Ladies and gentlemen, good day, and welcome to the Q4 FY 2026 earnings call of Leela Palaces Hotels & Resorts 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 this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Abhishek Agarwal from The Leela. Thank you, and over to you, sir.
Thank you, operator. Good evening, everyone. I'm Abhishek Agarwal, Senior VP FP&A and Investor Relations. Welcome to the global earnings call for the Q4 and FY 2026 results of Leela Palaces Hotels & Resorts Limited, India's only pure play luxury hospitality company. We have published our results and uploaded the investor presentation on exchanges earlier today, and you can also find it on the company website www.theleela.com/investors. Before we start, a disclaimer. We would like to inform you that the management may make certain comments on this call that one could deem forward-looking statements. Specifically, the financial guidance and pro forma information that we will provide on this call are management estimates based on certain assumptions and have not been subjected to any audit, review or examination procedure. The company does not guarantee these statements and is not obliged to update them at any time.
Participants are cautioned not to place undue reliance on these forward-looking statements while making their investment decisions. To answer your questions and to take you through the story, we have the senior management of The Leela on the conference call. Joining me today are Mr. Anuraag Bhatnagar, Whole-time Director and Chief Executive Officer, and Mr. Ravi Shankar, Head of Asset Management and Chief Financial Officer. Without further ado, I would like to hand over the call to Mr. Bhatnagar. Over to you, Anuraag.
Thank you. Thank you, Abhishek. Pleased to have you with us as we further strengthen how we engage with our stakeholders alongside the next phase of The Leela's growth. Good evening, everyone, thank you for joining us. The Leela for FY 2026 has been a transformational year, defined by strong financial and operational performance, disciplined and consistent execution, and sustained leadership in Indian luxury hospitality. We have outpaced the industry in growth and margins also had the highest ever annual key expansions in our portfolio. Importantly, this performance was delivered in a year characterized by elevated external volatility, underscoring the resilience of both our brand and our operating platform. Let me begin with the macro context and the key performance highlights in that context. FY 2026 was a year in which the Indian hotel industry navigated multiple health headwinds across aviation disruptions and geopolitical events.
Against the backdrop of the Middle East conflict in Q4 FY 2026, The Leela delivered double-digit growth in operating revenue and operating EBITDA. This performance was underpinned by a 15% year-on-year increase in ADR, reflecting The Leela's strong consumer pull, brand pricing power and disciplined execution. Together, these results reaffirm the brand's premium positioning and its ability to deliver superior commercial outcomes even in a challenging operating environment. Our business has been rooted in the thesis that our demand is more resilient, the previous quarter underscores the same. While occupancy in March took a hit due to international travel being disrupted, we continue to grow ADRs in double digits. Domestic demand remains robust, and we are focused on it to offset the impact on international inbounds.
In past instances of disruption like Operation Sindoor, occupancy bounced back quickly to previous levels, and we remain confident that the current impact will get mitigated once the situation normalizes. The structural drivers of luxury hospitality demand in India remain firmly intact, and the outlook continues to be compelling, supported by rising aspirational spending, wealth creation, and a growing cohort of experiential luxury consumers. Importantly, new luxury supply in The Leela's key micro market remains constrained. This has enabled us to consistently outperform the market, drive market share gains, and sustain improvements in both occupancy and pricing. Together, these factors underpin strong same-store growth over the medium to long term. Taking you through the highlights of FY 2026. At The Leela, guest experience is the bedrock of all performance outcomes and our defining differentiator.
For FY 2026, we recorded a net promoter score of 86, maintaining our position as the highest rated luxury hospitality brand in India. Importantly, we extended our lead to 12 points above the Asia-Pacific luxury industry average. This sustained multiyear outperformance reflects the consistency of our service delivery and the depth of our brand equity directly supporting long-term pricing power. We also delivered significant market share gains, continuing to outperform the broader luxury segment in India. In FY 2026, The Leela achieved 11 points increase in market share with our RevPAR index strengthening to 150. Notably, our RevPAR growth exceeded industry by more than 2x , supported by double-digit growth and market share expansion across both key city markets and leisure destinations.
This translates into a RevPAR premium of approximately INR 6,000 over the India luxury segment. Overall, in FY 2026, our same store RevPAR increased 14%, supported by double-digit growth across all five owned palaces and an overall 13% increase in ADR. The operating leverage from this pricing-led growth resulted in a 19% year-on-year increase in operating EBITDA, with margin expanding by 167 basis points to a best-in-class 49%. This operating momentum culminated in a record profit after tax of INR 403 crores in FY 2026, representing a decisive turnaround from a PAT of INR 48 crores in FY 2025. This 8.5x increase in profitability underscores the structural strengthening of the business, driven by sustained same-store RevPAR growth, targeted asset enhancements, key portfolio additions, and reduction in finance costs.
