Latest news with #LeelaPalaces
Entrepreneur
28-05-2025
- Business
- Entrepreneur
Leela Hotels IPO Fully Subscribed on Day 3, NSE to Settle Disputes with SEBI Ahead of IPO
The initial public offering (IPO) from the operator of Leela Palaces Hotels and Resorts is on its last day and has been subscribed 3.63 times so far, led by qualified institutional buyers (QIBs). The National Stock Exchange of India Ltd (NSE) is said to be offering close to a staggering INR 1,000 crores to settle longstanding disputes with the country's market regulator, Securities and Exchange Board of India (SEBI), in its quest to get publicly listed, according to a report. Opinions expressed by Entrepreneur contributors are their own. You're reading Entrepreneur India, an international franchise of Entrepreneur Media. The initial public offering (IPO) from the operator of Leela Palaces Hotels and Resorts is on its last day and has been subscribed 3.63 times so far, led by qualified institutional buyers (QIBs). The price band for the issue has been set at INR 413-435 per share, with the lot size being 34 equity shares and in multiples of 34 equity shares thereafter. The company has allotted 75 per cent of the shares for QIBs, 15 per cent for 15 per cent for non-institutional investors (NII), and 10 per cent reserved for retail investors. According to BSE data, the listing has been subscribed 3.63 times on day 3 of subscription. The IPO received bids for 16,93,98,676 shares against 4,66,10,169 shares on offer as on 3 PM IST. The portion for retail investors has received 63 per cent subscription, while NII investors subscribed 49 per cent to the issue. The QIB portion, however, has been booked 6.21 times. Schloss Bangalore is known for its premium segment offering in the hospitality industry under 'The Leela' brand and currently operates 3,382 rooms across 12 properties. Schloss also raised INR 1,575 crores from its anchor investors. In FY24, the hospitality company recorded positive growth, with its EBITDA at INR 600.03 crore, up from INR 87.72 crore in FY22. Aditya Birla Money Ltd., in its pre-IPO note, gave a 'Subscribe' rating to the listing, citing that the company is "The largest hotel player in the luxury segment, having a strong global appeal." The IPO note also said that Schloss Bangalore also has a 'strong track record in driving operational efficiency backed by a strong promoter and is promoted by PE funds which are managed and/or advised by affiliates of Brookfield, one of the world's largest alternative asset managers and investors with over USD 1 trillion n of AUM as of FY25, across various asset classes. The company also has a track record of delivering superior EBITDA margins and increased RevPAR for its owned portfolio, driven by operational efficiencies, said Aditya Birla. NSE-SEBI Work to Resolve Issues The National Stock Exchange of India Ltd (NSE) is said to be offering close to a staggering INR 1,000 crores to settle longstanding disputes with the country's market regulator, Securities and Exchange Board of India (SEBI), in its quest to get publicly listed, according to a report. SEBI will mull over the offer, with a decision expected soon, said the report, citing people familiar with the matter who shall remain confidential. NSE also paid close to INR 640 crores previously to SEBI to settle a case that involved alleged unfair access to its trading platform. NSE's CEO, Ashish Kumar Chauha, had also told market analysts and investors that the regulator had identified four areas and legal cases needing a resolution. SEBI's newly appointed Chairman Tuhin Kanta Pandey also hinted recently that it is working closely with NSE to resolve issues surrounding its IPO plans. NSE's valuation has also reached USD 58 billion, in anticipation of its potential listing, according to a TOI report citing market experts. At the USD 68 billion mark, the country's largest equity-derivatives exchange will surpass Nasdaq's valuation and inch closer to Deutsche Boerse AG's USD 62 billion valuation, according to Bloomberg.
