IPOs for Expansion

Green shoots in the hospitality sector coupled with buoyancy in the primary market has paved the way for Initial Public Offerings (IPOs) in the hotels sector. Two hotel chains - Bharat Hotels, which operates The LaLiT brand, and Chalet Hotels, owned by Mumbai-based K Raheja Corp have filed IPO papers. The public issues are expected to raise over Rs 3,000 crore combined. The major part of the proceeds will be used to repay loans, though the K. Raheja Corp may use some part for expansion. Both chains have different business models.

The LaLiT owns and manages its own properties - 14 luxury and mid-market hotels - while Chalet develops hotels and ties up with international hospitality brands like Marriott International to manage their hotels. In April, mid-market brand Lemon Tree Hotels came out with a public float that was well-accepted. The hotel sector is witnessing a revival of sorts with pan-India occupancy rates rising to above 65 per cent and marginal improvement in average room rates.

Manu Kaushik