No new brands. Niche luxury segments. That is what The Leela is planning post its IPO – $400 million (INR 35 billion) offering set for Monday.
Ankur Gupta is the managing partner of Brookfield Asset Management which purchased The Leela in 2019 and plans to use proceeds from The Leela to pay off debt.
The company has 13 properties including five hotels, so the remaining proceeds from the IPO will be used to acquire, market, and implement other initiatives.
The company revealed more about its future plans in a Friday press conference. What we learned is:
Staying with luxury Schloss Bangalore does not plan to abandon luxury or ultra-luxury. Anuraag Bhattagar, CEO of Schloss Bangalore said that there are many opportunities in this sector.
No new brands: Like its competitors, it won’t be adding any more brands. It will launch hospitality assets under the Leela Brand, segmented further into Palaces, Hotels, and Resorts.
The pipeline: In its Red Herring Prospectus the company reported that seven hotels, with 678 key in development, were on its pipeline. These hotels should be operational by the year 2028.
Niche luxury segments: You are planning to enter spiritual luxury accommodation segment with an upcoming property in AyodhyaBandhavgarh offers wildlife, Agra has heritage, and Ranthambore is a hill station.
New business segment: Serviced apartments are also available in Mumbai.
Staying local: The Leela does not currently have plans to expand internationally, but is looking at options. It has noted that Indian luxury brands are under-represented in locations like the Maldives and Dubai.
Pipeline Details
Bhatnagar reported that the Leela’s inventory would reach 4,200 keys by 2028. That is 18% of all luxury rooms across the country. The Leela estimates that the company currently accounts for more than 10% in India’s luxury hotels.
The pipeline is part The Leela’s effort to diversify luxury offerings within different niche segments.
The Leela’s prospectus states that the company will expand by focusing on gateway cities like Mumbai, wildlife, heritage, wellness, and spiritual tourism.
The majority of properties currently in the pipeline are low-room inventory, to maintain a luxury experience. In Ranthambore, for example, there are only expected to be 76 rooms. Meanwhile, Bandhavgarh is set to have just 30 rooms.
Diversifying Luxury Space
Bhatanagar replied, “We have perfected and refined ourselves in the luxurious space.” When asked why the company chooses to stay in the segment of luxury and not diversify, Bhatanagar explained.
He also mentioned examples of global companies like Four Seasons and Mandarin Oriental which continue to work in the luxury sector without “getting distracted by any other brand, or any sub-segment.”
Chief Financial Officer Ravi Shankar says The Leela has a 40% higher revenue per available rooms (RevPAR), and revenue from non-rooms, than the luxury average.
Arq is a private club that will only be open to members of the company’s properties in New Delhi and Bangalore. It will offer exclusive experiences.
In October last, The Leela announced the launch of Arq by The Leela The collection of “ultra luxury villas” was unveiled at The Leela Palace Udaipur. This offering is for ultra-high net worth individuals and elite clients. It’s expected that more villas will join the portfolio of this company.
The Leela wants to see this segment reach a level of demand that will give members of the Arq Club a preference in booking villas over non-members.
