The IPO pipeline which consists of issues coming from The Leela Hotels, Ventive Hospitality and Panchil Group and Brigade Hotel Ventures are likely to take the trend forward. The Leela Hotels is promoted by Brookfield, Ventive Hospitality by Blackstone and Panchshil Group and Brigade Hotel Ventures promoted by Brigade Enterprises.
On one hand, the current trend of a strong response to some of the IPOs from the hospitality sector has been encouraging. Recent hospitality IPOs such as Apeejay Surendra Park Hotels, Chalet Hotels, Samhi Hotels and Juniper Hotels evoked strong response from investors.
Other real estate firms such as DB Realty and Prestige Estates have expressed interest in hotel listings. The demerger and listing of ITC Hotels is on the anvil as well.
Institutionally backed hospitality companies: The Next IPO Wave
As per an HVS report, The Leela Hotels claims to be the only institutionally owned and managed pure-play luxury hospitality company in India. The company is promoted by private equity funds which are managed and/or advised by affiliates of Brookfield, one of the world’s largest alternative asset managers and investors with $925 billion of assets under management as of March 31, 2024, across real estate, infrastructure, renewable power, private equity and credit sectors.
Brookfield manages $267 billion of real estate assets and has a strong global track record in hospitality with a global portfolio comprising over 41,000 keys across 179 hotels. This includes iconic hospitality developments such as Pendry Manhattan West in New York, the United States, and Centre Parcs, near London in the United Kingdom.
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Ventive Hospitality is predominantly a hospitality asset owner focused on luxury offerings across business and leisure segments in India (such as JW Marriott, Pune and Ritz Carlton, Pune) and the Maldives. Its promoters are the Panchshil Group and the BRE Group. All of Ventive’s hospitality assets are operated by or franchised from global operators, including Marriott, Hilton, Minor and Atmosphere. Ventive’s promoter, the BRE Group, is affiliated with Blackstone, the largest investor in hotels globally based on the number of keys, with over 1.61 lakh keys as of September 30, 2024.
Brigade Hotel Ventures is the owner and developer of hotels in key cities in India primarily across South India. As per Horwath HTL report, Brigade Hotel Ventures claims to be the second largest owner of chain-affiliated hotels and rooms in South India (comprising states like Kerala, Andhra Pradesh, Tamil Nadu, Karnataka, Telangana, and the Union territories of Lakshadweep, Andaman and Nicobar Islands and Pondicherry among major private hotel asset owners (ie, owning at least 500 rooms pan India) as of June 30, 2024.
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The company’s Promoter, Brigade Enterprises entered into the hospitality business in 2004 with the development of their first hotel Grand Mercure Bangalore, which commenced operations in 2009. Today the company has a portfolio of nine operating hotels across Bengaluru, Chennai, Kochi, Mysuru and the GIFT City (Gujarat) with 1,604 keys. Their hotels are operated by global marquee hospitality companies such as Marriott, Accor and InterContinental Hotels Group and are in the upper upscale, upscale, upper-midscale, and midscale segments.
Hospitality IPOs: What do institutions Bring to the table?
Brookfield-The Leela Hotels
Brookfield’s longstanding presence in India, managing $27 billion of assets under management and a history of approximately 15 years as of March 2024, deep operating expertise, a demonstrated track record of managing capital and its commitment of resources is expected to create growth opportunities for The Leela Hotels.
This is demonstrated by The Leela’s growth pipeline which includes their collaboration with affiliates of Brookfield in relation to a serviced apartments project in Mumbai. As outbound tourism from India grows, as per a report from HVS an approximate 30 million Indians are expected to travel internationally in 2024, The Leela is positioned to leverage these trends for potential international expansion opportunities, supplemented by Brookfield’s global expertise and resources.
Brookfield, through its affiliates, also has extensive development experience in India and has delivered large scale mixed-use real estate projects of more than 10 msf as of March 31, 2024. The Leela has entered into a development management agreement with an affiliate of Brookfield. Depending on the location and project type, The Leela plans to either utilise Brookfield’s affiliates’ resources directly for development and project management services for a fixed fee or manage the projects themselves while collaborating closely.
The Leela derives benefit from Brookfield’s expertise in real estate, relationships with lenders, asset owning partners, and vendors, to drive further growth opportunities.
Blackstone-Ventive Hospitality
Ventive Hospitality’s Promoters Blackstone and Panchshil combine their deep knowledge of local markets along with global best practices in development, investment and asset management.
Blackstone is an investment firm with $1.1 trillion of assets under management as at September 30, 2024, across global investment strategies focused on real estate, private equity, infrastructure, life sciences, growth equity, credit and insurance, real assets and hedge funds
In hospitality business, Blackstone’s real estate funds are the largest investor in hotels globally based on the number of keys, with over 1.61 lakh keys as at September 30, 2024. Blackstone’s real estate business has extensive experience in building or rebuilding leading companies and taking them public such as Hilton Worldwide Holdings and Invitation Homes. Blackstone has over 31 years of operating experience in the hospitality sector and over 19 years of operating experience in India.
Panchshil Realty is a market leader in real estate development in Pune in hospitality and commercial segments. It also has presence across multiple other asset classes including retail, luxury residential and data centers.
