll be coming up with 60-plus keys of ultra-luxury service apartments with a 22,000 sq ft club offering. The expected launch of this project is FY27. We believe there is a strong potential for expansion into other urban metro such as Pune, Bangalore, and NCR.
In terms of the expansion of the owned hotels, we have a pipeline of 725 keys under development across leading luxury destinations, including Mumbai, Agra, Srinagar, Ranthambore, Bandhavgarh, and Ayodhya. In addition, there is an active pipeline including in select international markets with a high share of India tourist diaspora. We also have a signed pipeline of 203 keys of capital-light expansion through HMA in Sikkim and Mumbai, with several discussions ongoing. As we look ahead, we are targeting to reach 2,000 crore EBITDA by FY30. Our strategy is focused, our execution is precise, and our vision is ambitious. And as we continue to set new benchmarks for true Indian luxury on the global stage, now we can open the floor for questions.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We'll take a first question from the line of Aditya Mathur from Bank of America. Please go ahead.
Hello.
Yes, we can hear you. Please go ahead.
Yeah, hi. Firstly, thanks, Anuraag. Thanks, Ravi, for the detailed presentation. I had a question on the contracted pipeline. I see you have talked about the addition of the BKC Hotel. Firstly, would it be possible to get some color on the investment, the partnership structure that you talk about with Brookfield, timelines, or any expectations you have on this one?
We are introducing the Leela Palace to Mumbai through a landmark 250-key luxury hotel with our club in the heart of BKC, one of the most underserved luxury hospitality markets in India, with no new hotel supply since 2011, and there's only 738 keys operational. This hotel is a 50-50 JV between Brookfield and us, and the hotel, we are right now in the stage of design and concept development, and we'll come back with more details in the coming time.
Sure. So this is how long would this be? Would it be like four, five years, or would it be longer?
So we have already got the award right now, and we are working on the design concept stage and deciding the timeline for the construction.
Sure, sure. So we'll wait for more details when you're ready. The second thing I just wanted to ask you about the RevPAR growth across the various properties, they all seem to be extremely strong, especially the leisure properties. Just wanted to check if there is any call-out on the reasons for the same, particularly in, say, Jaipur and Udaipur, and how sustainable this is. Is there any base effect on any quarterly variation that one may need to be aware of?
So, hi. See, the RevPAR growth, if you look typically, the segment that we play in, if you look at historically, Leela has always been growing high double-digit over the last five years on RevPAR. And we have a 40, thereabouts 40% premium on the index when it comes to RevPAR. Specifically talking about our resorts in Udaipur and Jaipur that you spoke about, this particular quarter, there were some high-value celebrations. There were certain events. There were certain delegations. And we have been working on a strategy to pivot towards FIT and then FIT consumer. We definitely believe that this RevPAR premium that we command and this high double-digit growth that we have in RevPAR, not just in our resorts but across even our city hotels, is here to stay.
If you take a step back and just look at some macro indicators, India today is grossly underserved when it comes to luxury keys. Less than 18% of the total branded inventory is in luxury. And if you look at that in context of the high double-digit growth in demand of luxury consumers and very limited supply coming in, the markets that we operate in, this fundamental, there'll be a delta of almost 5-6 percentage points in terms of demand versus supply. So I definitely believe that this RevPAR growth is likely to stay. And we have also invested in a lot of digital investments, strengthened our sales and distribution network, and brought in revenue management practices to ensure that we capitalize on this delta.
Sure, sure. Thank you. Thank you, Anuraag. And if I can just squeeze in one more on the debt part of it, I think Ravi mentioned the net debt number has come down quite substantially. Is there any range that you would like to keep this in, and what's the comfort on where this could be, let's say, by year-end? Specifically for this year, if you could just throw some lights on any investment or CapEx that you've planned for the current year for FY26.
So starting with the question on the CapEx, this year we'll be investing around INR 400 crores of CapEx in the same-store growth. That's basically on the value drivers where we are adding the Leela Club in Delhi, Bangalore, and Chennai. We are adding 33 keys in Udaipur and 10,000 sq ft of ballroom space, plus other value enhancement in different hotels, out of which we have already spent INR 100 crores.