From an expansion standpoint, FY 2026 marked The Leela's fastest pace of expansion ever, with 23% growth in keys, totaling to a visibility of 966 additional keys. These additions came across Mumbai BKC, Dubai, Jaisalmer, and Coorg, and will strengthen our presence across marquee urban and leisure destinations. Our net debt reduced by 50%, with net debt to EBITDA now at a conservative 1.6x in FY 2026. Supported by a strong double A credit rating and strong cash conversion, we now operate with meaningful financial headroom to fund expansion and manage future CapEx while maintaining flexibility across cycles. Giving you some more color into our operating performance and growth plans. Our non-room revenue, our focus on F&B excellence continued to deliver results in FY 2026. F&B revenues grew 15% year-on-year, driven by strong performance across both restaurants and banqueting.
This growth was supported by approximately 13% increase in non-resident footfalls across the city hotels, reflecting the increasing relevance of The Leela as a destination for dining, events, and experiences beyond resident guests. Consequently, non-resident covers now constitute 54% of the total cover mix at our city hotels. We have continued our progress on strategic growth and expansion of The Leela footprint. During fourth quarter of FY 2026, The Leela strengthened its leisure portfolio with the acquisition of 71 key ultra-luxury all-villa operational resort in Coorg, to be unveiled as The Leela Coorg Forest Sanctuary, making our entry into nature immersive and wellness-anchored hospitality. We are very excited about this hotel addition, as it's a unique hotel built to Leela's standards across 76 acres and with 25 rooms having heated pools. The programming of this hotel will offer multi-day experiences for a multi-generational family.
This acquisition reinforces our strategy of disciplined, high-return expansion into premium leisure destinations and underscores our focus on value-accretive growth. In addition, we are all set to open The Leela Jaisalmer and The Leela Luxury Residences Mumbai in FY 2027. We continue to deliver growth in our portfolio additions. The Leela Hyderabad, a managed hotel which opened in FY 2025, demonstrated strong operating leverage by achieving healthy margin within its first year of operations, operating at 62% occupancy in first fiscal year of launch and delivering an average daily rate which is 1.24x compared to its peer set. We continue to actively evaluate value accretive opportunities that complement our portfolio and reinforce The Leela's positioning across India's most iconic and high-growth markets. Our greenfield development agenda continues to progress steadily.
Construction activity and execution milestones are advancing on plan across Bandhavgarh, Srinagar, Sikkim, Agra, Ayodhya, and Ranthambore, with progress across design development, demolition, excavation, piling, and site preparation and structural works. The Leela continues to be recognized as a leader in luxury hospitality across global and domestic platforms. We are once again voted India's best hotel group at the Travel + Leisure India's Best Awards 2025 for the sixth consecutive year, which is a strong endorsement of our sustained consumer preference. We also received the Michelin Key 2025 for The Leela Palace New Delhi, The Leela Palace Jaipur, and The Leela Palace Chennai, placing these hotels in a globally benchmarked league. On the F&B front, ZLB23 at The Leela Palace Bengaluru continues to feature across 30 Best Bars in India and Asia's 50 Best Bars 2025, alongside continued recognition for Le Cirque, The Library Bar, and Megu.
Overall, these recognitions reinforce the strength of our brand and the consistency of our delivery across key experiential pillars. People remain at the heart of our success. During FY 2026, we reinforced our position as an employer of choice through industry-leading talent development initiatives and onboarded 45 future leaders through our Leela Leadership Development Program. This year, we also achieved Great Place to Work recognition. We are also preparing for the launch of The Leela Center of Excellence, our dedicated learning infrastructure.
During FY 2026, we remained committed to our ESG philosophy, creating long-term value while delivering experiences that are both luxurious and responsible. We commissioned 2.25 MW of solar capacity at The Leela Palace Chennai, increasing our green energy usage to 67% of our total consumption, while reducing power and fuel costs to 3% of operating revenues from 3.3% in FY 2025, enhancing long-term operating efficiency. We advanced our social impact initiatives by supporting the livelihoods of 1,000+ women through upcycling 3 mt of floral waste, sourcing 45% of our tea from carbon neutral estates, and transitioning to 100% artisan-made jute bags, reinforcing our commitment to responsible luxuries. This is a very important year for us.
