India's Hotel Space To Be Four Cos More Crowded As They Plan To Capitalise On Strong Industry Outlook
"Cumulatively, these companies are looking to raise Rs 8,000 crore in IPOs including fresh raise of Rs 6000 crore," a Jefferies report said.
India's hospitality space is set to see heightened competition with three companies having filed its IPO prospectus in the past three-four months and as the market await the demerger of ITC's hotels business in the last quarter of this fiscal, according to Jefferies.
Three companies in hospitality segment namely Schloss Bangalore (Leela), Ventive Hospitality and Brigade Hotels have filled IPO prospectus in past 3-4 months. "Cumulatively, these companies are looking to raise Rs 8,000 crore in IPOs including fresh raise of Rs 6000 crore," a Jefferies said in a note, adding that it comes after a Rs 1,000 crore QIP by Chalet Hotels earlier in year and three IPOs (Samhi, Park, Juniper), which cumulatively raised Rs 4,000 crore.
"The Hotel IPO stocks in past year are above their issue price by 0-52% to date, with performances largely sideways/lower after the initial upmove," Jefferies said.
This comes as more players plan to capitalise on the country's tourism opportunity. "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," Jefferies said. "The demand and supply growth imbalance continues to support growth in ARRs for the hotel industry."
Jefferies' analysis of the performance of these new additions with listed players reveal that Ventive & Leela will be the amongst top five listed players by Revenue/Ebitda, while Brigade will be amongst the smallest.
The two, Ventive & Leela, will also be among among the top five in terms of average room rate and revenue per available room. However, from a number of keys perspective the three new listing are laggards and ITC Hotels is ranked 2, according to the brokerage.
Schloss operates an owner-operator business model with focus solely on luxury hotels under the brand name Leela, while Ventive/Brigade are hotel asset developers. Jefferies said Schloss operates a mix of owned and managed portfolio and Ventive has expanded in recent years through its development+acquisition model. "All 3 players have relatively small room inventory size (around 1600-3400 keys) vs the inventory of large listed peer like IHCL (at 25k+).," it said.
