Brigade Hotel Ventures Limited (BHVL) is set to enter the public markets with its initial public offering (IPO), aiming to raise INR 900 crore as it capitalizes on India’s recovering hospitality sector. The IPO will open on July 21, 2025, and close on July 23, 2025. This move comes at a time when the hospitality industry in India is experiencing a significant revival, driven by increasing domestic travel and urbanization.
India’s hospitality sector is projected to grow robustly, with the hotel market reaching INR 1.42 lakh crore in the fiscal year 2024 and expected to expand at a compound annual growth rate (CAGR) of 9% to 11% through 2029, according to HVS Anarock. This growth is supported by a surge in local tourism, business travel, and global events.
Strong Market Dynamics and Financial Performance
The performance indicators for the hospitality sector are on an upward trajectory. The occupancy rate for the industry in fiscal year 2024 stands at approximately 64%, an increase from 54% in fiscal year 2022. The average daily rate (ADR) has also risen to INR 6,057, marking a 21% year-on-year increase. Revenue per available room (RevPAR) has surged to INR 3,877, reflecting a 24% year-on-year growth.
BHVL’s strategic focus on South India, particularly in cities such as Bengaluru, Chennai, and Kochi, positions it well to benefit from regional trends. The company operates in a high-yield market where South India offers over 30% of India’s premium hotel supply. The demand for hotel accommodations continues to grow, aided by IT-led business travel and cultural tourism.
Key occupancy figures for major cities in South India for fiscal year 2024 include:
– Bengaluru: 72% occupancy, INR 6,620 ADR
– Chennai: 70% occupancy, INR 6,350 ADR
– Kochi: 65% occupancy, INR 5,820 ADR
– Mysuru: 60% occupancy, INR 5,300 ADR
These metrics indicate a strong recovery trajectory in these key markets.
Strategic Partnerships and Future Growth
Operating primarily in the midscale to upper-upscale segments, BHVL benefits from high margins, which range between 30% to 40%. The company has established partnerships with global hotel brands such as Marriott, Accor, and InterContinental Hotels Group (IHG). This collaboration enhances BHVL’s operational capabilities while tapping into the growing trend of branded hotel experiences in India, which remains significantly under-penetrated compared to countries like China and the USA.
As of June 30, 2024, BHVL operates nine hotels with a total of 1,604 keys. The company’s portfolio is expected to expand further with five hotels currently under development, including a Grand Hyatt in Chennai and wellness-focused properties in Kerala, projected to increase total inventory to over 2,300 keys by fiscal year 2027.
The company follows a distinctive “own-and-outsource” business model, maintaining ownership of its assets while leveraging the expertise of global brands for management. This strategy not only enhances operational efficiency but also allows BHVL to capitalize on Brigade Group’s real estate capabilities, leading to cost-effective project execution.
Financially, BHVL reported revenues of INR 401.7 crore for fiscal year 2024, marking a 14.7% year-on-year increase. The EBITDA margin also saw a notable improvement, reaching 35.72% compared to 3.46% in fiscal year 2022, reflecting the company’s successful turnaround from a net loss of INR 82.2 crore in fiscal year 2022 to a net profit of INR 31.2 crore in fiscal year 2024.
As the company prepares for its IPO, it aims to utilize the proceeds for debt repayment, land purchases, and general corporate purposes, including brand building and marketing efforts.
Brigade Hotel Ventures stands at a pivotal moment, with promising growth potential in a rapidly expanding market. While challenges remain, particularly related to capital intensity and market competition, its strategic positioning and operational efficiencies present a compelling case for investment.