As we enter the new financial year, we are very pleased to share with you that The Leela has now completed four decades of customer love and trust. Four decades of true Indian luxury. The 40th year serves as a strategic platform to reinforce the brand's leadership in true Indian luxury, leveraging four decades of heritage and excellence. We will deepen guest engagement, strengthen brand visibility, and accelerate premiumization through curio-curated experiences and differentiated storytelling across the portfolio. I will now hand over the call to Mr. Ravi Shankar, our CFO and Head of Asset Management, to take you through the financial highlights for the quarter and the year ended 31st March 2026.
Thank you, Anuraag. Good evening, everyone. Let me take you through the financial performance for the quarter and the year ended March 31, 2026. Q4 FY 2026 once again highlighted the strength, efficiency, and the resilience of The Leela platform. In line with the strong ADR momentum, operating revenue increased 12% YoY to INR 484 crores, while the operating EBITDA rose 13% YoY to INR 266 crores, delivering a best-in-class EBITDA margin of 55%, an expansion of 57 basis points. PAT increased from INR 117 crores in Q4 FY 2025 to INR 172 crores. Turning to FY 2026 performance, the company reported a robust all-around performance driven by improvement in both ADR and occupancy. Strong momentum in the retail and group segment supported a double-digit RevPAR growth across both city hotels and resort properties.
This drove operating revenue up 15% YoY to INR 1,527 crores. Operating EBITDA rose 19% YoY to INR 743 crores, with margin expanding by 167 basis points to 49%, again best in class. Over 60% of the incremental revenue converted to operating EBITDA, reflecting robust operating leverage and disciplined cost management. Active asset management continues to be a key pillar of value creation at The Leela, with a focus on enhancing guest experience, unlocking incremental revenue streams and EBITDA, and improving the asset level returns. During FY 2026, we progressed multiple value accretive initiatives across the portfolio, including: launch of The Arq by The Leela at The Leela Palace Bengaluru, our invite-only ultra-luxury membership club.
With the development work at advanced stages, Arq is slated to open in New Delhi in Q1 FY 2027 and in Chennai in Q2 FY 2027, followed by Mumbai in the later part of the year, expanding this high engagement platform across key markets. We also refurbished and added seven F&B outlets across The Leela Palace New Delhi, Jaipur and other locations. We relaunched approximately 334,000 sq ft of high-end retail space at The Leela Palace Bengaluru, 100% occupied. Reimagined spa and wellness offering at The Leela Palace Jaipur. Our wellness initiatives are being expanded to Bengaluru as well. Introduction of exclusive kids club at The Leela Palace Jaipur and Udaipur. Conversion of select villas into premium private villas catering to a multi-generational travel at The Leela Palace Jaipur.
These initiatives are being instituted with disciplined capital allocation and are targeted to deliver a projected yield on cost of approx 25%, reinforcing our focus on driving higher returns from existing assets while strengthening the long-term quality and durability of the earnings. To summarize, FY 2026 demonstrated The Leela ability to outperform the industry with resilience and consistency despite geopolitical challenges. The continued expansion of The Leela footprint takes our portfolio to over 5,200 luxury keys across 24 properties, planning 15 operational hotels and nine in the pipeline. Our balanced mix of owned and managed keys enables disciplined capital deployment while expanding its reach and scale. Before concluding, we would like to thank all our associates for their unwavering commitment to excellence and guest delight.
Thanks, Anuraag and Ravi. Operator, we can start the Q&A session now.
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone 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. Our first question comes from the line of Binay Singh from Morgan Stanley. Please go ahead.
Hi, team. Congrats for good set of numbers, given the environment we are in. Could you throw a bit more light on how were trends in March? Because we see quite a sharp drop in occupancy, whereas the war impact would have been only there for one month. Could you specifically share some trends on March, and how is April, May also trending? That will be the first question.
Hi, Binay. Good evening. The West Asia war has had an impact on travel as we all know, both inbound and outbound. Just to give some context, Leela has almost a 50%/50% share in terms of both international and domestic business. Our domestic business has not been impacted at all, while some part of our international business has been impacted from our key source market. Just for context, despite the disruption for the overall quarter, we have achieved a 15% ADR growth and a 6% RevPAR growth year-on-year, despite the disruption in the month of March. What we have also done, we have strengthened our domestic customer base, which has allowed our occupancy in April to recover, to your question, to similar levels as last year and healthy RevPAR growth versus same time last year.