Just, INR 1,130 crores is on the contracted pipeline for the five hotels, which will be spent in the next two and a half years. This year, if you look at our net debt to EBITDA, we are 0.33x. And even if we take into account our growth with the contracted pipeline, plus even the active pipeline that we have, our net debt to EBITDA in the next few years will be an average of 2.5x. It'll up or down, and we'll taper down as we move forward, and this year will be a similar 0.3x Net Debt to EBITDA.
Understood. Even by year-end. Got it. Understood. Thank you so much, and all the best to you guys.
Thank you.
Thank you. Next question is from the line of Sreetika Ray Mohapatra from JPMorgan. Please go ahead.
Thank you for the initial remarks, and congratulations on a great set of numbers. I just wanted to, if possible, provide an update on the progress of the upcoming assets. What stages are they in? We understand that the expected launch will be in FY28 for the five new hotels. But if you could draw some light on how each of these assets are progressing.
Hi. I can tell you in brief that we are very much on track for our overall timelines as we have declared. We are either having received approvals or in process of receiving approvals for all our projects. The various properties are at varying stages, ranging from design development, planning, to early construction. I mean, in terms of Agra, Srinagar, we are in final stages of concept design. We are at advanced approval stage. And in Agra, it is expected to come in the next few months, and the construction will begin by the end of the year. In Srinagar, we are in final handover processes going on. Concept design is in progress, and the teams have been mobilized on ground to start the construction. Bandhavgarh and Ranthambore, designing and concept designing is in place, and progress of approvals is in process. Ayodhya as well.
BKC, I think Ravi has already mentioned to you. Likewise, our two managed hotels, we are looking at Sikkim, is in advanced stages of the Master plan design. The Leela Luxury Residences is like we plan to put an operating team very much on the ground for pre-opening towards this year-end.
Thanks, Anuraag. Also, the presentation mentions an international expansion plan as well in terms of scouting for opportunities. Is there anything already that is in the works or being looked at, and any particular regions that you may be looking to target?
If I just take a step back, Leela has been present internationally, maybe not in terms of an asset yet, but we have nearly 50% of our business comes from international markets, and Leela has been recognized globally through various publications and Travel + Leisure as one of the best luxury brands, so we are always open and evaluating opportunities in markets which are, A, either key source markets for Leela in India, and B, the markets where India is traveling, so we are evaluating several options, and I'm sure we'll be in a position to let you know once we come to a meaningful closure, but we see significant potential for international expansion driven by the strength of the Leela brand, the expertise of our management team, and the global operating experience of Brookfield.
We just need to make sure that we are maintaining long-term financial discipline and ensuring that the decisions that we take are prudent and right.
Thanks. Thanks. That's very helpful. Also, while we're in early days of this quarter, how are you seeing the market offtake after the recent headwinds that we had seen in Q1? And how do you see the rest of the year shaping up in terms of demand and growth across your properties?
If I kind of talk about the Q1 and which various teams, and thank you for observing that we heard some very strong set of numbers where we have seen a 20% growth in terms of RevPAR in Q1. This is despite the two weeks odd blip that we observed in the month of May on account of geopolitical tensions and operations at Jaipur . That being said, typically, as we have all seen in terms of cycles, H2 is significantly stronger, which means Q3 and Q4, and we see on the business on books and the funnel and the events that are happening in the country, in the locations that we are present in, we see a very strong runway ahead and a very strong finish to this balance of this year for FY26.
We are looking at closing towards mid to high teens in terms of overall growth for FY26.
Thank you. Ladies and gentlemen, in order to ensure that management is able to answer queries from all participants, kindly restrict your questions to two at a time. You may join back the queue for follow-up questions. We'll take our next question from the line of Karan Khanna from Ambit Capital. Please go ahead.
Yeah. Hi. Thanks for the opportunity and congrats on a great quarter. So Anuraag, my first question to you, well, you did speak about the trends that you're seeing in the current quarter as well. But more importantly, if you think about the FTA recovery, which has been a challenge for the industry, how are the trends playing out for you, particularly in the July, August, September quarter? And more importantly, as we enter the season-heavy period of second half, what are the expectations going into that?
