Brookfield Asset Mangement-run luxury hotel chain Leela, which filed draft papers for a Rs 5,000-crore initial public offering last week, plans to expand its hotels portfolio by tapping into emerging segments such as wildlife, spiritual, and heritage tourism, as well as serviced apartments.
The share sale will see the hotel chain raise Rs 3,000 crore to repay debt, while Canada's Brookfield will sell shares worth Rs 2,000 crore. This will be the second Brookfield-run entity to go public in India.
As of May 31, 2024, Leela’s portfolio comprised 3,382 rooms across 12 operational hotels under three formats - The Leela Palaces, The Leela Hotels and The Leela Resorts.
Leela’s expansion plans include the addition of eight hotels, aggregating approximately 833 rooms or 24.63 percent of its current room capacity, through 2028. The blueprint includes setting up properties in Agra, Srinagar and Sikkim, and resorts at wildlife sanctuaries of Ranthambore and Bandhavgarh.
At the start of 2024, Leela had announced plans to develop a modern palace hotel in Ayodhya near the Shri Ram Janmabhoomi temple in a joint venture with real estate developer Abhinandan Lodha Group.
“Our growth pipeline comprises modern palaces, hotels and resorts, including expansion in segments such as wildlife, spiritual and heritage tourism, diversifying our geographical footprint across additional cities and tourist destinations,” the company said in its DRHP.
The company noted that spiritual tourism in India is expected to record a 16 percent CAGR over FY2024-2030 driven by demand for more fulfilling and authentic experiences. Improving connectivity, infrastructure and the government’s stated intent to develop more hubs of spiritual tourism and spiritual centres such as Tirupati and Ayodhya are expected to be key demand drivers for the segment, it said.
In addition to these emerging tourism segments, the company is also planning to enter the serviced apartments segment, with a serviced apartment project in Mumbai’s international airport district.
“We intend to continue to strategically undertake future expansion across the luxury hospitality sector within India and internationally. We intend to pursue this by developing our existing land assets, pursuing accretive asset acquisition opportunities, hotel management agreements with third-party hotel owners, and optimization of under-utilized space in our operating hotels. We will also pursue selective partnerships, acquisitions and development of brands that complement our Portfolio,” the company said.
Apart from this organic growth, Leela has also outlined inorganic growth plans in its DRHP. In order to “further accelerate our growth and leverage Brookfield’s expertise”, the hotel company has entered into a right of first offer agreement, with an affiliate of Brookfield, granting it the right of first offer to acquire hospitality assets from Brookfield.
Brookfield acquired Leela hotels in October 2019 for Rs3,950 crore. Hotel Leelaventure Ltd (now known as HVL Ltd), founded by Late Capt. C. P. Krishnan Nair, sold its hotels in New Delhi, Bengaluru, Chennai and Udaipur, along with a land parcel in Agra. The deal excluded its Mumbai hotel.
Since the acquisition, Brookfield has increased the number of hotel rooms by 35.55 percent from 2,495 rooms as of March 31, 2019, to 3,382 keys as of March 31, 2024. The asset manager has also increased the number of hotels in the portfolio and diversified its presence, from eight operating hotels in seven cities as of March 31, 2019, to 12 operating hotels in 10 cities as of March 31, 2024.
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