The Leela – India’s leading Luxury Hospitality Brand With a Growing Portfolio

26 May 2025 , 09:06 AM

The Leela, a leading Indian luxury hospitality brand, owns, operates, manages, and develops luxury hotels and resorts under its name. The Leela brand was rated the #1 best hospitality brand in the world in 2020 and 2021 and one of the world’s top 3 best hospitality brands in 2023 and 2024 by the Travel + Leisure World’s Best Awards Surveys.

The Leela currently has a total of 3,553 keys in its portfolio, spread across 13 in operation properties, including palace hotels, hotels and resorts.  The Company’s business is primarily conducted through direct ownership of hotels and hotel management agreements with third-party hotel owners. The Leela’s hotels are located in key business and leisure destinations in India.

The company is committed to preserve and further develop its status as a world-class luxury hospitality brand, which is aspired by the Indian hospitality philosophy “Atithi Devo Bhava”, meaning “Guest is God”. The Leela’s growth pipeline will add 7 new hotels to its portfolio, aggregating approximately 678 keys or 19.08% of existing keys, to be developed, owned and/or managed, by the company.

Offer Details

The Leela Palaces Hotels and Resorts’ IPO comprises fresh issue of equity shares aggregating up to INR 25,000 million and an offer for sale of up to INR 10,000 million. Project Ballet Bangalore Holdings (DIFC) Pvt Ltd., a promoter, is participating in the offer for sale.

• New Issue: INR 25,000 million
• Offer for Sale: INR 10,000 million
• Issue Size: INR 35,000 million
• Offer Price: INR 413 to INR 435

Book Running Lead Managers

The BRLMs for this issue are:

• JM Financial Limited
• BofA Securities India Limited
• Morgan Stanley India Company Pvt Ltd
• J.P. Morgan India Private Limited
• Kotak Mahindra Capital Co Ltd
• Axis Capital Limited
• Citigroup Global Markets India Private Limited
• IIFL Capital Services Limited
• ICICI Securities Limited
• Motilal Oswal Financial Services Limited
• SBI Capital Markets Limited

Objectives of the IPO

The principal purposes of the IPO are to use the net proceeds for deleveragin. The firm is looking to cut its debt load and to boost its balance sheet.

De-leveraging / Debt Repayment

The Company intends to utilise approximately INR 23,000 m of the net proceeds for the purpose of deleveraging.

Other General Corporate Purposes

Any remaining balance of the net proceeds will be used for general corporate purposes, provided that such utilization for the general corporate purposes does not exceed 25% of the Gross Proceeds, in accordance with the SEBI ICDR Regulations.

The Indian Hospitality Industry: An Overview

History and Origins

The Indian hospitality industry has a rich and varied history dating back to thousands of years. The idea of hospitality was ingrained into Indian culture. The Sanskrit saying, “Atithi Devo Bhava” means “The Guest is God”. This philosophy has been the cornerstone of Indian hospitality, with guests receiving care and respect from hosts.

Indian hospitality has evolved and come a long way. The Mughal Empire and British Raj eras left indelible marks. However, the modern Indian hospitality industry emerged in the post-independence period, when the Indian Tourism Development Corporation (ITDC) was established in 1966. The ITDC had a significant role in developing tourism in India and in encouraging the development of the hospitality industry in the country.

Market Size

Indian hospitality industry is a significant contributor to India’s GDP. It accounts for 6.5%. The sector is set to grow further in the years ahead, with the World Travel and Tourism Council (WTTC) projecting that it will account for 9.8% of India’s GDP by 2028.

India’s hospitality industry is estimated to be worth over INR 15 trillion (USD 200 billion), with luxury segment contributing nearly 15% of the market. The industry is expected to further expand, as luxury hotels and resorts are witnessing robust growth across the nation. The organized hotel inventory in India, is ~ 375,000 keys or about 11% of the total hotel keys (3.4m). Within this, the branded hotels account for 45%, while the independent account for the rest. Within the branded hotel market, luxury accounts for only 17% of the keys or 29000.

Growth and Trends

There has been a rapid growth in the Indian hospitality industry in the last few decades, thanks in no small part to the liberalisation of the economy as well as the emergence of the middle class.

As per an HVS ANAROCK report, the Indian hospitality industry is anticipated to expand at a CAGR of 10.4 % during the next five years. The luxury segment is expected to grow as fast if not faster at a CAGR of 10.6%.

Against a global average of 9.1% contribution of hospitality to GDP, it only accounts for 6.5% in India. Also, the hotel industry has seen faster growth in RevPAR due to favorable demand/supply dynamics. This is likely to continue as against a 10.6% CAGR in estimated demand, the supply is only growing at 5.9% CAGR.