I think as far as FTA is concerned, I touched upon it. Nearly 50% of our business is international for Leela, and India, as a country today, we still haven't caught up on the pre-COVID levels when it comes to foreign tourist arrivals. But we see, based on the bookings and the popular offtake of certain marquee products like the Leela Palace Trail that we launched last year, the Arc at Pichola that we launched last year, a very high-end premium luxury product. We are expecting the H2 of this year, which is typically the FTA season, from October to the end of March, to be a very high robust season in terms of FTA arrivals, and we are already seeing early-stage expressions of interest and long lead bookings coming our way. Plus, this is also the season when we get international incentives and delegations, so we don't see that.
Rather, we see that as an opportunity because the baseline has changed post-COVID. So we see that as a lot of headroom of opportunity because this international business, not only they stay longer, they typically tend to spend $10-$20 more depending on locations, and they consume and spend more money on overall F&B and wellness spendings and transportation.
Sure. And just looking at the occupancies for FY25, it stood at 65%. How should we think about scope for increase here given that you have a mix between leisure and business properties where demand will vary greatly based on seasonality for leisure and working days for business hotels?
So as far as occupancy is concerned, we have made a few shifts in terms of our internal strategy and market segmentation, which have yielded very well for us. There's a lot of investment that has happened in terms of driving direct business, which contributes nearly two-thirds of our total business. So whether it's our city hotels or our resort hotels, we definitely believe that our occupancy is recovering closer to 70, early 70s towards the end of this year, and with significant growth in ADR as well.
Sure. So second question, well, in one of your slides, you've guided for a mid-to-high teens sort of an EBITDA growth in FY26. But given that most of your growth assets will come on stream by FY28, how should we think about, let's say, FY26, 27, and 28 growth numbers for the company?
So I think I've already spoken about the same-store. All our Leela hotels, whether resorts or city hotels, are in such iconic locations and in such micro markets where there's no real supply coming in, and the demand is growing in double-digit. That being said, we have also invested a lot back into value drivers in each of our assets. For instance, we are adding a new ballroom in Leela Palace, New Delhi. We added one ballroom in Leela Palace, Bangalore, last year. We have upgraded and relaunched our restaurants in Leela Palace, New Delhi, the Qube and Le Cirque. There's a new F&B venue opening in Bangalore. Luxury retail is getting repurposed as we speak with some global international luxury brands creating an entire ecosystem in Leela Palace, Bangalore. We are launching a world-class spa.
New plunge pool villas have been launched in Leela Palace, Bangalore, and so on and so forth. So these asset enhancements that we have done across the portfolio of our hotels will create a compounding effect on the business because they create a brand stickiness. The most important launch, which I would say that we are doing this year, and Ravi alluded to it, is the launch of members-only, by invitation-only, private members club called The Arc. We are launching this year itself. We are launching in three of our hotels, starting with the Leela Palace, Bangalore, where we are targeting thought leaders and trailblazers, and this is going to be a great offering from the Leela portfolio. This creates a compounding effect for the rest of our business. On the expansion side, two of our hotels will open in FY27.
So in between now and 2028, we have two openings. The Leela Luxury Residences would be opening. The Leela Sikkim would be opening. And we will have all these clubs that we spoke about coming to life, and all the value drivers across all our hotels would have been stabilized. Enough is happening between now and 2028.
Thank you. We request you to join back the queue for follow-up questions. Next question is from the line of Murtuza Arsiwalla from Kotak Securities. Please go ahead.
Yeah. I've got two questions. One is for Ravi. So actually, more on the bookkeeping, if you have dropped in the depreciation cost year-on-year for Q1 versus Q1 2025, anything to explain that drop in depreciation because the base would be the same assets? Second is, obviously, some of the previous participants have talked about Jaipur and Udaipur, RevPAR, and you talked about how much do you think would have been the impact still of the tensions? A lot of the peers who have reported so far referred to the sort of border tensions in terms of impacting ARR and RevPAR. Do you think these numbers could have been even stronger than what it would have or how much had those tensions not been there? So those are my two questions.