This is also based on the strength of our robust sales and distribution channels in India, where we have over 300% sales associates, nine regional sales offices and revenue members on the ground that control nearly 2/3 of our revenue, which comes from our direct channels. We continue to be very nimble, keep watching the situation very closely, and keep working with agility on all the segmentation. We expect the domestic market to remain a strong opportunity for future growth as well as we approach the holiday season, while the inbound presents a future opportunity given the strong brand recall and the brand love that we have from our key source markets for stabilization.
Thanks for that. Just to sort of, any numbers on how March is. March would have been down double-digit for us, and then April, are we talking about high single-digit RevPAR growth?
March, yes, there was an impact on occupancy, I would say because some of our key source markets like U.S. and U.K., there was an impact in terms of occupancy. Our resilience on our pricing power and all that allowed us to mitigate that impact of occupancy through our ADR. As I mentioned, in April, we have seen the pace come back to same time last year levels, we definitely expect maybe a high single digit or early double digit growth in the terms in the month of April.
Oh, okay. We are saying that the high single-digit RevPAR growth in the month of April, which in a way is a good outcome compared to March.
Binay, just to add, May and June will be very exceptional good performance months for us. For the quarter, we will do a double-digit growth in revenues and EBITDA.
Binay, for context, if you look at it, the only segment for us that was impacted was international. H1 typically, if you lock top of the lift next six months, is almost one-third of H2, you know, in terms of-.
Right.
... the impact that it has on our overall business plan. Yeah. We are mitigating in that sense. Yeah.
International contribution also would be lower for you in this quarter, right? Given the weather.
It's dropped from a 50% share to around 40% odd share, where our domestic has risen to approximately 60%.
Right. Right. Secondly, team, could you share the management fees number for the quarter and the year?
The management fees for the quarter. For the full year, we have done approx management fees of INR 35 crores, we have done. We are looking for the next year we will have a growth again because our managed hotels will have ramped up. There will be an improvement in the whole management fees because our Hyderabad hotel has ramped up to almost 63% occupancy, while the managed hotels, some of the key hotels are doing well. That will have a double-digit growth in our management fees as we are moving forward.
Okay, team. I'll come back in the queue.
Thank you. The next question comes from the line of Karan from Ambit Capital. Please go ahead.
Yeah. Hi. Thanks for the opportunity. Just a couple of questions from my side. Anuraag, firstly, have you seen any meaningful cancellations or postponements in MICE events due to the evolving geopolitical environment? Are these events getting deferred into upcoming quarters or are being lost altogether?
Karan, thanks. Great question. We obviously had cancellations in MICE events that were booked across the portfolio in the month of March because of all the geopolitical tensions. What we did, we have given them credit notes and deferred them between the next nine to six months. We expect many of them, a very high pecentage of them coming back to us in the next few quarters.
Sure. Secondly, on the Coorg acquisition, how has been the initial response and when you say INR 170 crores of stabilized revenue, what kind of ARR are you penciling in for that number? Also, does that include the 19 villa expansion in phase I?
Coorg, Karan, just to take you back, is like we have recently acquired Coorg on 18th of March, as you know. Right now our focus is to, whilst the real estate is amazing and the asset quality is extremely good, it's fully built up on Leela standards with a, with a 7-acre lake and an all-villa property. Right now there's a lot of work happening, a lot of training happening in terms of soft aspects, something that Leela is known for. This is our first foray into a forest sanctuary experiential destination product. We are very, very excited about it. The, these are right now simulations and early guest feedback has been very, very positive on the asset, and we have not rebranded it yet.
There's a site visit and evaluation happening as we progress. We are looking forward to rebrand it at the end of this quarter or early next quarter. As a full-fledged The Leela Forest Sanctuary, that is when we expect all our distribution to start kicking in, with all The Leela, you know, in terms of loyalty programs and, you know, key customers and all of that. The initial response and the guest feedback has been very, very encouraging, although it's not yet been rebranded. Several touch points and experiential which are catering to the next generation travelers, MICE, wellness-seeking travelers, and even people who are seeking longer itineraries to experience the entire ecosystem and the destination. This is the kind of funnel that we're already building up going forward.
To answer your question in terms of expansion, Once we open the hotel and stabilize, we'll definitely evaluate, because just to remind you, only 20 acres out of the 76 acres has been used up right now. We definitely see an opportunity to do that, but we'll come back to you at the right time, because right now our focus is to open it on brand and open it soon as The Leela Forest Sanctuary.
