Leela Hotels IPO Eyes $2.5 Billion Valuation, Listing Likely in 9 Months: Report

The Leela Palaces, Hotels and Resorts looks to make a significant entry into the public market, seeking a valuation of approximately $2.5 billion in its upcoming initial public offering (IPO), as reported by Mint.

Expected to raise around INR 31.5 billion ($377 million), this would make it the largest IPO in the history of India’s hospitality sector. The report also noted that promoter Brookfield will initially sell 15% of its stake to the public in the listing likely to come in 9 months, and will sell an additional 10% over the next three years.

However, the IPO will exclude The Leela Mumbai, which Hotel Leelaventure (HLV) Limited, the original owners of Leela, promotes and is already listed.

Right Time for an IPO

Speaking with CNBC TV18 recently, Ankur Gupta, managing partner at Brookfield Asset Management, hinted at the imminent IPO, “The businesses is at that point where the growth that we are seeing will ensure that some amount of activity will happen sooner than later.”

Leela will join a list of other prominent Indian hotel companies already on the stock exchange, including Indian Hotels Company (parent of Taj Hotels), East India Hospitality (parent of Oberoi Hotels), Lemon Tree Hotels, Juniper Hotels, Mahindra Holidays, Chalet Hotels, and the government-owned India Tourism Development Corporation (ITDC). Park Hotels has been the latest entrant, launching its IPO in February this year.

Additionally, ITC Hotels last week received shareholder approval for the demerger of its hotel business, paving the way for its own listing.

A Globally-Recognized Indian Brand

The Leela listing marks a remarkable turnaround for the luxury hotel chain, which faced severe financial distress five years ago. In 2019, Brookfield acquired four of Leela’s hotel assets in New Delhi, Bengaluru, Chennai and Udaipur along with a land parcel in Agra for INR 39.5 billion ($470 million) through bankruptcy proceedings. The deal excluded its Mumbai property.

Brookefield’s Gupta emphasized the importance of creating a globally recognized Indian luxury brand, stating that the Canada-based investment management company is laying the groundwork for Leela to achieve this status.

He highlighted the strong recognition of Leela within the investor community, noting that over the past five years, they have effectively communicated the brand’s story to partners worldwide.

“Across the board, the Leela investment has turned out pretty well for us. Hopefully the next chapter creates more vibrancy around it,” he said.

Under Brookfield’s stewardship, Leela has expanded from 8 to 15 hotels, with plans for nearly 20 properties across India. Gupta, who currently leads Brookfield’s real estate business in the Asia Pacific and Middle East region, stressed that they have maintained and enhanced the luxury quotient of the brand.

Talking about Leela’s high end luxury rentals he said they would be coming up with a project in Mumbai next to the airport, which would serve as a prototype for future developments.

The Hospitality Boom in India

The Indian hospitality sector has shown robust performance in early 2024, driven by an 8.5% increase in average daily rates and an 11.4% rise in revenue per available room (RevPAR).

JLL’s Hotel Momentum India (HMI) report for the first quarter of 2024 attributes this growth to increased corporate travel, weddings, and demand for Meetings, Incentives, Conferences, and Exhibitions (MICE).

In 2023, the Indian hospitality industry attracted $401 million in investments, nearly four times the transaction volume of the previous year. Also, in the first quarter of 2024 the hotel transaction volumes went up to $78 million, a surge of 80% compared to the same period in 2023.

Global hotel chains are increasingly focusing on India, betting on the country’s rising affluence and the subsequent surge in travel demand. A recent Skift article highlighted the strategic investments by the world’s largest hotel chains in India, underscoring the country’s growing significance in the global hospitality landscape.

At the recent New York University International Hospitality Industry Investment Conference, industry leaders from Marriott, Accor, Hyatt, Hilton, and IHG identified India as a key market for future growth.