Mint
26-05-2025
- Business
- Mint
Leela Hotels' ₹3,500 crore IPO to test investor appetite for India's luxury travel boom
Mumbai: Leela Palaces, Hotels and Resorts' ₹3,500 crore initial public offering (IPO)--the largest ever in Indian hospitality--is testing investor appetite for luxury tourism stocks amid a tepid primary market. The listing will expand the roster of publicly traded luxury hotel chains beyond Indian Hotels Company, which runs the Taj brand, and EIH Ltd, the parent of Oberoi Hotels. The offer includes a fresh issue of shares worth ₹2,500 crore and a ₹1,000 crore offer for sale by its New York-based promoter Brookfield Asset Management, according to the company's red herring prospectus. Investors can subscribe to shares of Schloss Bangalore, the sole owner of the Leela brand, at ₹413– ₹435 apiece during 26–28 May. The IPO also serves as a litmus test for sentiment in a sluggish primary market, especially with heavyweights like the National Stock Exchange still await clearance to list. Read this | Leela to retain its 'niche, complete luxury' hotel identity even after IPO: CEO Still, subdued investor sentiment has resulted in a more rational valuation for Leela's stock, despite recent fierce returns from rivals, said Taher Badshah, CIO at Invesco Asset Management (India). 'Leela may not necessarily offer immediate listing day gains. But it is definitely providing a cheap entry into the luxury segment which is expected to grow faster than the broader hospitality sector, especially in terms of value," Badshah said. Demand for premium experiences is driving a strong upcycle in the hotel industry, bolstering margins and profitability across luxury operators, according to industry experts. With high average room rates and strong brand positioning, luxury hotels are well-placed to sustain bottomline growth, something increasingly rare in India Inc. Leela currently operates 13 hotels, with average room rates (ARR) and revenue per available room (RevPAR) of ₹22,545 and ₹15,306, respectively, for FY25, about 1.4x the luxury segment average in India. It also boasts the highest Ebitda margin in the industry at nearly 50%, one of its key strengths, at least on paper. Chink in the armour However, the company's crushing net debt of ₹2,567 crore eats into most of its profits through interest payments. Despite its high operating profitability, Leela has posted losses until FY24 and is set to deliver the lowest net margin, at 3.4% among peers in FY25, per its prospectus. Much of the IPO proceeds of ₹2,300 crore will go towards debt repayment. That raises key questions: Will Leela have enough free cash flow to fund its capital expenditure plans? How will it strike a balance between growth and deleveraging? Read this | Travel startups and indulgent Indians: A match made over dream destinations and luxury escapades 'Post IPO, the company's net debt will be close to zero. This means there will be ample liquidity available through internal accruals to finance future capex," Ankur Gupta, managing partner and head of Asia Pacific and Middle East at Brookfield Asset Management told Mint. 'Even at the project level, we can borrow for construction and then pay it down with accruals from that property over a period of time. A combination of minimal debt and internal accruals should be sufficient for the current pipeline," he said. Leela plans to add 678 rooms across seven new hotels by 2028. Some will be owned and operated by Schloss Bangalore, while others will follow a management-contract model. The expansion includes palace-style hotels in Agra and Srinagar, wildlife resorts in Ranthambore and Bandhavgarh, a Hyderabad hotel, and serviced apartments near Mumbai airport. Still, analysts caution that rivals have more aggressive expansion plans to tap into India's growing demand for luxury hotels, potentially limiting its market share gains. In FY24, Leela's average occupancy rate stood at 63%, well behind Indian Hotels Company's 77%, underscoring the intensity of competition. Experts attribute this gap to stronger brand recall enjoyed by rivals like Taj and Oberoi. Leela's smaller, less diversified portfolio also makes it more vulnerable to seasonal swings in tourism demand, they noted. Since most of Leela's new properties won't be operational until 2028, the company also risks missing out on capitalising fully on the current luxury upcycle. Also read | Where are Indians travelling in 2025? That may partly explain its lower valuation: Leela has been priced at 27 times enterprise value to Ebitda for FY25, compared to 30–34x for peers like Chalet Hotels and IHCL, according to a source managing the IPO. Luxury tailwinds Despite slower volume growth, Leela's premium positioning could still deliver meaningful value growth. Supply addition is typically slower in the luxury segment, so room rates might hold up better even during a downturn, as consumers are less sensitive to prices in this segment, said Invesco's Badshah. In fact, India's luxury ARR at $175-200 is significantly lower than the global average of $579. Meanwhile Leela projects excess demand for luxury hotel rooms to result in an 8% compound annual growth rate for the industry's ARR till FY28, according to the red herring prospectus. This indicates a significant opportunity for value growth in the luxury segment given the current demand-supply mismatch expected to persist there. Also read | JP Morgan's Mookim seeks bright spots amid earnings lull in Indian markets 'Leela operates in and leads a niche segment which is somewhat immune to economic cycles. Now that it is somewhat cheaper, it can be a good long-term play," Badshah said.
