Chalet Hotels aims to grow its big-box hotels through investment and expansion

Aiming to add about 800 rooms, Chalet Hotels, a division of K Raheja Corp Private Ltd, has set lofty goals to grow its portfolio of “big-box,” or large inventory, hotels. With ₹2,000 crore set aside for ongoing capital projects, the development will add 5,000 rooms to the property over the course of the following three to four years.

The company’s managing director and CEO, Sanjay Sethi, stated in an interview with Mint that Chalet Hotels’ business plan depends on leveraging the demand created by office buildings next to its hotel assets.

According to Sethi, Chalet Hotels distinguishes out in the industry trend towards lower asset ownership and an emphasis on hotel management since it actively pursues growth in both its balance sheet and Ebitda. “We delivered high Ebitda margins purely because of strategies like having different hotel operators to work with,” he said.

“Hotels make money, and especially in good cycles like the one that is currently going on. In fact, they make a lot of money, if the location and operator is right,” Sethi added.

In addition to operating properties like the JW Marriott Mumbai Sahar, Four Points by Sheraton Navi Mumbai, The Westin Hyderabad Mindspace, and Bengaluru Marriott Hotel Whitefield, Chalet Hotels also boasts partnerships with operators including Accor, Marriott, Hyatt, and Taj.

Although it is still considering the prospect of establishing its own hotel brand, Sethi appreciates the freedom that comes with not having a proprietary brand.

Costs associated with hotel administration include reimbursable charges and management fees, which for a major hotel can total up to roughly ₹10,000 per month or ₹1.2 lakh annually per room.

Crisil predicted that occupancy rates for leading hotel chains will rise somewhat to 74% in 2023, above pre-pandemic levels of 66%. Furthermore, an 8–10% increase in average accommodation rates was anticipated, reaching ₹8,000 per night.