I think I will take the RevPAR, and then I'll hand over to Ravi to talk about the depreciation. If I give you a month-by-month breakup of Q1, when you spoke about these border tensions and probably what other companies have been reporting in terms of cancellations, luxury as a segment is relatively inelastic and bounces back. This we have seen over various cycles, and this is not just a Leela-specific phenomena. It's a global phenomena if you look at any luxury brand across segments, and I think Leela has also, through our numbers, you can see that luxury has more resilience than any other segment. That being said, there was a blip for around two odd weeks in the month of May, wherein we had high double-digit growth, nearly 20% growth in the month of April as well as June.
So whether it's Jaipur or Udaipur, there is a very strong Indian domestic demand of luxury consumers. And the experiences that we have created over the last few years, the programming that we have brought into play, for instance, each of our hotels, we have made them extremely family-friendly, attracting the new consumer behavior of multi-generational travelers. We are creating villas in Jaipur as we speak and new kids' clubs in Jaipur and Udaipur to ensure that we have families who come for staycations. They drive down for two to three nights, and they have great experiences and programming to back them up to focus on length of stay to insulate us from the seasonality and some of these blips that can happen. So on the RevPAR side.
And just to add, if you look at Jaipur, we have increased our occupancy in the quarter one by 16.5%. We did 59% occupancy in Jaipur. That was almost a 6.5% increase. So that's how our hotels are ramping because we have put in the entire FIT strategy in our resort hotels. And on the depreciation point, the brand was in the Schloss HMA, which is the corporate company. This brand got amortized over a period of five years, with the last year being FY25. That's the main reason for the decrease in the depreciation. And the similar depreciation number would continue in the coming quarters, except for the value drivers that we are now doing, that will get capitalized and will have some incremental depreciation amount quarter by quarter.
Sure. So basically, the brand amortization has been completed last year. That led to the drop. And as you capitalize more assets or other investments, that's it. Okay. Thank you so much.
Thank you. We'll take our next question from the line of Binay Singh from Morgan Stanley. Please go ahead.
Hi, team. Congratulations on a good set of numbers. Two questions, actually. First is, we talked about expansion, including international expansion. Is there any debt-to-EBITDA ratio that you would not want to cross, like any sort of guardrails or any benchmarks that you sort of kept in mind?
So Binay, thanks for the question. With our contracted pipeline or even with the active pipeline we have both in India and internationally, our intention is to have an average net debt-to-EBITDA of around 2.5x, sometimes higher or lower, but average around 2.5x. That's the threshold which we have in our mind, Binay.
Okay. That is helpful. Secondly, this 2030 guidance that we've given on the EBITDA side, so does it include, if you could, A, give us the key drivers of that? B, does it include the BKC property that you've talked about in the presentation? And C, does it include other income, or is it without other income, so these three points. Thanks.
So first of all, Binay, what we have done in this quarter, just to clarify on the other income, we moved all our operating income to revenue from operation. Right now, other income only includes treasury income. So now we have made our accounts much cleaner for you guys to refer to. The INR 2,000 crores has a very small amount of treasury that is generated because of some working capital kept. So it's a very insignificant amount of treasury income, the INR 2,000 crores. Now, how we would achieve the guidance that we have given for INR 2,000 crores? That's first, safely in the same-store growth, where we'll drive our occupancy and ADR and RevPAR to high double digits. And with our operating leverage, we'll have around a mid-teens of EBITDA growth, plus the value driver which Anuraag spoke about, the three clubs, the spa, the retail coming in.
All these will also add to the EBITDA. Plus, with the contracted pipeline of the five hotels, Agra, Ayodhya, Ranthambore, these five contracted pipelines, plus the two managed hotels, which is Sikkim and Mumbai, with these contracted pipeline and same-store, we'll double the EBITDA from INR 700 crores of FY25 to almost doubling it by FY30, and with the active pipeline, like the Leela BKC, which we just mentioned during our call, and the other active pipeline, we'll increase our EBITDA by another INR 500 crores, reaching almost INR 2,000 crores of EBITDA. To add on to what Ravi just mentioned, we are creating two new brand verticals, the Arc Club, which is coming in five locations, as well as the Leela Luxury Residences. We see a long runway ahead, especially looking at the market in India, looking at the way the offices are moving and what's happening in the real estate economy.
