IPO-bound Leela Hotels eyes wildlife, spiritual tourism sectors for expansion
Leela Hotels, a luxury hotel chain managed by Brookfield Asset Management, is preparing for a ₹5,000 crore initial public offering (IPO). The company has unveiled plans to broaden its portfolio by exploring emerging sectors like wildlife, spiritual and heritage tourism. Additionally, it aims to venture into the serviced apartments sector. This strategic move marks the second time a Brookfield-managed entity is going public in India.
IPO proceeds to repay debt
The upcoming IPO is expected to raise ₹3,000 crore from the market, which will be used to repay existing debt. Additionally, Brookfield plans to sell shares worth ₹2,000 crore. As of May 31 this year, Leela's portfolio comprised 3,382 rooms across 12 operational hotels under three formats: The Leela Palaces, The Leela Hotels and The Leela Resorts.
Expansion includes 8 new hotels
Leela's expansion strategy involves adding eight new hotels, increasing its current room capacity by approximately 24.63%. These proposed properties will be located in Agra, Srinagar and Sikkim, with resorts planned for the wildlife sanctuaries of Ranthambore and Bandhavgarh. Earlier this year, the company announced plans to build a modern palace hotel near the Shri Ram Janmabhoomi Temple in Ayodhya, in association with real estate developer Abhinandan Lodha Group.
Leela to tap into spiritual tourism and serviced apartments
Leela is set to tap into India's spiritual tourism sector, expected to grow at a compound annual growth rate (CAGR) of 16% from FY2024-2030. The company attributes this growth to an increasing demand for authentic experiences, improved connectivity and infrastructure, and government initiatives to develop more spiritual tourism hubs. In addition to these sectors, Leela also plans to enter the serviced apartments market with a project in Mumbai's international airport district.
Leela's future expansion
Leela plans to strategically expand within the luxury hospitality sector both domestically and internationally. The company intends to achieve this via developing existing land assets, pursuing accretive asset acquisition opportunities, hotel management agreements with third-party hotel owners, and optimizing under-utilized space in operating hotels. Also, it will explore selective partnerships, acquisitions and development of brands that complement its portfolio.
Inorganic growth strategy
Leela has also outlined an inorganic growth strategy in its DRHP. To further accelerate growth and leverage Brookfield's expertise, the firm has entered into a right of first offer agreement with a Brookfield affiliate. This grants it the right of first offer to acquire hospitality assets from Brookfield. Since its acquisition by Brookfield in October 2019 for ₹3,950 crore, Leela has seen a significant increase in its number of hotel rooms and diversified presence across cities.
