Indian Economy News

Indian hospitality sector eyes US$ 943.3 million (Rs. 8,000 crore) boost as four new players gear up for market debut: Jefferies

India's hospitality sector will expand its listed universe with four new entrants. Schloss Bengaluru, Ventive Hospitality, and Brigade Hotels are collectively seeking to raise US$ 943.3 million (Rs. 8,000 crore) through Initial Public Offerings (IPOs), including a fresh issue of US$ 707.5 million (Rs. 6,000 crore). This follows previous fundraisers such as Chalet Hotels' US$ 177.9 million (Rs. 1,000 crore) Qualified Institutional Placement and IPOs from Samhi, Park, and Juniper Hotels, which raised US$ 471.6 million (Rs. 4,000 crore) combined. Additionally, ITC Hotels plans a demerger in Q4 FY25 to focus on standalone hotel operations. Despite a mixed performance from recent IPOs, with stock prices ranging from 0% to 52% above their issue price, long-term prospects for the sector remain strong. Elevated travel demand, rising Average Room Rates (ARR), and high occupancy levels reflect growing consumer interest in travel experiences. 

The IPO-bound companies bring diverse business models and growth strategies. Under the Leela brand, Schloss Bengaluru operates a mix of owned and managed properties across major cities. Ventive Hospitality, part of Pune-based Panchshil Realty, focuses on development and acquisitions, with operations in Pune, Bengaluru, and the Maldives. Brigade Hotels, an offshoot of Brigade Group, plans to add 996 keys to its existing 1,604, focusing on South Indian cities. However, these companies face challenges, including small profits or marginal losses at the PAT level and leveraged balance sheets, with Net Debt-to-EBITDA ratios ranging from 4x to 7x for FY24. Despite these hurdles, the sector's favourable supply-demand dynamics and strong travel preferences create an optimistic outlook for new listings. 

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.