“The process has started and the DRHP (draft red herring prospectus) will be filed in two weeks or so,” said one of the people mentioned above, on condition of anonymity. “The money will be used for funding the growth plans in the hotels and hospitality space.”
“Prestige is looking to dilute 10% stake in the subsidiary through the proposed IPO (initial public offering) and has plans to significantly ramp up its hotel portfolio,” said the second person, also requesting anonymity. “Apart from growth, part of the funds may be used to shave off debt.”
Prestige Hospitality Ventures is a wholly owned subsidiary of Prestige Estates Projects Ltd, which houses all hospitality assets and projects of Bengaluru-headquartered real estate major Prestige Group. The company owns properties such as JW Marriott Prestige Golfshire and Conrad Bengaluru.
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The move to go public comes in the backdrop of the realty major putting its hotel business expansion plans on the fast track in the backdrop of the country’s thriving hospitality and tourism market.
Prestige’s hospitality plans
As a real estate firm, Prestige Group has largely focused on residential and commercial projects but has also built and scaled up hospitality and shopping mall properties alongside. The group had indicated last year that it plans to double its hospitality portfolio in three to four years.
Prestige’s hospitality portfolio includes eight operating hotels (1,477 keys) and four ongoing projects (1,137 keys). It is now developing a St Regis hotel and a Marriott Marquis hotel and convention centre in Delhi’s Aerocity, with almost 800 keys cumulatively, among others.
The developer also has a significant pipeline of 11 hotel projects, with around 2,146 keys, in Bengaluru, Chennai, Mumbai, Goa, Hyderabad and Hassan (near Bengaluru), according to its latest investor presentation.
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In March 2024, Prestige had signed an agreement with global hospitality giant Marriott International to develop six hotel projects in the country in two to five years.
In the first nine months of FY25, Prestige’s operational hotels achieved an average room rate (ARR) of ₹14,139 and revenue per available room or RevPAR of ₹8,522, the presentation said. RevPAR measures the average revenue generated per room over a specific period.
Hospitality IPOs
Even though the primary market is now perceived to be less vibrant than the last calendar year by analysts and bankers, the scenario for hotels and hospitality companies is somewhat different especially with rising average individual income and a palpable desire among the country’s urban youth to spend on luxury work stays and family vacations.
Nikhil Shah, senior director and head, hospitality, capital markets and investment services, Colliers India, a property advisory, said hotels were doing well due to strong domestic demand and are, therefore, expanding.
“Hospitality companies want to hit the market to list in the current scenario,” said Shah. “The market had an appetite for IPOs. However, given the current subdued market prices, IPO valuations are likely to be more realistic.”
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To be sure, Prestige’s proposed IPO will follow a slew of hospitality IPOs in recent months, including Samhi Hotels (in September 2023), Juniper Hotels (February 2024), Park Hotels (February 2024) and, most recently, the December listing of Ventive Hospitality Ltd, a joint venture between real estate developer Panchshil Realty and global asset manager Blackstone.
In the coming months, more hospitality IPOs are expected to hit the market. Bengaluru-based realty firm Brigade Group’s Brigade Hotel Ventures Ltd in February received Sebi approval for a ₹900 crore IPO. Schloss Bangalore, the parent of Brookfield-owned Leela Palaces Hotels & Resorts, also secured the market regulator’s nod for its ₹5,000-crore proposed IPO, which could be the country’s largest IPO in the hospitality sector.
“The next two to three years should continue to see high demand for hotels fuelled by domestic demand; business travel should also do well,” said Shah, while cautioning that the US tariff announcement may have an impact on IPOs going forward. “We have to see how it plays out,” he said.
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According to the India Hotel Market Review 2024, released by consultancy Horwath HTL in February, India’s organized hotel industry is set to add more than 100,000 rooms to surpass the 300,000-mark by 2029. For the first time, hotel chains crossed the 200,000 branded room mark, adding 14,000 rooms to India’s inventory in 2024.