Sure. Last question to you, Ravi. For Ayodhya, Agra, and Ranthambore, we are now looking at CY 2028 instead of FY 2028. Is there a slight delay here? Also if you could talk a bit about the cost inflation that you might be seeing in terms of construction costs, then how are you looking at the CapEx number for FY 2027 and 2028?
Just to answer in terms of these three hotels, we have just, you know, put CY. This is one or two quarters of construction risk always moves because of the approval when you open the hotel. All the approvals of all these three hotels are already in place. The funding is already in place. The construction have started. That's the reason we have, you know, it's all on pace. The CapEx numbers for these hotels remains the same. There's no escalation in the cost, [Karan]. Numbers remains the same.
Great. Thanks, Ravi. Thanks, Anuraag, and all the best.
Thanks.
Thank you. The next question comes from the line of Dipak Saha from Nirmal Bang Institutional Equities. Please go ahead.
Yeah. Thanks for the opportunity. First question is, if you can highlight, overall revenue growth, mid-double digit and RevPAR growth 6%. The faster element of growth is coming from F&B or management fees for the quarter?
You know, F&B also contributes 40% of the hotel revenue. If you see our F&B banquet grow by more than 10%, F&B is close to a double-digit growth. Even our managed hotel income has also improved with The Leela Hyderabad ramping up to the full potential of almost 63% and ADR growth almost 1.2x of the market. We have also got additional, you know, HMA fees from our hotels because of the contractual contract terms that we have. As a result, we have been able to get a double-digit revenue and EBITDA growth.
Just to follow up on that, sir. In the F&B growth side, the non-guest footfalls are higher, I mean, are quite significant, in alignment with what we saw last quarter?
Yes. Our non-resident covers have increased almost 9%-10% for the quarter. For the full year they have almost grown by 12%. Our focus continues in driving both non-resident covers and growing our in-house capture ratio.
See, Mr. Saha.
One last quick.
Sorry, I'd just like to add something to what Ravi mentioned. If you recollect, in every quarter we have been saying that Leela, our biggest differentiator is the luxury ecosystem. We give as much importance to food and beverage experiences and dining programs as we do to the rest of our business. F&B is nearly 40% of our business, which has grown by 15%, as Ravi mentioned, and a very high percentage of non-resident footfalls across all our events and spaces and restaurants.
Got it. That's helpful. One last question. On the Dubai side, I know it's very early and dependent on lot of things beyond our control. Just from taking over that particular property, do we have any, you know, plans in terms of fast-forwarding or delaying? What's the status there in terms of taking it over and upgrading it to a Leela brand? Is there any change compared to where we were earlier?
No change in our plans. Firstly, I'd like to just remind everyone that everyone is safe on the ground, and our physical asset has not been impacted at all. It's also worth noting that we are a 25% shareholder there, and impact to our larger business plan is minimal. We are also fortunate to have a strong capital partner, Brookfield, who's the remaining 75% owner. None of our plans have been impacted because of this geopolitical events. It's very hard to predict how these events will pan out in the future and what the recovery will look like. One thing we are very clear about is that the new supply in Dubai is going to be very muted in the near and long term, which will eventually create a very positive fundamental in the long run.
I'm sure you've seen a lot of headlines in the market regarding hotels shutting down in Dubai or refurbishments in the near term and long term. While that hotel continues to remain operational and we are focused on breaking even operationally at this stage, there could be an opportunity for us to take a larger market share when the market recovers. Our plan is to start a refurbishment work, this was our original plan as well, by the end of this calendar year, which we would then accelerate and reopen and launch the property in 2028 under The Leela brand. By this time, we are hopeful, I mean, we are talking of like significant 12 to 15 months from now that we are hopeful that this market would have seen a recovery.
Regarding residential sales, which was a part of our business plan, we had budgeted sufficient time to execute the sales over the next two, three years.
Got it. Thank you. That's really helpful, and all the best for FY 2027. Thank you.
Thank you. The next question comes from the line of Girish Choudhary from Avendus Spark. Please go ahead.
Yeah. Hi, good evening. Thanks for the opportunity. Firstly, on Coorg, I mean, regarding your assumptions of INR 165 crore-INR 175 crore stabilized revenues, when do you think this can be achieved in year one or year two? As a follow-up, for the 19 villas which are expected to come up, any CapEx number and when will that be spent?
The INR 165 crores of revenue numbers includes the 19 villas that we had planned for phase II. This number will be achieved in the year four when those 19 villas will also come into play. The CapEx that we have planned for those additional villas are around INR 21 crores that we would spend to make those 19 villas.
