Summary
Suba Hotels Limited - Q3 FY26 Earnings Call Summary Tuesday, January 27, 2026 4:00 PM
Event Participants
Executives 4 Chandrakant Shetty, Mansur Mehta, Mubeen Mehta, Premal Zaveri
Analysts 5 Amin Hemant, Aniruddha Pandhare, Kushal Chauhan, Madhav Agarwal, Naville [Last Name Not Provided], Sahil [Last Name Not Provided]
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue (Q3 FY26) | ₹35.28 crores | Reported for the third quarter post-listing. |
| Revenue (9M FY26) | ₹79.07 crores | Reflects current fiscal year performance to date. |
| Revenue Growth (H1 FY26) | +49.0% | YoY growth driven by portfolio expansion and strong domestic demand. |
| EBITDA Growth (H1 FY26) | +54.0% | Growth outpaced revenue, indicating margin expansion. |
| PAT Growth (H1 FY26) | +58.0% | Strong bottom-line performance following IPO. |
| Operational Keys | 4,517 count | Includes 528 keys added post-IPO; 85% of expansion was asset-light. |
| Occupancy | 73.0% | Company-wide occupancy supported by T2/T3 market resilience. |
| Average Room Rate (ARR) | ₹3,276 | Blended portfolio rate; domestic ARR specifically at ₹3,226. |
| Distribution (Revenue) | 73% Rev-Share | Revenue mix: 73% Rev-share, 22% Owned, 5% Managed/Franchise. |
| Pipeline | 901 keys | 18 hotels in progress; 95% expected operational within 12 months. |
Geographic & Segment Commentary
- Domestic Portfolio: Operations span 97 hotels across 50+ cities with an 80% concentration in Tier 2 and Tier 3 markets. Management noted these markets are driven by resilient pilgrimage, industrial activity, and infrastructure flows rather than luxury demand.
- International (UAE): Currently operates three hotels in Dubai (Click Square, Click Grand, Click Park) with high occupancy rates ranging from 87.3% to 97%. The segment achieved an average ARR of 172 Dirhams (~₹4,300) and serves as a base for potential Saudi Arabia expansion.
- Regional Distribution: North India represents the largest market share at 49%, followed by West India at 24%. South India (16%), Central (4%), International (3%), and East (2%) make up the remainder, with East and Central identified as high-growth potential areas.
Company-Specific & Strategic Commentary
- Multi-Model Operating Platform: Suba utilizes a mix of owned, leased, revenue-shared, managed, and franchise formats (asset-right strategy). Only 4% of the total portfolio (227 keys) is owned, ensuring high ROCE and minimal balance sheet stress.
- Brand Architecture: The company is the only Indian operator spanning Upscale (Suba, Clarion), Mid-scale (Click, Quality), and Economy (GenX, R&B, Comfort) with both domestic and international brand options in each segment.
- Strategic Loyalty Integration: Launching “Choice Privileges” later this year, connecting Suba to 60 million global members and 7,400 hotels. This allows guests to earn/burn points across the Choice Hotels network and airline partners like Singapore Airlines.
- Last-Mile Funding: Suba selectively provides capital support to owners through revenue-share agreements to complete projects. This funding is structured to be recovered within 3 to 4 years.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Inventory Growth | +500 keys per year | Minimum annual commitment specifically for Choice Hotels brand expansion. |
| ARR Growth | +10% to 15% | Target for FY27 driven by GDS connectivity and RFP pursuits. |
| Occupancy Gain | +5% to 7% | Expected improvement through clustering strategy and loyalty program launch. |
| Pipeline Execution | ~850 keys | 95% of the 901-key signed pipeline to be operational by Q3 FY27. |
| New Asset Addition | 1 Owned asset/year | Strategy to build leverageable assets for future capital raising/safety. |
Risks & Constraints
| Risk | Context |
|---|---|
| Execution Risk | With 18 hotels in the pre-opening phase, the company faces the challenge of simultaneous launches. Management mitigates this by a staggered schedule and utilizing existing cluster teams. |
| Standard Maintenance | Managing 52 franchise hotels requires rigorous quality control. Suba employs quarterly mystery audits and “Train-the-Trainer” models to prevent brand dilution. |
| Concentration Risk | 49% of the portfolio is in North India, making performance sensitive to regional economic or climate disruptions. The company is actively seeking diversification in East/Central India and Saudi Arabia. |
Q&A Highlights
Booking Sources & Revenue Management
- Question: What is the breakup of booking sources and how is OTA pricing managed? (Madhav Agarwal)
- Answer: OTAs contribute 22-25%, while Corporates account for 50-60%. Pricing is managed via an in-house revenue team using “Staah” (channel manager); OTAs have no rights to change rates independently. (Chandrakant Shetty)
Asset Strategy & Capital
- Question: Will the company shift toward an asset-heavy model in the future? (Naville)
- Answer: The focus remains asset-light, but the company plans to build one owned asset per year to maintain the capacity to raise money/leverage assets if a “COVID-like” situation recurs. (Mubeen Mehta)
International Performance
- Question: Can you provide details on the Dubai portfolio and the CWIP on the balance sheet? (Kushal Chauhan)
- Answer: Dubai occupancy is exceptionally high (up to 97%). CWIP primarily relates to the Pithampur project (80 rooms), which will be fully operational within 45 days. (Mubeen Mehta)
Franchise Economics
- Question: What are the revenue sources from franchisees? (Madhav Agarwal)
- Answer: The single line of revenue is royalty. Suba does not charge additional commissions on sales provided through its network or website to franchisees. (Mubeen Mehta)
Key Takeaway
Suba Hotels Limited delivered a steady Q3 FY26 with revenues of ₹35.28 crores, supported by a 49% YoY revenue jump in H1 FY26. The company maintains a lean, asset-right model where only 4% of its 4,517 operational keys are owned. Strategy is centered on a unique dual-brand architecture (domestic and International/Choice) across three price segments, particularly targeting Tier 2 and Tier 3 business corridors. Management is aggressively expanding with a 901-key pipeline, 95% of which is slated for opening within 12 months, and a commitment to add at least 500 Choice-branded keys annually. Looking ahead, the company targets 10-15% ARR growth and improved direct bookings through the upcoming Choice Privileges loyalty integration. While regional concentration in North India remains high, the expansion into Saudi Arabia and Central India serves as a key geographical hedge.
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