We definitely see there's a lot of potential and tailwinds behind expanding the Leela Luxury Residences model to other cities as well, starting with the first one in Mumbai, as well as for the Arc Club.
Right. Right. So that is helpful. So just to sum up, it's basically 15% same-store EBITDA growth, and the remaining is coming from new properties to reach this number of INR 20 billion or so, right? And Mumbai is included in this. The BKC is included in this target, EBITDA target.
This is a guidance, not a target. This is a guidance that we have for the five years how we would track to.
Great. Great. Great. Thanks, team, and best wishes for future quarters.
Thank you. Next question is from the line of Ajay Kumar from HSBC. Please go ahead.
Yeah. Hi. Thanks for taking my question. So first of all, I just want to understand that about your BKC construction. So basically, I think most of the hotel operators and owners have been talking about sort of expensive land and high cost of capital as one of the biggest hurdles, especially in greenfield capacity addition and in the cities like Mumbai. Payback period is very high. So what are your thoughts on that? I mean, is it like because they are so high that it is still feasible to have a hotel constructed in BKC, or is there anything else? So just want to understand how you see the economics, especially in the places like BKC where land must be very, very expensive.
Just thank you for the question. Very interesting. Just to give you clarity, the land that we have acquired, it's already at a very attractive basis of 20%-25% less than the sale deeds that are in the market, and the information is a public domain. Also, just to give you some more statistics about the BKC market, BKC has 39 keys per million sq ft of space versus 230 in Delhi and 185 in Bangalore. There's a major supply gap there. Also, it's backed by strong demand fundamentals, including India's largest convention center and rising commercial density. There's already a huge potential for the hotel to have a very high occupancy and the ADR because of the demand-supply gap. There is no luxury hotel, no supply coming from 2011, only 738 keys, which is in the BKC center.
So as a result, the fundamentals are very strong, and the returns are also attractive, and that's the reason we have gone for this project.
Right. Okay. Fine. So you mean that because of high ARRs and the sort of underpenetration, this makes the project quite feasible? That's how we should look at it, right?
See, I mean, I just come in here. The last hotel that opened in BKC was opened in 2011. If you look at today's BKC with the NMACC, with the office consumption, and the global Fortune 500 companies operating from this financial district, there's a long headroom for both occupancy and ADR to grow in this micro-market, and plus, as Ravi mentioned, our basis of cost was very realistic and reasonable and 25% lower than in this prime location on G Block that we have acquired.
Right. Okay. My second question is around your business. So you mentioned that 50% of your business comes from international markets. So on that note, I mean, if you see all the sort of international players, whether it's Marriott, whether it's InterContinental, everybody is sort of talking about increasing their presence in India, and everybody is talking about opening 1,000 hotels or whatever. Even InterGlobe talked about opening so many hotels along with Accor. So do you think, and when it comes to international inbound tourism, I think definitely Marriott and all those are sort of a preferred brand. So how do you think the competitive landscape could play or could have an impact on your business given the current circumstances and given how international brands are sort of targeting their presence in India?
Hi. This is Ankur. I was trying to chime in and answer your question on the BKC land first. If I may just come in here, can you hear me? This is Ankur.
Yeah. Yeah. I can.
Yeah. So two things. You mentioned, and it in a way segues into your question about the international brands as well. You've heard a lot of operators talk about land cost and land basis. What they don't have is the sponsorship that the Leela business has with the largest real estate alternative asset manager in the world, which has really come to light in this project where Brookfield and Brookfield Capital is partnering with the Leela business to create something unique, which is not available to most hotel standalone owners, operators, managers.
Which is also a segue into why we believe this is a very good opportunity because of the limited competition that business has from any other hotel brand, which is represented in a way that for the last decade and a half, no hotel has come up in the BKC districts, despite the district becoming one of the top destinations, not just in India, but globally. So I hope that is also something that we are able to provide as a promoter of the Leela business, which is very, very unique. And this is the first example of this. I would like to believe that many more examples will come, which will place us uniquely compared to any other competition that you may talk about.
