Schloss Bangalore Ltd Set to Launch India’s Largest Hospitality IPO Amidst Expansion Plans

MUMBAI: In an exciting development for the Indian hospitality sector, Brookfield-backed Schloss Bangalore Ltd is set to launch the country’s largest hospitality initial public offering (IPO) on May 26, aiming to raise approximately ₹3,500 crore. This IPO will consist of a fresh issue of ₹2,500 crore alongside an offer for sale (OFS) worth ₹1,000 crore. The three-day offering will close on May 28, marking a significant financial maneuver in the hotel industry.

Schloss, known for its luxury ‘Leela’ brand, is not just focusing on the IPO; the company has ambitious plans to expand its portfolio from 13 to 20 hotels in the upcoming three years. The new ventures will include seven new ‘Leela’ branded luxury hotels strategically located in spiritual hubs and picturesque locales such as Ayodhya, Ranthambore, Gangtok, Srinagar, Bandhavgarh, Agra, and Mumbai. This expansion is aimed at catering specifically to luxury travelers.

Expansion Plan and Legacy of ‘The Leela’ Brand

The planned expansion comes at a time when Schloss operates 13 hotels with a total of 3,353 keys. The addition of 678 keys through the new hotels is expected to strengthen the brand’s footprint in the luxury market. Most notably, five of the seven new hotels will be owned by Schloss, while the remaining two will either be managed or franchised.

Anuraag Bhatnagar, CEO of The Leela, highlighted, “Our focus is on luxury, which is where demand is being generated. In comparison, the supply of luxury hotels is limited.” This assertion underscores the gap in the market that Schloss aims to fill. The company also plans to launch an exclusive, invitation-only club in key locations, including Delhi, Bengaluru, and Chennai, reflecting their commitment to high-end hospitality.

Brookfield’s Strategic Support

Brookfield Asset Management is heavily involved with Schloss, having been a transformative force for the brand since their acquisition of Hotel Leelaventure Ltd’s properties in 2019 for ₹3,950 crore. Ankur Gupta, Managing Partner and Head of Real Estate for Asia Pacific & Middle East at Brookfield, commented that the business has performed exceptionally well over the past six months, which has resulted in significant internal cash generation. He added that the company’s current net debt, approximately ₹2,500 crore, will be decreased to zero following the IPO.

A Growing Trend in Hotel IPOs

While some analysts view the primary market as less vibrant compared to previous years, the outlook for hospitality IPOs remains promising. The rising disposable income among Indians and the growing trend of luxury travel, especially among the urban youth, are driving demand. The India Hotel Market Review 2024, published by hospitality consultancy Horwath HTL, indicates that the organized hotel industry is expected to eclipse the 300,000-room count by 2029, adding over 100,000 rooms to current inventory.

• First-time branded room count in India surpassed 200,000 in 2024.
• Hotel chains added 14,000 rooms to the inventory this year alone.

Recent activity in the IPO landscape showcases a series of hospitality offerings, including:

• Prestige Hospitality Ventures Ltd with a proposed IPO of ₹2,700 crore.
• Samhi Hotels IPO in September 2023.
• Juniper Hotels and Park Hotels IPOs planned for February 2024.
• Ventive Hospitality Ltd’s December listing, a joint venture with Blackstone.
• Brigade Hotel Ventures Ltd, approved for a ₹900 crore IPO.

Conclusion: A Promising Future for Luxury Hospitality

As Schloss Bangalore Ltd prepares for its landmark IPO, the company’s strategic expansion and investment indicate a vibrant future for the luxury hospitality market in India. With the demand for premium accommodations on the rise and a commitment to enhancing the Leela brand, Schloss stands poised to become a significant player in the increasingly competitive industry.

The upcoming IPO not only signifies a pivotal moment for Schloss but also reflects broader trends in the Indian economy where luxury hospitality continues to flourish despite market fluctuations. For potential investors and stakeholders, Schloss represents a unique opportunity to engage with a growing sector that promises robustness and resilience.

As we await the IPO launch, all eyes will be on the hospitality market, where luxury living is increasingly becoming a mainstay for travelers across the globe.