Cygnett Hotels aims to become ₹300 crore business by FY25-end-OxBig News Network

The company operates a namesake brand along with brands like Cozzet. Primarily, a mid-scale hotel player, also announced a new five-star hotel brand, Anamore, this week.

Sarkar said the company has 25 operational hotels—mainly in tier II cities—with 1,000 rooms cumulatively. It has 23 hotels in the pipeline at locations like Rajasthan’s Pushkar and Jaipur, West Bengal’s Kharagpur, Himachal Pradesh’s Chail, Assam’s Dibrugarh, Maharashtra’s Mahad and Alibaug, and Gurugram. 

“We began with our focus on signing hotels across East India and the seven sister states in the North-East of India, primarily focused on tier II cities. We started first with an asset-light model with 95% of our portfolio in management contracts and the remaining as franchised properties,” he said.

The company has also invested in a 15-acre land parcel in Vrindavan, Uttar Pradesh, and will be building a wellness resort there. “We will also consider going the IPO (initial public offering) route in the next five years once we achieve the 100 property mark and will have a mix of owned and managed properties,” he said. 

In 2019-20, the company had a gross revenue of ₹100 crore, which fell drastically due to the covid-19 outbreak to ₹30 crore in 2020-21. 

The expansion spree

By 2025-26, it expects 15 hotels in its pipeline to open, bringing its room count to about 3,700. “Every month, we are trying to open one new hotel,” he added. 

In January, the company launched a hotel in Jaipur. In February, it will open a property in Mahad, Maharashtra. Next will be a five-star luxury resort in Pushkar, which will focus on large-scale weddings.

“What we’ve seen is that the spending power of the consumer has increased post the covid-19 pandemic, and people are spending a lot more, which is helping pull up average room rates. This has really increased the opportunities for hotel brands like ours,” Sarkar added.

It first began business in 2014. It operates a majority of its portfolio as hotel management contracts. This week, the company announced the signing of a 150-room, five-star villa resort in Goa near the Manohar International Airport, which will be operational by 2026. 

In a management contract, the property owner signs a hotel management business to run the day-to-day operations on their behalf for a sum consideration. 

Given the current growth trajectory, Cygnett aims to add 1,000 keys annually over the next five years. This will expand Cygnett’s portfolio to over 100 hotels with over 9,000 keys by 2029.

Earlier, the company was affiliated with US-based Red Lion Hotel Corporation, which was running the Signature Inn that Cygnett had brought to India. By 2016, the companies parted ways, and Cygnett began branding hotels under its own name.

The sector outlook

The hospitality sector will see 7-9% year-on-year revenue growth in 2024-25 and 6-8% in 2025-26, building on the high growth year of 2023-24, according to rating agency Icra. 

The agency also projects a moderate improvement in pan-India premium hotel occupancy, expected to rise to around 72-74% in 2025-26, up from 70-72% in 2025-25.

The average room rates (ARRs) for premium hotels are expected to rise 8% on-year to ₹7,800-8,000 in 2024-25 and touch ₹8,000-8,400 in 2025-26. 

Icra’s sample group, comprising 13 prominent hotel chains, is expected to deliver robust operating margins of 31-33% in 2024-25 and 2025-26, compared to 33% in 2023-24 and 20-22% of pre-covid years.

The key demand drivers in 2024-25 included strong domestic leisure travel, business from meetings, incentives, conferences, exhibitions (MICE), and weddings, along with a steady rebound in business travel, despite a brief dip during the general elections. 

Besides, spiritual tourism and growing interest from tier-II cities are expected to play an increasingly significant role in 2025-26. 

While domestic tourism has been the primary growth driver in 2024-25, foreign tourist arrivals (FTA) have yet to return to pre-covid levels, with recovery dependent on the global macroeconomic climate.