Brookfield-backed Schloss Bangalore, the parent company of Leela Palaces, Hotels & Resorts is the third Indian hotel company to seek IPO in as many months, and this may be the largest yet.
Schloss Bangalore filed an application on Sept. 20 for a public listing valued at 50 billion Indian rupees ($599 million) on the Bombay Stock Exchange. If successful, the offering might be the largest IPO in the history of Indian hotels, according to The Times of India. The newspaper reported the Schloss Bangalore offering is the “latest in a string of Indian companies rushing to go public in a stock market that is cruising at record highs and is trailing only Wall Street’s NASDAQ and Standard & Poor’s 500 as the top-performing indexes this year.”
The offer has two sets of shares: a fresh issue of a combined value of 30 billion rupees and an offer of sale of value 20 billion rupees.
Schloss Bangalore has derived most of its income from its five owned hotels — Leela Palace Bangaluru; Leela Palace Chennai; Leela Palace Jaipur; Leela Palace New Delhi, and Leela Palace Udaipur.
Leela Palace Bangaluru saw revenue increase 68% to approximately 3.52 million rupees from May 2023 to May 2024; Leela Palace New Delhi grew revenue 27% to approximately 3 million rupees in that time; and Leela Palace Chennai's revenue grew 21% to 2.21 million rupees in that period.
As of May 31, Leela Palaces managed 3,382 rooms in 12 hotels, all in India, including its owned hotels. It has eight hotels in the development pipeline, with a room count of 833 keys. The additions are slated to open by the end of 2028.
Schloss Bangalore acquired 50% of the ownership interest in Leela Palace Jaipur in May 2021 and the remaining shares in May 2023.
Toronto-based Brookfield is the principal sponsor of the Bangaluru-based Schloss Bangalore. Bangaluru is the modern and accepted name for the Indian city, which is an IT hub referred to as the “Silicon Valley” of India.
India's demand potential
Executives at Schloss Bangalore are bullish about hotel demand in India.
In its stock-exchange IPO prospectus, they outlined the growth they expected for India and its hotel industry.
“The Indian hospitality sector is expected to deliver strong growth in the coming years as India’s gross domestic product is projected to double from $3.6 trillion in 2023 to $7.1 trillion in 2030,” executives wrote. “The luxury hospitality segment in India is underpenetrated constituting only 17% of the branded hotel stock. The total demand for luxury rooms estimated to grow at a compound annual growth rate of 10.6% over financial year 2024 to financial year 2028 against supply growth of only 5.9% over the same period. India is expected to see domestic tourism and foreign tourist arrivals growing at CAGRs of 13.4% and 7.1%, respectively, between 2024 to 2030.”
String of hotel IPOs continues
This has been a busy year for Indian hotel companies to go public.
In February, Kolkata-based Apeejay Surrendra Park Hotels went public and issued shares valued at 10.5 billion Indian rupees.
In June, ITC Hotels, a division of Kolkata-based conglomerate ITC listed on the Bombay Stock Exchange; and on Sept. 10, Pune-based real estate investment trust Ventive Hospitality outlined its preparation for an IPO.