Okay. Got it. Just on the occupancies, how should we look at for fiscal 2027 and the blended occupancies for the year, fiscal 2026 were 69%. How should we see between your city properties and the resorts? For fiscal 2026, we saw a meaningful improvement in occupancies for resort properties. How should we see for FY 2027?
Occupancy for FY 2027 will be in early 70%, for sure, as the city hotels will do in mid-70% and resorts will do in, you know, mid-60% to late 60%.
Noted. Thank you.
Thank you. The next question comes from the line of Akash from Nomura Holdings. Please go ahead.
Hi, am I audible?
Yes.
Yes, Akash.
Yeah, hi. Congratulations on great performance. Sir, just to run again on the Q4 FY 2026 numbers. I think this time, room and F&B revenue numbers were not pinned down in the PPT. Could we just get the exact room and F&B revenue for Q4 FY 2026? Room, F&B and HMA fees.
You know, maybe we can collect on a separate call to give you deep dive numbers on the rooms and F&B and HMA. What we have spoken earlier that rooms grew by, you know, for the quarter four by almost 6%. F&B grew by almost double-digit numbers, and HMA, other income also grew by double-digit numbers.
Understood. How much revenue would we get from the Coorg acquisition in FY 2027? What kind of top line are we seeing from that hotel specifically?
This will be our first operating year, where we are right now working on the whole, the rebanding process, and we will be doing the occupancy, you know, in early 40%. For the first full year, we will do somewhere around INR 65 crore-INR 70 crore will be the first year of revenue. Very healthy EBITDA margins will do as we do in our Leela portfolio hotels.
Understood, sir.
Which will be almost 50%-55%, which we do for other resort hotels in our portfolio.
Understood. That's all the question I had. Thank you.
Thank you. The next question comes from the line of Abhay Khaitan from Axis Capital. Please go ahead.
Yeah. Thank you for the opportunity. Firstly, on the Q4 performance, if you can help break the RevPAR growth of 6% in city hotels and resort hotels. Also for April, you mentioned that the growth is actually tracking for a single-digit growth. There also are we seeing like a broad-based growth across city or resort, or is this one segment better than the other?
If we talk about the occupancy, Abhay, you know, we did an occupancy, you know, growth. At quarter four FY 2026 we were 22%. Last we did 78%, that was 6%. That was mainly because of the war impact. If the war cancellation would not happen, we would have done similar occupancy, a little more than what we did for quarter four FY 2025. If you look at the ADR grew by almost 15%. From INR 27,000 we went to INR 32,000. As a result, the RevPAR was 6% because of the occupancy drop.
The occupancy has dropped in our city hotels, which had a larger share of international business. I just want to reiterate that the only sub-segment of demand that got impacted because of the war was our international business from our key source markets.
We see that dampening as we go forward, and we see that not reflecting in the future pace of bookings. Our resorts were insulated and resorts continue to, like Ravi mentioned earlier, May and June we see a very strong rebound happening in resorts. Even in April we see that, you know, it getting this compression getting offset even in our city hotels.
Understood. That is very helpful. My second question is again follow-up on what you mentioned right now. Given that, if the international, travelers are sort of offset by higher domestic, do we see some risk to other revenues or the F&B revenues and therefore on the margin side, or do we expect that to remain the same YOY?
Not really. What we have seen over the last few years, especially at The Leela, we can talk with confidence basis our last eight quarters, that our domestic travelers travel as much, they stay as long, whilst the international business has a larger, longer length of stay. Typically if you come from long-haul markets like the U.S., you would probably stay for 3.5 to four nights, where the average domestic traveler would stay for 2.5 nights. The spending on F&B, the spending on SE revenue is the same.
You know, going back, given the brand love and the recall that we have in international markets, Leela has always been voted as one of the finest luxury brands in the world consistently by their users and the customers. We expect when the international business starts coming back to its normal state, we'll be the first to pick up and bounce from there, which gives us another layer of opportunity.
Also, if you see our non-resident covers, those are growing almost 12% YoY. That also helps in driving our F&B revenue, even if you have a slightly lower international mix.
Great. That is very helpful. Thank you.
Thank you. The next question comes from the line of Vaibhav Muley from Haitong India Securities. Please go ahead.
Hi, sir. Thanks for the opportunity, and congratulations on a strong set of numbers, especially in a weak demand period. My first question was on our revenue growth. We reported RevPAR growth of 6%, while revenue has grown by 14% year-on-year. I just wanted to understand the bridge between the room revenue growing by 6%, F&B growing by 9%-10%, while HMA again is, as you said, would be in low double digits. Have we seen additional delta coming in from Coorg Resort, which is pretty significant? And is there also a delta that's coming in from our commercial leased area Bangalore property?
