Why Chalet Hotels wants to operate more of its new properties

Chalet Hotels, which is owned by K Raheja Corp, is progressively choosing to operate more of its hotels through franchise agreements rather than management partnerships with hotel chains.

While the majority of its properties are now operated by international brands such as Marriott International and Accor, the Mumbai-based hotel developer plans to franchise new hotels such as the Taj Delhi Airport at Terminal 3 and Hyatt Airoli.

“We like the franchise model. We have taken the Taj that’s under construction in Delhi on a franchise model. The Hyatt Airoli that’s under construction will also be franchise,” Shwetank Singh, Managing Director and CEO of Chalet Hotels, told Business Today in an interview.

Chalet develops the facility under a management contract before handing it over to brands such as Marriott or Hilton when it is finished. These hotel chains manage the hotel’s revenue, expenditures, and total profit and loss. At the end of each month, they pass on the leftover profit to the owner after deducting their charge, which is often between 10-12% of overall sales, according to Singh.

with contrast, with a franchise model, the brand does not oversee day-to-day operations. Instead, it shares its name, distribution channels, and access to systems such as its website and reward programs. The owner maintains the hotel independently while paying a franchise fee, which normally ranges between 5-6%. The cost savings, however, are not substantial.

“One of the primary reasons owners favor this arrangement is that worldwide companies might have extremely rigorous standards. It is difficult to persuade them to adjust anything to suit the local environment,” Singh added, noting that their human resource costs are typically higher.

The Taj Delhi Airport, which will open in FY27, is the only Taj in the country that has been offered on a franchise basis, according to Singh. “It demonstrates IHCL’s confidence in Chalet’s capacity to operate it. This shows they trust us with the brand. Taj Delhi, which will cost Rs 500 crore, will feature around 380 rooms, he added.

Chalet Hotels’ portfolio includes 11 functioning hotels with 3,389 rooms. The company is currently constructing approximately 1,500 rooms. About 85% of its revenue comes from hotels, with the other 15% coming from commercial real estate, of which approximately 2.2 million square feet is operational and another 900,000 square feet is under development.

Building a leisure portfolio.

Singh, who became MD and CEO in February 2026, aims to generate 20% of sales from the leisure business, up from 13% today. “We have expanded our leisure hotel portfolio. Leisure offers higher average room rates but lesser profits due to the necessity for more people to operate larger properties,” Singh explained.

“Typically, margins in leisure are slightly smaller than huge boxes in cities. Some of our boxes, such as the JW Marriott Mumbai Sahar, the Westin Powai, the Mariott in Bengaluru, and the two Westin hotels in Hyderabad, have more than 450 rooms, and the unit economics on a larger box are always quite good. “For Chalet Hotels, being able to maintain, if not grow, margins would be an accomplishment,” he said.

The company has also purchased two sites in Goa and is conducting due diligence to build a hotel in Udaipur. “We are now expanding into leisure space and geographically expanding at the same time,” Singh said.

Prior to its listing in 2019, Chalet Hotels’ portfolio was mostly focused on business and lacked leisure offerings. The corporation entered commercial real estate to generate a consistent source of income. “The reason we got into commercial real estate is because we knew a steady income would keep us afloat in the difficult times,” Singh added.