Mint
23-05-2025
- Business
- Mint
Leela to retain its 'niche, complete luxury' hotel identity even after IPO: CEO
The Leela Palaces, Hotels and Resorts, which is set to launch the largest initial public offering (IPO) in India's hospitality space to fund its expansion, is clear that it won't allow scale to dilute its core identity. The luxury hotel chain, operated by Brookfield-backed Schloss Bangalore Ltd, says it will remain a distinct, pure-play luxury brand with a sharp focus on high-end hospitality, as it prepares to raise ₹3,500 via the public offer that opens on Monday. "Ours will be a niche, complete luxury hotel offering," Anuraag Bhatnagar, chief executive officer, Schloss Bangalore Ltd, told Mint. Also Read | IPO-bound Schloss to spread Leela hotels in India, explore new luxury ventures The Leela Palaces IPO price band has been set at ₹413- ₹435 per share. The company's vision is clear, and will be focused on luxury hotels, continuing with its 40-year legacy. "This is a very nuanced and a very niche space we have created. We are the only institutionally managed pure-play luxury hotel company in India and it has taken us years to reach here. It's not easy to perfect this kind of an ecosystem of luxury and we have refined our vision and this will be our moat going forward too," Bhatnagar said. The company has 13 hotels that are currently operational and another 700-odd rooms are in active development across different cities. Leela owns over 10%, or 3,500 of India's luxury hotel inventory of nearly 30,000 rooms. "When we look at industry data, we are charging on an average, 40% premium (or 1.4 times) on our luxury hotel rooms than any other luxury player in the country and luxury rooms themselves charge two-and-a-half times higher in terms of revenue per available room than the regular industry average. This number is ₹15,300, which is higher than the industry average of ₹11,000. We have a long runway ahead" he said. Revenue per available room, or RevPAR, is a metric by which hoteliers measure performance of the total hotel rooms they have. It is calculated by dividing the total room revenue by the total number of rooms available. Also Read | 'Leela deal worth the price; such assets not built quickly' Average daily rates, or the rates that hotels charge per day per room, in the luxury segment are far lower in India than their overseas counterparts, including hotels in the Middle East and Asia Pacific, giving companies like The Leela Palaces more room for growth, Bhatnagar said. According to hospitality consultancy firm Hotelivate's October 2024 report, India had a total branded hotel inventory of approximately 180,000 rooms as of FY24, with around 39% of these falling into the upscale and luxury segments. India now has about 200,000 or more branded hotel rooms, with the number expected to shoot past 300,000 rooms by FY30, according to another hospitality consultancy Horwath HTL. Also Read | Leela, Hyatt or Radisson? Summer brings out India's best hotel deals Bhatnagar said that the hotel sector has experienced a sustained recovery and growth over the past five years, following the pandemic-induced downturn. This resurgence is characterized by a permanent shift towards prioritizing travel and experience-driven consumption. 'There is also now an overlap with the India growth story and the phenomenal rate at which our GDP is growing along with the increase in purchasing power. There were about 70 million-odd households in India a few years ago, which were potentially consuming luxury goods and services. This is expected to triple in the next five years to 200 million households. That's where a huge opportunity lies," he said. Hospitality, traditionally shaped by global consumption trends, has long been central to the luxury goods and services space. Bhatnagar further noted that the country's expanding infrastructure, including the development of new airports and the rising popularity of destinations easily accessible by road from major cities, is significantly contributing to business growth. 