Brigade Hotel IPO: A Growing Presence in the Indian Hospitality Sector

24 Jul 2025 , 01:53 PM

Brigade Hotel Ventures (BHVL) owns upscale to midscale hotels in South India, with a significant presence in Bengaluru. It is the hospitality arm of the well known real estate developer, Brigade Enterprises Limited. Its portfolio encompasses 9 hotels with a total of 1604 keys. The properties are operated by renowned international hotel brands like Marriott, Accor and Intercontinental group.

Offer Details of the IPO

The public issue is a fresh issue by Brigade Hotel Ventures Limited. The size of the fresh issue is up to INR 7,596 million. All the proceeds of the IPO (after IPO-related expenses) will accrue to the company.

Price Band: INR 85 to INR 90 per Equity Share

BRLMs:

• JM Financial Limited
• ICICI Securities Limited

Objectives of the IPO:

The purpose of the IPO is to use the net proceeds to strengthen the balance sheet by repaying debt, funding capex & M&A. The details of the IPO are as follows:

De-leveraging/Repayment of Debt: Redemption or prepayment of outstanding borrowings incurred by the company and its material subsidiary, SRP Prosperita Hotel Ventures Limited, amounting to INR 4,681.40 million. This is 75.61% of the company’s total debt outstanding as of March 31, 2025.

M&A: The total amount earmarked towards unspecified inorganic acquisitions will not exceed INR 900.00 million.

Capital Expenditures: Consideration towards purchase of undivided share of land from the promoter, BEL, totaling INR 1,075.19 million.

Indian Hospitality Industry Overview

The Indian hospitality industry is a significant contributor to the country’s economy, providing a wide range of services to cater the needs of travelers, tourists, and business professionals. The industry also includes various sectors such as hotels, resorts, restaurants, and travel agencies, offering a diverse array of products and services to meet different customer demands.

It also offers a broad spectrum of options, including luxury and budget hotels, fine dining restaurants, and travel agencies providing domestic and international travel services. The industry is characterized by a high level of competition, with numerous players operating in the market, ranging from small, family-owned businesses to large, multinational corporations.

Key Segments within the Industry

The Indian hospitality industry can be broadly segmented into the following categories:

Hotels and Resorts

This segment includes luxury, upscale, mid-scale, and budget hotels, as well as resorts, offering accommodation services to travelers and tourists. The hotel industry in India is highly competitive, with numerous players operating in the market, including international hotel chains and domestic players.

Food and Beverage (F&B)

The F&B segment includes restaurants, cafes, and bars, offering a wide range of cuisine and beverages to customers. This segment is highly competitive, with numerous players operating in the market, including fine dining restaurants, casual dining restaurants, and quick-service restaurants.

Travel and Tourism

This segment includes travel agencies, tour operators, and online travel agencies, providing domestic and international travel services to customers. The travel and tourism industry in India is growing rapidly, driven by increasing demand for leisure and business travel.

Other Segments

Other segments within the Indian hospitality industry include conference and banqueting services, event management services, and hospitality education and training services. These segments are smaller in size compared to the hotel, F&B, and travel and tourism segments but are still important contributors to the overall industry.

Industry Size and Growth

In recent years, the Indian hospitality sector has witnessed significant growth due to the rising tourist inflow and increasing business travel.

• As of March 2025, there are 204,000 chain-affiliated hotel rooms in the industry across categories. The market has expanded across different segments with Luxury-Upscale having 33.9% of supply, Upscale-Upper Mid-scale 38.4% and Midscale-Economy, 27.7%.
• Share (measured by rooms) of international chains has risen from 21% in Fiscal 2001 to 45% for the last ten years. This is expected to be at 47% at end Fiscal 2030.
• Demand for chain affiliated hotels has increased from 61k rooms per day for FY15 to 116k rooms per day for FY24 to 127k rooms per day at end of FY25. Demand grew at 9.9% CAGR between FY01 and FY25, including at 7.6% CAGR between FY15 to FY25. Demand growth in the last 3 years, was at 5.6% CAGR between FY23 and FY25.
• The sector is anticipated to continue to witness robust growth, supported by growing demand from both domestic and overseas visitors. According to WTTC, the sector’s contribution towards India’s GDP is expected to rise at a CAGR of 7.4% between 2024 and 2034.

Key Drivers of Growth

There are several driving forces contributing to the development of the industry:

• Rising Tourism: Demand from both domestic and international tourists.
• Government Initiatives: Government initiatives to promote tourism, including the launch of e-visas and the construction of new airports have led to the growth of the industry.
• Infrastructure Growth: Airport infrastructure improvements, increases in airline capacity, and the addition of new travel locales have also helped to fuel growth in the sector.
• Leisure Travel: India’s increasing middle class and younger population are spending more of their disposable income on travel and tourism.
• Business/MICE Travel – In addition to business related travel, MICE events are an increasing source of revenue. MICE events have contributed to the growth of F&B revenues to 31% share and INR 51 billion in Fiscal 2024 for certain listed companies

Company Overview

Brigade Hotel Ventures Limited (BHVL) BHVL is a key player in the Indian hospitality market with a portfolio of 9 operational hotels and serviced residences in Bengaluru, Chennai, Kochi, Mysuru & the GIFT City (Gujarat). The company is an enterprise of Brigade group, which is one of the leading real estate developers in India.

BHVL’s initial hotel, the Grand Mercure Bangalore, was opened in 2009. Since then, BHVL has grown its collection through acquisitions and developed the company and its portfolio, and established a presence in the hospitality industry in India.

The Brigade Group is a well known real estate developer in India and the founders of BHVL belong to the Brigade Group.

Business Segments

BHVL is a player in the hospitality industry and continues to strive to offer clients a holistic customer experience through the hotels in which it operates. Its hotels are managed by international marquee hospitality brands like Marriott, Accor and InterContinental Hotels Group.

