Leela’s Parent Files For IPO to Fuel Hotel Expansion in India

Schloss Bangalore, the luxury hospitality group behind India’s The Leela Palaces, has filed for a massive $599 million (INR 50 billion) IPO, the largest ever in India’s hotel industry. The company seeks to capitalize on the growing demand for high-end accommodations in India while also paying down debt.

Schloss Bangalore’s Draft Red Herring Prospectus was submitted Friday and outlines ambitious plans. The company aims to raise $359 million (INR 30 billion) through fresh share issuance, while Project Ballet Bangalore Holdings, an affiliate of Brookfield Asset Management, will sell shares worth $240 million (INR 20 billion). Brookfield’s stake stems from its 2019 acquisition of Leela’s assets in bankruptcy.

With 3,382 keys across 12 operating hotels in 10 Indian cities, The Leela is already a prominent name in India’s luxury hospitality sector. The company owns five hotels in cities like Bengaluru, Chennai, New Delhi, and Udaipur, and manages six other properties, including The Leela Kovalam and The Leela Bhartiya City Bengaluru. The company owns one franchised hotel — The Leela Mumbai.

The prospectus reveals plans to expand by adding eight more hotels with 833 keys by 2028. The growth pipeline includes ventures into new segments, such as wildlife and heritage tourism, with properties planned near Ranthambore and Bandhavgarh National Parks.

This diversification is in line with broader trends in luxury travel, where experiential tourism is gaining popularity.

The Leela intends to further expand its footprint, by acquiring and developing five new hotels that it will directly own and manage — in Agra, Srinagar, Ayodhya, Ranthambore National Park, and Bandhavgarh National Park.

The Leela has also recently entered into hotel management agreements for two new hotels in Hyderabad and Sikkim, as well as luxury serviced apartments in Mumbai international airport district.

Industry Context: A Competitive Landscape

The IPO positions The Leela alongside other prominent Indian hotel groups, including Indian Hotels Company (parent of Taj Hotels), Oberoi Hotels, and Lemon Tree Hotels. Park Hotels, which went public earlier this year, adds further competition to an already crowded market. And ITC Hotels has received shareholder approval to spin off and list its hotel division.

As more hospitality companies go public, the battle for investor attention is fierce.

The Indian hospitality industry witnessed investments to the tune of $401 million in 2023, real estate company JLL revealed in a new report. This was nearly four times the transaction volume recorded in 2022. 

A Turnaround Story

The IPO marks a remarkable turnaround for Leela, which faced severe financial distress just five years ago. Brookfield’s 2019 acquisition of key Leela assets was a lifeline. With new ownership and a strategic vision, Leela has focused on expansion, building the brand, and debt reduction.

A major portion of the IPO proceeds, approximately $323 million (INR 27 billion), will go toward reducing debt.

Schloss Bangalore reported a loss of $255,000 (INR 21.3 million) in fiscal 2024, down sharply from $7.4 million (INR 617 million) the previous year. In the first two months of fiscal 2025, it reported a loss of $4.36 million (INR 364 million).

But revenue per available room (RevPAR) rose by 23% to $115 (INR 9,592), reflecting an uptick in demand for premium hotel stays in India. As the hospitality industry recovers from the pandemic, the IPO will be a key test of investor confidence in the luxury travel segment.

The IPO will be managed by a consortium of 11 merchant bankers, including JM Financial, BofA Securities India, Morgan Stanley India Company, JP Morgan India, Kotak Mahindra Capital Company, Axis Capital, Citigroup Global Markets India, IIFL Securities, ICICI Securities, Motilal Oswal Investment Advisors, and SBI Capital Markets. KFin Technologies has been appointed as the official registrar to the issue, managing the administrative aspects of the IPO.

Accommodations Sector Stock Index Performance Year-to-Date

What am I looking at? The performance of hotels and short-term rental sector stocks within the ST200. The index includes companies publicly traded across global markets, including international and regional hotel brands, hotel REITs, hotel management companies, alternative accommodations, and timeshares.

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