'The addressable luxury market is going to increase year on year," he added. While the current number of pure-play inbound international travellers lags, projections indicate a significant increase to 15 million in the coming years, which is expected to substantially boost the business. Leela at present has a near 50-50 split of Indian versus international travellers, which gives it balanced future growth prospects, he added. Earlier, prior to the pandemic, this figure was 65% international travellers versus 35% Indians. The company is reinvesting strategically in its existing hotel portfolio and exploring emerging luxury sub-categories to enhance average daily rates. This includes developing premium offerings such as high-end villas within current properties and establishing exclusive members-only clubs. 'These will all be value drivers that we have built into a system which will play out in the next few years," he said. This will also include its luxury residences which will come up in the next 18 months in Mumbai. Hotels will open in a phased manner till 2028. Schloss Bangalore Ltd earlier this week said it will open its ₹3,500 crore initial public offering on 26 May, making it the largest IPO in the country's hospitality sector to date. The company has scaled down the issue from an earlier ₹5,000 crore plan, citing robust cash flows in recent quarters, and will use the proceeds to fully repay its ₹2,500 crore debt, making it a debt-free business. "We see it as a very positive spin because our primary need of the IPO proceeds was to pay our debt and we had to pay ₹2,500 crore of debt. Our need for capital has gone down. And the size of reduction of the offer for sale (OFS) shows a promoter confidence in the brand and the company," he said. The IPO also comes amid a wave of listings in India's hospitality sector, as rising disposable incomes and a surge in premium travel drive investor interest in hotel chains. The Leela's earnings before interest, taxes, depreciation, and amortization (Ebitda) have grown from ₹600 crore to ₹700 crore from FY24 to FY25. Brookfield had also infused over ₹1,200 crore cash into the business which is sitting on the balance sheet. For the next phase of growth, it will utilize that and the capital on its balance sheets including internal accruals. "We've seen a balance growth across our portfolio and not just from one set of hotels. Food and beverages is a very large part of our business and about 37% comes from it," Bhatnagar added. More than a third, or 35%, of its current inventory of about 1,220 rooms are managed while the remainder are owned. By the end of FY28, the company will have 10 owned hotels, from five now. Along with the listing, Schloss is ramping up expansion with seven new hotels planned over the next three years in cities like Ayodhya, Ranthambore, Gangtok, Srinagar, Bandhavgarh, Agra and Mumbai—targeting demand across spiritual, heritage, wildlife and business travel segments. "The trend of multi-generational travel and spiritual luxury travellers is here to stay. This is where our moat is. The average age of the consumer of luxury is getting younger. Earlier, one associated luxury with a particular age group, but now as we move forward, we find it is getting more democratic and more inclusive," he added. Five of these seven hotels will be owned, while two will be operated through management or franchise agreements, making the company grow from 13 to 20 properties to scale the luxury portfolio in underpenetrated markets. The hotel industry has seen a lot of formalization in the last few yeas, with several players listing themselves while others are still in the process. Prestige Hospitality Ventures Ltd has filed draft papers for a ₹2,700 crore public issue. Ventive Hospitality—a joint venture between Panchshil Realty and Blackstone, filed its preliminary papers with the Sebi in December last year, while Juniper Hotels and Park Hotels last February. Next will be Brigade Hotel Ventures Ltd, which filed its DRHP last December and received approval for a ₹900 crore IPO. Brookfield is a 100% owner of the Leela Hotels. Ankur Gupta, head of Asia Pacific and Middle East for Brookfield's real estate business, said that the company will look to hold about 76% of its ownership post-IPO and will dilute just 24%. Brookfield finalized its $500 million or ₹3,900 crore acquisition of Hotel Leelaventure—the company behind the iconic Leela luxury hotel chain, in 2019.