We already explained, you know, the rationale for the increase in the double-digit numbers. If you look at the room revenue growth hasn't been really impacted by 6% occupancy decline due to the war. F&B contributes 40% of the total hotel revenue, which grow by double digit. We have also seen the HMA fees grow double digit in some of our managed properties based on our management contracts and ramp up of recently opened hotels like Hyderabad. We have seen a strong growth in HMA fees in this quarter and expect this trajectory to continue. This is on the back of the ramp up in our performance across several managed properties, along with our ability to charge higher fees in some cases where we are in a strategic money deposit.
Understood, sir. Secondly, on Dubai asset, for Palm Jumeirah Resort, since current environment is uncertain and, we have seen real estate prices plummeting in Dubai market itself, is there a possibility that we may have to take any sort of write-offs on our investment in Dubai in the near term if the situation persists for a longer period? Is that a possibility?
We are evaluating the situation, but we don't see any such possibility. As we had said that the basis on which we had underwritten this asset in terms of our real estate pricing was very conservative, and it's too early for us to say how the situation will pan out, and we'll evaluate it. We are very strong asset management focused, and we'll keep everybody posted as the situation and the market evolves. We're evaluating the situation literally every day, and we'll block and tackle as required.
Understood, sir. Lastly, on the weddings portion, did we see any benefit in March in terms of shift from some of the weddings which were planned outside India, which got shifted into domestic leisure markets? Going forward in Q1 and Q2 as well, do you expect more traction coming in from weddings?
Yes, that's correct. There were some of the weddings that were booked in the Middle East. We were able to take three of such weddings in our hotels in the month of March, and there are queries also in the month of April and May for some of such weddings, which will also help to drive incremental revenue on the wedding segment.
Understood, sir. Thank you so much, and all the best.
Thank you.
Thank you. The next question comes from the line of Achal Kumar from HSBC Bank. Please go ahead.
Yeah, hi. Thanks for the opportunity. First of all, I wanted to move away from revenue and just want to understand about the cost. Basically, in this Q4, I think most of the costs were sort of quite inflated-
Sorry, Achal, you're not clear. Can you repeat that?
Achal, please unmute your line in case if you are on mute. Since there is no response from the participant, we will move to the next participant, that is Karan Kamdar from Choice Institutional Equities. Please go ahead.
Hello, sir. I had a question on the cost side only. Now that we are facing some disruption in the Dubai property, are we expecting any cost overruns to impact margins, or will that not be a huge cost overrun for us?
It will not be a huge any cost impact for us. Anyway, you know, the operator who is managing the hotel will continue to manage till end of this year. Our plan was that we'll get the handover on first January 2027, and we'll rebook the hotel by end of this year and rebrand first January 2028. The plan remains the same, and there is no cost overrun on that front.
Okay, great. Sir, secondly, can you maybe detail out what plans we have for the Arq franchise, what is sort of our revenue model? Are we sort of going for a membership model, and what are revenue expectations there for 2027, 2028, maybe?
Thank you for that question. I mean, Arq is really a great milestone achievement in our asset portfolio. We opened the first Arq club in The Leela Palace Bengaluru in the last financial year, which is FY 2026.
We are opening two Arq clubs in this financial year, one in this quarter itself in The Leela Palace New Delhi, and the second one in Chennai. These are great members-only club and very rarified spaces for which create a compounding effect for the rest of our business and gives us access to lifetime access to ultra HNI and HNI customers. There is an initiation fee model for which a member has to pay, and membership is only by invite, so they have to pay an initiation fee. Then there's a run rate fee that they have to pay every year. The memberships are currently either for 10 years or for lifetime. This is what we are doing for our founding members.
Eventually, as we grow, we also evaluate other membership models so that we can, you know, whilst we are being very, very relevant when it comes to the quality of the real estate and the privileges and programming, and then we can scale up to have the larger share of memberships there.
Got it, sir. Any idea on what kind of number are you targeting? If not the revenue number, but what kind of membership number are you targeting?
See the current initiation fee is INR 45 lakhs plus GST. As I said, this is only through invite. We have a waiting list and a funnel of memberships across all the major metros. We are meeting them. Our overall goal on stabilization and once we have all the clubs open. Let me also tell you, in addition to Bengaluru, Chennai and New Delhi, we are also looking for the Arq club in Mumbai as well. This has also come on the feedback of our guests. We are looking at an overall stabilized number of 2,000 members because at that number we feel is the right fit, where we can serve them, take care of them and give them that kind of a luxury experience that they have paid for.