• Hotels: BHVL’s operating portfolio consists of nine hotels located in Bengaluru, Chennai, Kochi, Mysuru, and the GIFT City (Gujarat). Overall, the hotels of the company are situated in markets with positive demand drivers, including population density, or premium neighborhoods, or commercial region, or IT region.
• Food and Beverage (F&B) Services: BHVL’s hotels provide various F&B services comprising fine dining and specialty restaurants, MICE facilities, lounges, swimming pools, outdoor facilities, spas, and gymnasiums.
• Meetings, Incentives, Conferences, and Exhibitions (MICE): BHVL hotels have various MICE offerings that include venues, catering, and event management.

Growth Strategy

BHVL intends to grow its businesses by acquiring new assets through M&A activity and developing real estate in prime markets. The company also has a strong focus on operational efficiencies and cost control.

Competitive Landscape

BHVL competes in the highly competitive hotel and restaurant business with many established chains. It faces competition from multiple global and domestic brands including:

• EIH Limited
• Chalet Hotels Limited
• Juniper Hotels Limited
• Lemon Tree Hotels
• Apeejay Surrendra Park Hotels
• Ventive Hospitality Limited
• ITC Hotels Limited
• Schloss Bangalore Limited

Competitive Positioning

The company has a relatively good foothold in the Indian hospitality market compared to its peers with nine operating hotels, including properties in Bengaluru, Chennai, Kochi, Mysuru and the GIFT City. The company’s hotels are managed by world renowned global hospitality operators including Marriott, Accor and InterContinental Hotels Group as a testament to the business’ dedication to enhancing the experiences of its guests.

• Market Share: The company is the second largest chain-affiliated hotel owner in South India with a market share of 13.3% in terms of rooms.
• Brand Portfolio: The company has a diversified brand portfolio of luxury, upper-upscale, upper-midscale and midscale hotel segments.
• Efficiency: The company has taken several measures to lower operational costs such as cost reduction, optimization of energy and other consumption, staff reduction and investment in technology, to ensure a competitive advantage.

Strengths

Strategically Located Award-Winning Hotels

BHVL operates nine hotels, in Bengaluru, Chennai, Kochi, Mysuru and the GIFT City, India, aggregating to 1,604 keys. Its hotels are managed by leading international hospitality chains, including Marriott, Accor and InterContinental Hotels Group, underscoring the Company’s focus on providing its customers with a premium experience. BHVL’s hotels are generally situated in demand accretive locations based on population/consumer density, premium neighborhoods, commercial locations or an IT hub.

Strong Lineage and Brand Name

BHVL is an entity of Brigade Enterprises Limited (BEL), one of India’s leading property development companies. The brand value, goodwill, corporate clients and experience in developing properties emanated from the experience gained by BEL. By utilizing BEL’s brand name, goodwill, network and reputation, the BVHL positions itself as a trusted hospitality service provider.

Asset Management and Operating Efficiencies

BHVL has a business model under which it owns or leases hotel assets, and contracts with global hospitality operators to manage, maintain, and market its hotel assets pursuant to management contracts. This philosophy enables the company to gain global customers and maintain reputable quality. BHVL actively manages and maintains close oversight to drive improvement in the performance of its hotels.

Weaknesses

High Attrition Rate

BHVL incurred a high turnover rate during Fiscal 2025 of 58.19%, which could result lower service quality and short term disruption to its business. In the long run high attrition could have a material impact on its business performance.

Dependence on OTA

About 30% of room bookings in FY25 were from intermediate travel agents and OTAs. As this has a higher commission rate, it has a negative impact on the company margins.

Financial profile

Roust revenue growth: The company’s revenues have clocked a robust growth in the past three fiscals with a CAGR of 14.70%. The revenue growth was achieved through the company’s ability to drive its average room rate (ARR) and occupancy levels. ARR has risen from INR  5,943.57 in FY23 to INR  6,387.58 in FY24, and to INR  6,693.59 in FY25. Additionally, revenue growth was also driven by:

• Uptick in occupancy ratios
• Hospitality industry growth

Strong Profit Growth: BHVL has witnessed robust profit growth over the past three years. From making losses in FY23, its PBT has increased to INR 445 million in FY25. In FY25, its PBT witnessed a YoY growth of 40%. PAT growth, on the other hand, was lower due to higher taxes.

Good cost control: The company’s total expenses have grown only by 14% over a 2 year period from INR 3,712 million during financial year 2023 to INR 4,262 million during financial year 2025. Savings in property taxes and overall operational efficiencies have been the key reasons for its operational efficiency.

Table 1: Peer Comparison

Company	Revenue from Operations (INR m)	EPS – Diluted (INR)	P/E	RoNW (%)	NAV – per equity share  (INR)
Brigade Hotel Ventures Limited	4,683	0.72	125	30.11%	2.79
The Indian Hotels Company Limited	83,345	13.4	56.06	16.42%	87.22
EIH Limited	27,432	11.82	32.2	16.23%	75.86
Chalet Hotels Limited	17,178	6.52	136.63	4.68%	139.42
Juniper Hotels Limited	9,443	3.2	99.48	2.61%	122.55
Lemon Tree Hotels Limited	12,861	2.48	62.04	13.59%	22.59
Samhi Hotels Limited	11,300	3.84	62.75	7.49%	51.63
Apeejay Surendra Park Hotels Limited	17,178	3.92	42.05	6.51%	60.17
Ventive Hospitality	20,784	6.83	115.58	0.82%	252.88
ITC Hotels	35,598	3.05	78.2	5.94%	51.55
Schloss Bangalore Limited	13,006	1.97	229.34	1.32%	107.95

Source: RHP