Mumbai-based Leela Palaces Hotels and Resorts is accelerating expansion across India’s luxury hospitality segment, betting on a long runway for high-end travel while maintaining tight control over brand standards and key assets.
The company is planning nine new properties, alongside branded residences and members-only clubs, spanning wildlife, heritage, spiritual, mountain and urban destinations.
“Luxury travel in India is a multi-decadal story, India has just about 30,000 luxury hotel rooms and we have about 4,000 of them. Rising household incomes, growing number of affluent travellers, and a largely under-penetrated luxury hotel market give us a long luxury runway ahead," Anuraag Bhatnagar, chief executive officer of Leela Palaces, told Mint.
Financially, he said, the company is well-positioned to fund this expansion. "We reported 49% Ebitda margins in recent quarters and 62% free cash flow conversion. Our robust cash flows, supplemented by internal accruals, provide us sufficient capacity to fund the development pipeline and strategic acquisitions, including a Dubai property that will be fully rebranded under Leela once the transaction closes," he added.
Ebitda stands for earnings before interest, taxes, depreciation and amortisation and is a key measure of a company’s operating profitability.
The Leela was founded in 1986, and is one of the country's oldest luxury hotel brands, competing with the likes of Oberoi and Taj's luxury offerings. Alternative asset management company Brookfield took control of the business in 2019 and later listed it in 2025, before the company was renamed Leela Palaces Hotels & Resorts Ltd.
Shares of the company settled 2.1% lower at ₹407.05 apiece on the BSE on Friday.
Stronger demand
Bhatnagar pointed out that demand for luxury hospitality in India has strengthened after the pandemic, and there's no looking back. Geopolitical tensions in West Asia have also shifted some outbound travel back to India, boosting demand in wildlife, heritage and mountain destinations. "We hope to see that in Q2 FY27 and beyond. We have seen postponement and deferment in events that were to happen in March as well to later months, so we expect to see good traction in Q2 (July-September 2026)," he added.
Leela Palaces has several new properties, including in Ranthambore, Bandhavgarh, Agra, Ayodhya, Srinagar, Sikkim, Coorg and Jaisalmer, with six of these owned and three under management contracts. “Our current development pipeline is fully funded, giving us the flexibility to pursue existing projects and evaluate new opportunities as they arise. While the demand for luxury is growing at double digits, the supply in our micro markets remains muted," he said.
By FY30, Leela expects to operate 24 hotels, up from 15 currently, maintaining a near-equal split between owned assets and management agreements. This strategy, Bhatnagar said, will allow the company to scale.
For the nine months ended 31 December 2025, Leela Palaces reported revenue of ₹318.4 , up 21.2% from ₹262.7 crore a year earlier. Profit after tax stood at ₹18.4 crore, compared with a loss of ₹1.8 crore in the same period last year.
“We have been performing at a 48 to 49% EBITDA margin, with nearly 62% of our topline revenue flowing through to free cash flow. Our net debt-to-EBITDA ratio is close to 1.7 times, giving us enough capacity on the balance sheet to fund our existing development pipeline while also evaluating new opportunities," Bhatnagar said.
He said that the locations the company is growing into are "nature-centric, heritage-driven, spiritual and allow for multi-generational travel experiences", destinations that are increasingly shaping luxury stays. "We are also expanding members-only clubs to Delhi, Chennai and Mumbai, building recurring revenue streams and deepening loyalty among premium travellers," he said.
Strong pricing power
Leela commands strong pricing power. In its Q3 (October-December 2025) call in January, Bhatnagar said the company had performed better versus its luxury industry peers, helped mainly by a sharp rise in room rates. Revenue earned per available room, or RevPAR, rose 20% from a year earlier, while operating Ebitda, or core profit, grew 23%. The growth was driven by a 17% increase in average room rates, showing the company was able to charge more and still maintain strong demand. "Non-room revenue streams are also becoming increasingly important, with food and beverage contributing 35-36%, wellness 4-5%, and events 20-23% of total revenue."
India’s luxury hotel market remains under-penetrated, with an estimated 30,000 rooms in this category. Overall, India has about 200,000 hotel rooms, and this number is expected to grow to 300,000 by FY30, according to data from hospitality consultancy Horwath HTL. "The number of households capable of consuming luxury travel is expected to grow from 70 million to over 200 million in the next five years. The combination of rising domestic wealth, infrastructure improvements, and limited luxury supply gives Leela a significant growth opportunity," he added.
Horwath HTL's India Market Report 2025 said that average daily room rates in the luxury category of hotels were ₹13,379 per night, 9% higher than in 2024. Such hotels had a year-round occupancy of 68%, significantly higher than upscale and midscale hotels whose occupancies ranged at 56-65%. The report added that 16% of upcoming hotel room supply will be in the luxury segment, broadly in line with 15% in 2025.
Over the next three years, seven of its nine upcoming properties will open across Ayodhya, Ranthambore, Gangtok, Srinagar, Bandhavgarh, Agra and Mumbai. Five will be owned while two will operate under management agreements. “Our moat is the ecosystem we have built around luxury travel. Experiences, residences, wellness centres and members-only clubs together create long-term value and a differentiated proposition for our guests," he added.
