Why Chalet Hotels wants to operate more of its new properties
Shwetank Singh, who officially took over as MD and CEO in February 2026, is targeting 20% of revenues from the leisure portfolio as against 13% currently
- Apr 10, 2026,
- Updated Apr 10, 2026 5:48 PM IST
K Raheja Corp-backed Chalet Hotels is increasingly opting to operate more of its hotels by taking franchises rather than giving management contracts to hotel chains.
While most of its hotels are currently operated by international brands such as Marriott International and Accor, the Mumbai-based hotel developer is looking to operate new hotels such as the Taj Delhi Airport at Terminal 3 and Hyatt Airoli under a franchise model.
“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.
Under a management contract arrangement, Chalet develops the property and then hands over operations to brands like Marriott or Hilton once it’s ready. These hotel chains take responsibility for running the hotel, including managing revenue, costs, and overall profit and loss. At the end of each month, they pass on the remaining profit to the owner after deducting their fee, which is usually around 10–12% of the total revenue, said Singh.
In contrast, under a franchise model, the brand does not handle day-to-day operations. Instead, it provides its name, distribution channels, and access to systems like its website and loyalty programmes. The owner manages the hotel independently while paying a franchise fee, typically in the range of 5-6%. The cost savings, however, are not very significant.
“One of the main reasons owners prefer this model is that international brands can be quite rigid in their standards. To get them to change anything to suit to the local environment becomes very hard,” Singh said, adding that their cost structures on the people side tend to be higher.
The Taj Delhi Airport, which will open in FY27, is the only Taj in the country that has been given on a franchise model, says Singh. “It shows IHCL’s belief in Chalet’s ability to run it. This means they trust us with the brand. Taj Delhi, which will cost Rs 500 crore, will have 380-odd rooms,” he added.
Chalet Hotels’ portfolio comprises 11 operational hotels with 3,389 rooms. The company has around 1,500 rooms under construction. About 85% of its revenue comes from hotels while the rest 15% comes from commercial real estate, of which about 2.2 million square feet is operational and another 900,000 square feet is in development.
Building leisure portfolio
Singh, who officially took over as MD and CEO in February 2026, is targeting 20% of revenues from the leisure portfolio as against 13% currently. “We have added more leisure hotels to the portfolio. Leisure comes with better average room rates but lower margins because of the need for more manpower to maintain bigger properties,” said Singh.
“Typically margins in leisure tend to be slightly lower than big boxes in cities. Some of our boxes like JW Marriott Mumbai Sahar, Westin Powai, Mariott in Bengaluru and the two Westin hotels in Hyderabad, they are all upwards of 450 rooms and the unit economics on a larger box is always very good. For Chalet Hotels, to be able to maintain margins, if not grow them, would also be an achievement,” he explained.
The company has also bought two plots in Goa and is doing due diligence to build a hotel in Udaipur. “We are now expanding into leisure space and geographically expanding at the same time,” said Singh.
Before its listing in 2019, Chalet Hotels portfolio was mainly business-centric and lacking in leisure. The company entered commercial real estate to build a steady stream 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,” said Singh.
K Raheja Corp-backed Chalet Hotels is increasingly opting to operate more of its hotels by taking franchises rather than giving management contracts to hotel chains.
While most of its hotels are currently operated by international brands such as Marriott International and Accor, the Mumbai-based hotel developer is looking to operate new hotels such as the Taj Delhi Airport at Terminal 3 and Hyatt Airoli under a franchise model.
“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.
Under a management contract arrangement, Chalet develops the property and then hands over operations to brands like Marriott or Hilton once it’s ready. These hotel chains take responsibility for running the hotel, including managing revenue, costs, and overall profit and loss. At the end of each month, they pass on the remaining profit to the owner after deducting their fee, which is usually around 10–12% of the total revenue, said Singh.
In contrast, under a franchise model, the brand does not handle day-to-day operations. Instead, it provides its name, distribution channels, and access to systems like its website and loyalty programmes. The owner manages the hotel independently while paying a franchise fee, typically in the range of 5-6%. The cost savings, however, are not very significant.
“One of the main reasons owners prefer this model is that international brands can be quite rigid in their standards. To get them to change anything to suit to the local environment becomes very hard,” Singh said, adding that their cost structures on the people side tend to be higher.
The Taj Delhi Airport, which will open in FY27, is the only Taj in the country that has been given on a franchise model, says Singh. “It shows IHCL’s belief in Chalet’s ability to run it. This means they trust us with the brand. Taj Delhi, which will cost Rs 500 crore, will have 380-odd rooms,” he added.
Chalet Hotels’ portfolio comprises 11 operational hotels with 3,389 rooms. The company has around 1,500 rooms under construction. About 85% of its revenue comes from hotels while the rest 15% comes from commercial real estate, of which about 2.2 million square feet is operational and another 900,000 square feet is in development.
Building leisure portfolio
Singh, who officially took over as MD and CEO in February 2026, is targeting 20% of revenues from the leisure portfolio as against 13% currently. “We have added more leisure hotels to the portfolio. Leisure comes with better average room rates but lower margins because of the need for more manpower to maintain bigger properties,” said Singh.
“Typically margins in leisure tend to be slightly lower than big boxes in cities. Some of our boxes like JW Marriott Mumbai Sahar, Westin Powai, Mariott in Bengaluru and the two Westin hotels in Hyderabad, they are all upwards of 450 rooms and the unit economics on a larger box is always very good. For Chalet Hotels, to be able to maintain margins, if not grow them, would also be an achievement,” he explained.
The company has also bought two plots in Goa and is doing due diligence to build a hotel in Udaipur. “We are now expanding into leisure space and geographically expanding at the same time,” said Singh.
Before its listing in 2019, Chalet Hotels portfolio was mainly business-centric and lacking in leisure. The company entered commercial real estate to build a steady stream 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,” said Singh.