The Leela's $400 Million IPO to Fund Luxury Expansion in India
The Leela plans to pay down debt and expand its luxury footprint across spiritual, heritage, and wildlife destinations.
No new brands. Niche luxury segments. That is what The Leela is planning post its IPO – $400 million (INR 35 billion) offering set for Monday.
Parent company Schloss Bangalore aims to use proceeds to pay down debt, said Ankur Gupta, managing partner at Brookfield Asset Management, which acquired The Leela in 2019.
The remaining IPO proceeds are meant to be used for acquisitions, marketing, and other initiatives at the company, which has 13 properties, including five owned hotels.
In a press conference Friday, the company shared more on its future plans. Here's what we learned:
Sticking with luxury: Schloss Bangalore is not planning to move away from luxury and ultra-luxury. 'There is a lot of opportunity in this space,' said CEO Anuraag Bhatnagar.
No new brands: Unlike its competitors, it will not be adding brands. It will open hospitality assets under The Leela brand, further segmented into Palaces, Hotels, and Resorts.
The pipeline: In its Red Herring Prospectus, the company said it has a pipeline of seven hotels with 678 keys in development. They are expected to be operational by 2028.
Niche luxury segments: It is planning to enter spiritual luxury accommodation segment with an upcoming property in Ayodhya, the hill station leisure space in Srinagar and Gangtok, wildlife offerings in Bandhavgarh, and heritage space in Agra and Ranthambore.
New business segment: It is also entering the business segment with serviced apartments in Mumbai.
Staying domestic: The Leela currently has no plans for international expansion, but it is considering options, and noted that locations such as Maldives and Dubai are under-penetrated by Indian luxury brands.
Pipeline Details
By 2028, The Leela's inventory will reach 4,200 keys, about 18% of the total luxury rooms in the country, Bhatnagar said. Currently, the company accounts for over 10% of the rooms in the luxury hotels space in India, according to The Leela's estimates.
The pipeline is a part of The Leela's efforts to diversify its luxury offerings in different niche segments.
In its prospectus, The Leela said that it will focus on gateway cities such as Mumbai, wildlife destinations, heritage spaces, wellness destinations, and spiritual tourism destinations for expansion.
Most of the properties in its current pipeline have a low room inventory to maintain the luxury experience. For instance, the upcoming property in Ranthambore is expected to have only 76 rooms, while the Bandhavgarh resort is currently slated to have 30 keys.
Diversifying in the Luxury Space
'We have refined and perfected ourselves in the luxury space,' Bhatanagar said, when asked about why the company is choosing to remain in the luxury segment and not diversify.
He also cited examples of global companies such as Four Seasons and Mandarin Oriental, which continue to operate in the luxury space without getting 'distracted by any other brand or any other sub-segment.'
Chief financial officer Ravi Shankar claims The Leela commands a 40% premium in its revenue per available room (RevPAR) and non-room revenue over the average in the luxury space.
The company is also planning to launch a members-only club called Arq in its New Delhi, Bangalore, and Chennai properties to offer exclusive experiences.
In October last year, The Leela announced the launch of Arq by The Leela - its collection of 'ultra-luxury villas,' which debuted at The Leela Palace Udaipur. The offering is meant for ultra high-net worth individuals and elite guests and more of these villas are expected to be added in the company's portfolio.
While it is currently open to all, The Leela is hoping for this segment to reach a stage in terms of demand where members of the Arq club will get preference over non-members in booking the villas.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Skift
2 hours ago
- Skift
The Leela Has Soft Debut, but Now Has IPO Cash
The Leela did everything right - the product was impeccable and the marketing was on-point. But it might have been betrayed by the intimidating "largest-in-Indian-hospitality" IPO size. The Leela's parent company Schloss Bangalore debuted on the Indian stock exchanges Monday at INR 406 ($4.74) - 7% below its IPO price. By Tuesday's close, it had only modestly recovered. The muted investor response comes despite high anticipation for the $400 Million IPO of the luxury chain – the largest in the Indian hospitality industry. Other recent travel IPOs
Travel Weekly
2 hours ago
- Travel Weekly
Luxury hotels prevail amid fallen consumer confidence
NEW YORK -- Hotel CEOs on stage at the NYU International Hospitality Investment Forum on June 2 discussed how consumer hesitation is hitting midscale and economy hotels much harder than luxury hotels. Hyatt CEO Mark Hoplamazian talked about a "massive divergence by chain scale," with economic pressure increasing the further down the chain scale you go. A month ago, Hoplamazian discussed the phenomenon during Hyatt's Q1 earnings call, saying luxury and upper-upscale hotels (about 70% of Hyatt's portfolio) were outperforming the company's lower-tier hotels. Hoplamazian's comments jibed with a revised 2025 forecast from CoStar and Tourism Economics at the NYU event. Luxury hotels are expected to achieve 3.4% growth in revenue per available room (RevPAR) this year, and 1.8% growth is expected for upper-upscale hotels. Meanwhile, upscale hotels are projected for 0.5% RevPAR growth, and midscale and economy hotels are expected to record 0.8% and 0.7% RevPAR decreases, respectively. Wyndham Hotels & Resorts CEO Geoff Ballotti