The second part of your question, I would like to believe that everybody is talking about an asset-like model, which means that without investing a dollar, from thin air, people can create 1,000 hotels every year, which I don't think, realistically, on this call we can all believe that that's possible. Any which way, Leela has a unique business model which relies upon realistic targets, as well as a segment which is massively underpenetrated, which most of the names that you talked about are not able to target in a place like India, and secondly, where is the capital going to come from? It's, no pun intended, a billion-dollar question.
Right. Okay. Perfect. Thank you so much, and I wish you all the best.
Thank you. We'll take our next question from the line of Sumit Kumar from JM Financial. Please go ahead.
Hi. Good evening. Thanks for the detailed update and the fixed set of numbers. My first question was partly answered. For the growth of Udaipur, can you please break it down? What was led by occupancy and how much was India's growth?
Okay. The overall growth, as you can see on slide number 17, is 29%. You just give me a moment, and I'll give you the details. Yeah.
Sure. And my second question is on the Udaipur expansion. So do we have any update on that? What will be the completion timelines, as well as what kind of a product that will be similar to the existing offering, or will probably sort of position it maybe even at a much premium level?
So I'll quickly come to the new land, but I can just give you the details. The growth is coming 20% from ADR and nearly 4%-5% from occupancy in terms of the RevPAR that has happened growth of 29%. Now, this new land that we have acquired is sharing a common boundary wall with The Leela Palace in Udaipur. It's 1.8 acres of lake-facing land. As I mentioned earlier, we are doing design development and preparing the site right now in the final stages of getting all to build approvals. We are looking at developing 33 keys and a 10,000 sq ft banquet space. This is our opportunity to expand our premium inventory and capture a larger share of MICE business.
If you look at the demand-supply data points in Udaipur as well, we see a high double digits demand in that city from celebrations, MICE, international incentives, and very high-end exotic FIT movement. So we believe that this addition of 33 keys and this 10,000 sq ft of ballroom space and an additional restaurant will further strengthen our palace offering. And this particular hotel, all the rooms are going to be facing the lake. And with Leela typically, our room sizes are 30% higher than anybody else in luxury hospitality. We really believe this will complement our existing palace, as the new offering of the arc and Pichola has done on the other side of the lake adjacent to Leela.
This will also help us to increase our share in the luxury weddings and the MICE because we'll have multiple venues and additional ballrooms.
Okay. Any idea on when this will get completed? By '28, will that be shifted to you?
So, next 18-24 months, this will be operational, Sumit.
Okay. So we are at 88 rooms. There are some Leela rooms also coming, and then 33 on top of this. Correct?
So we'll be a total of 134 keys once we finish because yeah.
Okay. Yeah, and on the Udaipur road.
I request you to join back the queue, please, Sumit, as we have other participants waiting for their turn. Thank you.
Sure.
Next question is from the line of Prashant Biyani from Elara Securities. Please go ahead.
Yeah. Thank you for the opportunity. So sir, is it that two, two and a half years will be suffice for construction of own portfolio assets? I heard in the initial remarks that most of them are in the design stage, the first five months that we had discussed. So two, two and a half years would be suffice timeline for operationalization?
If I tell you, yeah. I mean, if you look at what we have been doing, our track record in terms of our design development and to execution, if you look at what has already been done, we have been achieving some real short and quick and quality timelines with a lot of efficiency. We have an in-house design development and technical services team. We work historically with some of the best partners and vendors, and we are very confident in terms of the timelines that we have declared of achieving all our project goals.
Sure. And for the clubs.
If I may just clarify, if I may just clarify, these are not new projects. They've been in the works for several years. What the timelines you see are from today onwards, and as we know, design approvals, etc., take a bunch of the time. The actual physical construction for the hotels that we are talking about in the short term, and some of these are repositioning of existing hotels like in Srinagar, and some are ground developments like the resorts in the wildlife, which have a shorter timeline. Of course, the BKC project will take four years, and some other projects might take even longer than that, but the track record of opening the Mumbai residences next year and followed by Sikkim and the other hotels to follow, that is the path that the company has guided us to.
And I believe that we have the right knowledge, track record, and the sponsorship to achieve that.
Sure. So for the clubs that will start by FY 27, three of them, I think we are starting by then, three or four. So how many members are we targeting for the clubs by FY 27?
By 2030, in the next five years, we're looking at around.
I was saying 27.
