Chalet Hotels Targets Occupancy Rates In The High 70s In H2

Chalet Hotels is confident of achieving an occupancy rate in the “high 70s” in the second half of the financial year, according to its MD & CEO, Sanjay Sethi.

“Quarter two has had its own challenges. Monsoons have been a bit of a downer in many of the cities across India.  But, H2 looks very, very bullish. Once we get into the H2, we expect occupancy rates heading back to the high 70s, as we've done in the past,” he told NDTV Profit

The recent rationalisation of GST (Goods and Services Tax) rates to put more money in consumers' pockets is providing fresh "tailwinds" for India's burgeoning hotel industry. While welcoming the measures, the industry veteran also called for crucial reforms to the GST structure to sustain long-term growth.

“This sort of propels and adds to the tailwinds that the hotel industry has had over the last few quarters. It covers all the aspects of Viksit Bharat and Sabka Vikas. What has changed is that the additional liquidity in the hands of the consumers will add to the tailwinds,” he said.

The new 5% GST rate for hotel room tariffs below Rs 7,500 without Input Tax Credit (ITC) will have minimal impact on Chalet Hotels, according to the CEO.

"A very small part of Chalet's room nights are sold below Rs 7,500. It's in single-digit percentage numbers," he explained. 

Sethi firmly dismissed any suggestion that the company might reprice rooms to take advantage of the lower tax bracket, stating, "Not at all. We are a forward-looking company; we'd like to work on growing the business, not working in a negative fashion."

He argued that the withdrawal of Input Tax Credit (ITC) for rooms under Rs 7,500 should be reversed. Further, he asserted that the Rs 7,500 threshold itself is outdated.

"I think the right number there would be about Rs 12,000. To end this debate forever for the future, I think we should link this cutoff price to the CPI (Consumer Price Index) so that we don't have to discuss this ever again, what the right number should be,” he underscored.

Sethi remains confident about the industry’s trajectory, projecting double-digit RevPAR growth for the next few years.

“We continue to hold the double-digit RevPAR growth story for India for the coming few years. And that's a good number to have. Costs are growing at about 5.5-6%. So, we should continue as an industry to add to the margins that we deliver,” he said.

Shares of Chalet Hotels closed 2.16% lower at Rs 1,017.8 apiece on the NSE, while the benchmark Nifty50 ended 0.13% higher at 25,005.5.