There has also been a surge in visitor numbers from overseas, which have increased from 2.6 million in 2000 to 10.9 million in 2024. Government initiative to attract tourists such as “Incredible India’’ campaign and relaxation of visa rules have been notable contributors to the growth.

Factor Driving Growth

The Indian Hospitality Industry growth is mainly triggered by the following several factors:

• Increasing Wealth: As disposable incomes and affluence grows, demand for luxury items and services, such as luxury hospitality, is also on the rise.
• Infrastructure Creation: The Indian governments infrastructure spending on building air, road, and rail network to connect different parts in India is transforming the connectivity and access to the Indian hinterland.
• Corporate Travel: While most marquee international conventions host their events in metro cities, adding convention hotels with supporting infrastructure could divert traffic to other cities where facilities are currently inadequate.
• Changing Consumer Spending Pattern: The Indian consumers are looking for high-end products and experiences which is leading to high demand for luxury hospitality and such other services.
• Growth in domestic tourist visits (“DTV”) at a CAGR of 13.4% from 2.8 billion in 2024 to 6.0 billion in 2030.
• Growth in foreign tourist arrivals (“FTAs”) at a CAGR of 7.1% from 9.7 million in 2024 to 14.6 million in 2030.
• Significant under-penetration of hotel keys relative to major economies. In 2023, India had 263 organized hotel keys per million population compared to the global average of 7,877.

The Leela – A Legacy of Luxury Hospitality

Origins and History

The Leela is one of India’s largest and most awarded luxury hotel groups. The Leela has a distinct history. Started by Captain C.P. Krishnan Nair in 1986, the company is headquartered in Mumbai.

Early Beginnings and Growth:

The Leela started with the first hotel, The Leela Mumbai, in 1986. The hotel soon became known for its high-quality service, opulent facilities, and prime location. The firm gradually diversified its portfolio and opened new properties at prime locations all over India such as Bengaluru, Chennai and New Delhi. Today, The Leela has 13 hotels in 11 Indian cities with a combined 3,553 keys.

Competitive Landscape
The Leela competes in a fiercely competitive luxury hospitality segment in India, where numerous large local and international players jostle to gain market share.

Major Competitors

• Indian Hotels Company Limited (IHCL) is one of India’s largest hospitality companies. While IHCL has a larger footprint, The Leela has a higher luxury keys share. This indicates its strong positioning in the luxury segment.
• Marriott International: Marriott International is a global hospitality company with a large footprint in India. Larger rival Marriott has a bigger global presence, but The Leela’s strong command over the Indian market and its luxury offerings are a competitive differentiator.
• ITC Hotels Limited (ITC): ITC is a large Indian hospitality company with a portfolio of 13,328 keys across brands. While it has a larger footprint, The Leela has a higher share of luxury keys.

Competitive Positioning

The Leela’s competitive positioning is as a luxury hotelier with a deep understanding of Indian market.

Strengths:

• Focus on luxury: 100 per cent of Leela’s keys are in the luxury space, enabling the company to have a strong brand positioning and attract upscale customers.
• Operational Excellence: Leela has had a track record of operational excellence with strong NPS and guest satisfaction scores.
• Brand value: The brand The Leela is a well-known and respected brand in the Indian hospitality sector known for luxury and excellence.

Weaknesses

The key weakness is its smaller size vs competitors like IHCL and ITC. The Leela, with a smaller number of keys as compared to its peers, is at a disadvantage due to lesser economies of scale.

Financial Profile:

Revenue Growth

The revenue of the company has shown a steady increase where the total income has grown by 14.68% from INR 12,265 million to INR 14,065 million since the Financial Year 2024. This growth is largely on account of higher revenue from operations, which contributes 92.47% to the total income.

Drivers Of Revenue Growth

Revenue increased, driven by an increase in the occupancies and ARR in owned portfolio. ARR has been up by 7.53%, from INR 20,966 during FY 2024 to INR 22,545 during FY 2025. Further, the food and beverage income has grown by 11.02% to INR 4,781.73 million, in the Financial Year 2025, benefiting from higher average revenues per cover and from increased consumer demand.

Profitability

The company has reported a profit for the Financial Year 2025 of INR 476.58, but a loss for the year of FY24 of INR 21.27. Growth in profitability is mainly attributed to revenue from operations and other income.

New Hotels to boost Growth

The company’s plans to combine new acquisitions with existing hotels is helping revenue rise. The acquisition of 50% of the issued and paid-up equity share capital in the entity holding The Leela Palace Jaipur, has led to higher revenue from operations. Meanwhile, the company also has a plan to add 678 new keys or 19.08% increase in keys by 2028 as part of its portfolio expansion.