It's a phased one. See, the club is an aspirational product. It is the highest end of luxury. For an exact number, well, this is not a push sale. This is by invitation, and we are very, very mindful that this club is going to create a brand affinity and a brand extension for us. Our goal, which we believe we'll be achieving, is around 2,000 members over the next five years in a phased-out manner, but this is not a product that is going to be like our approach is to create experiences, programming, brand affinity, and create those privileges for all the guests who relate with Leela.
Typically, the guests generally hold more than one club membership at the luxury end?
The target audience who we have identified and who have shown a lot of interest. They may be holding global club memberships. They are very, very aware of what offerings to expect and what experiences, and this is what differentiates us from any other clubs that are operating today in the country.
Sure. And so on the BKC land or BKC hotel, as you have shown in the image, is it that the commercial tower will be beside Leela Palace, or they would be in the same tower, both of them?
This is the initial question.
I just come in here. Lots of people toy around with or assume that we can build multi-use towers. People with experience know that multi-use product in the same tower is very difficult. So there will be two separate towers here. One will be the commercial tower. One will be the hotel tower. So Leela's interest really lies in the hotel tower here. And as I mentioned earlier, Brookfield is the partner with the largest office portfolio in the world and the largest office portfolio in India. And this is the unique nature about this partnership. The benefits of the multi-use is available to both, and the experience of doing something like this is available to a very few handful of operators, developers, managers in the world. One of those being Brookfield and the Leela combination. Yeah. And just lastly, what will be the mix of our domestic and international guests?
I think I answered that earlier. Are you talking specifically about Mumbai or talking about at a portfolio company level? It's 50/50.
Company level. So in case it's 50/50, are we seeing any disruption due to the flight cancellations that we are seeing from Air India, all the widebody aircraft that they have canceled for now?
No. I think we answered that question earlier as well, but we haven't seen any disruption as our business is very strong and is relatively inelastic to the short-term disruptions, and if you've seen, our growth is 20% on RevPAR across not just every market, but every segment that we operate in. We have grown over 20%.
Thank you. We'll take our next question from the line of Suman Kumar from Motilal Oswal. Please go ahead. Sumit, please go ahead with your question. As there is no response, we'll move on to the next question from the line of Maulik Raja from Fresh Food. Please go ahead.
Yeah. Hi, sir.
Hello.
Hi. Hello. Yeah. Are you getting noise?
Yes.
Yes, sir. I would just like you to throw some light on, as I see that the operating side slightly declined by 6.21% year-on-year. Is it just due to seasonality or any other thing? And one other thing I want to ask is I read somewhere that currently occupancy is around 63%. And as you said that you are planning to get up to 70%. So it will be the max what we want to achieve or in future, we are expecting more occupancy than 70%?
Okay. So all our hotels have an occupancy right now between for this particular year. We're looking at early 70s on occupancy. But our hotels have headroom to grow. As I mentioned, the demand in those markets and those micro markets is high double digits, and there is no real supply coming. We have the highest guest experience score of 86, which makes Leela Hotels the automatic and the best address by choice for all our guests. There are a lot of investments. All our hotels have been renovated. A lot of capital was deployed over the last few years. So all our hotels' asset quality is spanking new. There is a lot of unleashed potential waiting, especially in terms of international business coming in. It has not yet reached a pre-COVID level.
India today, as a market, is still underserved, not just in supply, but also underserved when it comes to average daily rates compared to any other city in Asia-Pacific or in the Middle East. So there is a lot of headroom in terms of occupancy for growing in the hotels as well as average daily rates.
Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to management for closing comments. Over to you, sir.
Thank you all very much for joining us in this first-ever call post our listing, and I thank you all for your time that you have invested in this, listening to us and our story and the growth that Leela has delivered in the Q1. It's a very strong platform for us to start, and it has been a defining quarter for Schloss Bangalore. Not only have we delivered a strong operational and financial performance, strengthened our balance sheet, and taken meaningful strides in executing a long-term strategy, our differentiated luxury brand, a robust pipeline, and supportive industry tailwinds, we are very well positioned to build on this momentum and create sustained value for all our stakeholders. Thank you all very much. Thank you.
Thank you. On behalf of Schloss Bangalore Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.