As per a report from Horwath HTL, the overall new hospitality inventory supply growth in Ventive Hospitality’s target markets in India is expected to be limited, with a CAGR of 1.6% in Pune from September 2024 to FY27 (compared to a 2.7% CAGR from FY15 to September 2024) and a CAGR of 5.4% in Bengaluru from September 2024 to FY27 (compared to a 5.6% CAGR from FY15 to September 2024). Similarly, luxury supply in Maldives is expected to be limited to a CAGR of 5.4% from September 2024 to 2026 as against a CAGR of 8.5% between 2015 to September 2024
Ventive leverages upon the experience of both Promoters globally and within India to undertake strategic acquisitions and expansions into new segments and geographic markets, as well as development and design expertise.
Brigade-Brigade Hotel Ventures
Brigade Hotel Ventures association with Brigade gives it a competitive edge and allows it to leverage its brand reputation, relationships with corporate clients and expertise in developing real estate properties, as per the company’s DRHP.
Brigade Hotel Ventures benefits from Brigade’s understanding of market trends and strategic location opportunities, enabling it to develop hotels in prominent areas with high growth potential. Brigade Hotel Ventures also takes advantage of Brigade’s involvement in mixed-use developments to develop hotels as part of real estate projects to offer integrated experiences to customers.
Brigade Hotel Ventures believes that it is well-positioned to benefit from growing hospitality demand, particularly in markets where it operates. As per the Horwath HTL Report, select markets like Bengaluru Karnataka, Chennai, Hyderabad (Telangana), Ahmedabad (Gujarat), Kochi and Mysuru will see limited new supply, with only 11% share of new supply between July 1, 2024 and March 31, 2029. With only 11,500 rooms being added in select markets through March 2029, the overall supply share of select markets will decline from its current level of 24% to 19.5%. According to the Horwath HTL Report, the Hotel Association of India estimates foreign tourist arrivals to cross 30 million in India by 2037 and McKinsey estimates 5 billion domestic visits by 2030. Further, HAI forecasts 15 billion domestic visits and 100 million FTAs by 2047. The growth in FTAs is expected to strengthen hotel average daily rates, particularly for upper-tier hotels.
Hospitality IPOs: How have financials shaped up?
The Leela Hotels
During the FY24, the average room rate (‘ARR’) and revenue per available room (‘RevPAR’) across Owned Portfolio amounted to Rs 20,966 and Rs 14,030, respectively, both 1.4 times the luxury hospitality segment average in India. The Leela Hotels improved its EBITDA and EBITDA Margin from Rs 88 crore and 21 % for FY22 to Rs 600 crore and 48.92% for FY24respectively. Total Income was Rs 1,226 crore in FY24 from 416 cr in FY22.
Ventive Hospitality
Ventive Hospitality’s Revenue from hotel operations was Rs 218.7 crore in H1FY25 and Rs 243.7 crore in FY24 from Rs 91 crore in FY22. EBITDA has grown to Rs 180.3 crore in H1FY25 and Rs 300.5 crore in FY24 from Rs 1,24.5 crore in FY22. EBITDA Margins stand at 46.38% in H1FY25, 60.75% in FY24 from 52.46% in FY22.
Brigade Hotel Ventures
Revenue from operations grew to Rs 102 crore in Q1FY25 and Rs 402 crore in FY24from Rs 146 crore in FY22. EBITDA has grown to Rs 34 crore in Q1FY25 and Rs 145 crore in FY24 from Rs 5.2 crore in FY22. EBITDA Margin was 32.89% in Q1FY25, 35.72% in FY24 and 3.46% in FY22.
Hospitality IPOs: key strengths and investment highlights
- The Leela Hotels: Key Strengths
- Sponsorship by Brookfield
- Leading Luxury Hospitality Brand with Rich Heritage and a Global Appeal
- Marquee Owned Hotels in Markets with High Barriers to Entry
- Comprehensive Luxury Ecosystem Resulting in Diversified Revenue Sources
- Track Record of Driving Operational Efficiency by Active Asset Management Approach
- Highly Experienced, Cycle-Tested Senior Management Team, Guided by an
- Experienced and Distinguished Board
The Leela Hotels: Growth Strategies
- Improve same-store growth and profit margins
- Expansion of Portfolio through acquisitions and developments
- Expand footprint through new hotel management agreements
- Expand the reach of The Leela brand
Ventive Hospitality: Key Strengths
- Renowned Promoters with global and local expertise
- Premium hospitality assets complemented by Grade A annuity assets
- Established track record of development and acquisition-led growth in India and the Maldives
- Well-positioned to benefit from strong industry tailwindsVentive Hospitality: Growth Strategies
- Developing and expanding asset base
- Drive organic growth from ramp-up of existing assets
- Leverage on award-winning F&B and amenities
- Optimise event spacesBrigade Hotel Ventures: Key Strengths
- Strong parentage of Brigade Group
- Strategically located award winning hotels
- Focus on asset management resulting in operating efficiencies
- Focus on environmental, social and governance
Brigade Hotel Ventures: Growth Strategies
- Expand Operations by Developing New Hotels at Select Locations
- Focus on Improving Operating Efficiencies and Increase Revenue
- Expand Portfolio by Way of Opportunistic and Accretive Acquisitions