Good. Thank you so much, sir. Thank you.
Thank you. Ladies and gentlemen, due to time constraints, we will take the last question from Vinamra Hirawat from Jefferies Group. Please go ahead.
Hi, sir. Am I audible?
Yes.
Yes. Yes. Congrats on a good third quarter-
Vinamra, you are not audible now.
1.8 versus FY 2025 and 2026 block. Whereas last year this was 2.5%. Is there a reason for this? Do we see any spike in this going forward?
Our net debt to EBITDA is 1.66x as of FY 2026, and we expect a similar, you know, net debt to EBITDA in the next year as well. This would go down to 1x and even a lower number as we move forward.
Sorry, sir. I was talking about depreciation, not net debt.
Depreciation, almost INR 100 crore will remain in the same line in the next two, three years. Only when we have the new hotels operating, then only the depreciation numbers will start to increase marginally.
Okay. Okay, got it. Thank you.
Thank you. The next question comes from the line of Achal Kumar from HSBC Bank. Please go ahead.
Yeah. Hi, sorry my line was disconnected. As I started, I wanted to understand about the costs. Basically, if I look at all the costs, you know, all looks inflated. For example, your employee cost, F&B cost, everything is as a percentage of revenue are significantly above the Q4 last year. What's the reason? Is it like only impact on March revenue had such a big impact? Going forward, are you thinking about taking any steps to cut down your costs to protect your margins? That's my first question. If you could please give a bit of a color understanding on that.
Achal, we have a very active asset management approach in cost management, a very efficient cost structure. Most of our costs have just grown by inflation. Only there have been cost increase in sales and marketing and sales commission, for which I'll explain you a reason. If you see the flow through has been 60%, this industry-leading flow-through margin. Even if you look at our EBITDA margin, we are operating at a 49% EBITDA margin, which 167 basis points better than same time last year, full year. If you look at all the costs, all the costs is a lower percentage to a GR except for marketing and commissions, where obviously Expedia and Agoda started charging on a gross basis rather than a net basis. That was one of the main reason.
Obviously our share of GHA revenue also increased and there were some commission with sales price which has increased. Otherwise, all other costs as a percentage of revenue are lower than what was last year.
Ravi, I mean, if you see employee costs in Q4 last year it was 15.9%. In Q4 this year it is 16.6%. Similarly, your other costs are up 70 basis points. I mean, you know, not only the marketing costs, looks like all the costs have gone to that. That's where I wanted to understand, what's the reason for that?
I'll tell you, in payroll, obviously, there has been, the whole impact of, taking accrual on the, for the, new labor code, where we have taken impact on the both the leave encashment and gratuity. That has been an exceptional item in the payroll cost that has come in. Other we have added few employees for the new value drivers that we have added as a result of that cost. This year we'll see the our value drivers firing in full cylinders and the revenue impact will come. Those people have already been hired for the simulation and training piece. If you exclude all that impact, our payroll cost increase by only 8.5%.
Should we expect these costs to go down as a percentage of revenue going forward?
It should.
Okay. My second question is about the net debt to EBITDA. Of course, you are, you're at 1.6x, which looks very comfortable. Going forward, how do you see in FY 2027? Do you think stable? Do you think it's going down further? Or do you think because of the CapEx coming through it could go up a bit? What is your color? Any thoughts on that, please?
I'll tell you, we obviously said our debt will increase for the CapEx that we do for the pipeline assets. Since our EBITDA will increase, our net debt to EBITDA will remain in the similar levels of 1.66x. Moving forward, we'll come down to lower to 1.4x and then come to closer to 1x. Obviously, if we do more acquisition then it will go a little higher. Once all these assets start, you know, generating EBITDA, it will come to a very comfortable level, even below 1x.
Right. Okay. My last question is on your comment regarding the city hotel versus resorts. It would be great if you could give a bit of a color in terms of performance, ADR and occupancy, by different cities like Delhi, Bengaluru and all. That'll be very helpful, please.
That, Achal, we can connect separately and we can give you know, the occupancy of-
Sure. Sure. Sure. Perfect. Perfect. Thank you so much, Ravi.
Thank you. Ladies and gentlemen, in the interest of time, that was the last question for today. For any further queries, please reach out to the investor relations team at Leela. Thank you for joining us. You may now disconnect your lines.
Thank you.
Thank you.