Chalet Hotels: ADR Up 11%, Occupancy Dipped

CHALET Chalet Hotels ( NSE : CHALET) owns and operates upscale hotels and resorts in Mumbai, New Delhi and other cities, alongside select residential projects. It had 11 operating hotels and resorts as of the September 2026 quarter. India’s domestic travel and tourism market is projected to grow from $254 billion in 2024 to $523 billion by 2034. What happened: In Q2FY27, average daily rate grew 11.3% year on year to Rs 13,546. Occupancy declined to 64.2% from 66.7% a year earlier. RevPar grew 7.2% to Rs 8,702. Consolidated hospitality revenue grew 8.3% to Rs 411.4 crore. Total expenses fell to 58.9% of revenue from 60% a year earlier. Segment profit rose 14.8% to Rs 124 crore. The company noted the Middle East crisis curtailed international flights to India. Why it matters: Chalet’s tariff discipline allowed it to grow segment profit faster than revenue despite the occupancy dip. Expenses as a percentage of revenue fell 110 basis points, reflecting cost management alongside pricing power. RevPar of Rs 8,702 compares with Rs 8,220 for The Indian Hotels Company in the same quarter, despite Chalet trading at a steep valuation discount. What I am watching: Chalet has nearly 2,036 rooms under development, including a Taj-branded property at Delhi International Airport with 380 keys expected in FY28. Recovery in international arrivals will be a key driver of occupancy. My stance: Chalet trades at 29.8 times consolidated P/E, its five-year low, and a 52% discount to The Indian Hotels Company at 62.9 times. ROE is 19%. The combination of tariff strength, cost discipline and a large development pipeline makes this the most attractively valued among the three mid-cap hotel chains. I do not hold a position in Chalet Hotels at the time of writing. This is not investment advice.