Jefferies in its latest note on hotels sector said three companies in the hospitality segment namely Schloss Bangalore (Leela), Ventive Hospitality and Brigade Hotels have filled IPO prospectus in the past 3-4 months, looking to raise about Rs 8,000 crore, including fresh raise of Rs 6,000 crore. In addition to this, ITC Hotels will be getting listed via demerger.
Jefferies said it sees even more real estate players such as DB Realty Ltd (now Valor Estate Ltd) and Prestige Estates eyeing listing of their hotels business. These asset developers like the already listed Chalet, Juniper and Samhi have tie ups with leading hotel operators such as Marriott, Hilton, IHG for the hotel operations, it noted.
Among the three likely IPOs, Jefferies said Schloss Bangalore (Leela), Ventive Hospitality and Brigade Hotels either reported small profit or losses. Balance sheets of the three players are levered with FY24 net debt/Ebitda at 4-7 times, it noted. Ventive & Leela will be the amongst top five listed players by revenue and Ebitda, while Brigade will be amongst the smallest, the foreign brokerage said.
Jefferies said Schloss and Ventive are backed by private equity/asset management firms, while Brigade Hotel is an offshoot of the South India based real estate developer. Ventive Hospitality was also established as the hospitality division of Pune-based Panchshil Realty firm.
"Ventive and Leela are relatively larger players with revenue/Ebitda of Rs 1,200-1,800 crore/Rs 500-800 crore, Brigade Hotels is much smaller player with revenue/Ebitda of Rs 400 crore/Rs 150 crore. Ventives' proforma rev/Ebitda are highest among listed hospitality asset owners in India. The RevPAR for both Leela/Ventive stands in top 5 vs listed space (because of higher mix of luxury hotels)," it said. "All 3 players have marginal profit/losses at PAT level. Balance sheet is levered for all 3 with FY24 Net Debt/Ebitda ratios of 4-7 times," it added.
Jefferies said the travel demand in India has remained healthy even post the growth normalisation seen in many consumer segments post Covid. Industry pricing across segments remains elevated without hurting growth, materially, suggesting that Indian consumers are priortising travel over many other spending categories, also aided by macro trends, it said. The demand and supply growth imbalance continues to support growth in ARRs for the hotel Industry, the brokerage added.
Schloss operates an owner-operator business model with focus solely on luxury hotels under the brand name Leela. Ventive and Brigade are hotel asset developers with capital heavy business model.
Schloss operates a mix of owned and managed portfolio. Ventive has expanded in recent years through its development and acquisition model.
"All 3 players have relatively small room inventory size (1,600-3,400 keys) vs the inventory of large listed peer like IHCL (at 25,000-plus). Brigade has the largest growth pipeline of 996 keys (over 1,604 existing keys), Leela has planned addition of 833 keys (over 3,382 existing), Ventive plans to add a 367 keys (over 2036 existing). Schloss has a relatively well diversified regional presence including all most metros, Ventive has selective presence in cities of Pune, Bangalore and Int'l market of Maldives, while Brigade's presence is mostly restricted to cities in South India," it said.