said the company's midscale-and-above brands are driving profitability in the U.S., along with extended-stay hotels. Hawthorn Suites is Wyndham's primary extended-stay chain, and it has added Echo Suites and WaterWalk in recent years. "There's just tremendously more demand in extended stay than there is supply right now," said Ballotti, attributing the segment's strength to housing shortages and corporate demand for accommodating blue-collar workers on infrastructure projects. Hotel industry resilience The CEOs also discussed the hotel industry's resilience during a time of economic uncertainty, saying travel demand has continued to hold up relatively well across most sectors. Marriott International CEO Anthony Capuano said that was "pretty encouraging." Hoplamazian said consumers are putting off their booking decisions until the last minute, causing business on the books to initially appear weaker than usual. He's seeing that trend particularly in business travel. "We're seeing the pace for transient business start to slow down maybe two months out, and then it gets weaker, and then as the date of travel gets closer and closer, it comes back up," he said. Hilton CEO Christopher Nassetta acknowledged that most major hotel companies have lowered their 2025 outlook. Despite economic volatility, he expressed optimism that pending legislative packages and trade deals could provide the stability needed to restore consumer confidence. "Getting those things buttoned down at least a little bit more, I think, will allow our customers -- whether that's leisure, business, meetings or events -- to have a little bit more confidence," said Nassetta. The other CEOs on stage were Elie Maalouf of IHG Hotels & Resorts and Sebastien Bazin of Accor. Protestors disrupt CEO panel Midway through the session, the sound of protesting interrupted the proceedings, startling audience members. A security guard said protesters had gathered on the fifth floor of the New York Marriott Marquis. The protest was about the use of eggs from caged hens. The panel resumed shortly after the disruption.
Skift
2 hours ago
- Skift
'Great Green Scam': IATA Chief Blames EU, Fuel Giants for Slow Climate Progress
The head of the International Air Transport Association (IATA), Willie Walsh, is blaming governments and fuel producers for stalling progress on aviation's climate goals. Speaking at an aviation meeting in India on Monday, Walsh said governments, particularly the European Union, have failed to provide the support needed to scale sustainable aviation fuel (SAF). 'From the outset we made it clear that it would be challenging and that the airlines could not do this on their own,' he said. 'Despite their enthusiasm, governments did not create a supportive policy framework to meet their 2030 interim target. The companies we need to be major SAF players like BP and Shell have cut back or delayed their investment.' According to IATA, when airlines use SAF in the EU, they have to pay compliance fees which cover the cost of blending the fuel and checking it meets the policy's requirements. 'It is an outrage that suppliers are charging airlines compliance fees that value SAF at double its market premium over conventional jet fuel. That's a billion-dollar windfall for fuel suppliers. This is the EU's great green scam.' Pressure Mounts Ahead of 2030 Aviation Climate Target IATA Directer willie walsh blamed governments and fuel producers for aviation's slow climate progress In 2021, IATA member airlines, which represent most of the global aviation sector, committed to reaching net zero carbon emissions by 2050. But with demand for flying rebounding sharply post-pandemic, progress has been slow. Governments gave airlines an interim target of reducing emissions by 5% by 2030. However, after a drop in emissions during Covid-19, airline emissions are expected to return to, or even exceed 2019 levels this year, according to Carbon Action Tracker. Walsh directed his sharpest criticism at the European Union's current policy, which requires airlines to use at least 2% SAF in their fuel mix by 2030. 'The EU mandate of 2% SAF in the jet fuel supply has succeeded in raising costs but has done nothing to improve production,' Walsh said. Fuel Producers Push Back Fuels Europe, which represents companies like BP and Shell, have rejected the aviation industry's claims. 'We reject claims from the aviation sector suggesting a lack of sustainable aviation fuel supply,' the group said in a statement. 'Our members are on track to meet their current mandate and exceed 2030 targets. Despite policy and investment challenges, European fuel producers have rapidly scaled SAF output and lowered costs.' An EU spokesperson told Skift it is helping with the transition to SAF through a range of initiatives such as its Refuel EU program and that the current targets are "realistic and feasible." "The implementation of ReFuelEU Aviation has already begun to stimulate production capacity within the EU, with SAF supply starting to outpace mandated minimum shares. This is a positive and necessary signal," the spokesperson said. The spokesperson said the EU is watching the price of SAF closely and recognizes that there continues to be "significant barriers to commercial deployment, primarily due to insufficient investment." They said there will be a dialogue on SAF later this year, with the goal of improving financing and de-risking investment. Skift's in-depth reporting on climate issues is made possible through the financial support of Intrepid Travel. This backing allows Skift to bring you high-quality journalism on one of the most important topics facing our planet today. Intrepid is not involved in any decisions made by Skift's editorial team.
