Business Profile of the Brigade Hotel Ventures Limited
Brigade Hotel Ventures is a leading owner and developer of hotels in key cities in India, primarily in South India. The company is a subsidiary of Brigade Enterprises, a leading Indian real estate developer. As the second largest chain-affiliated hotel owner in South India, they have a portfolio of nine operating hotels across Bengaluru, Chennai, Kochi, Mysuru, and GIFT City. They operate by global hospitality companies like Marriott, Accor, and InterContinental Hotels Group. The company is strategically locations its hotels in high-population areas, premium neighborhoods, and commercial centers, catering to customer preferences and expectations.
With an average occupancy of 73.29% in FY24, the company plans to develop five additional hotels operated by global hospitality companies. The company follows a business model where it owns or leases hotel assets and engages global hospitality companies for operation. These include a luxury beach resort in Chennai, two upper midscale hotels in Bengaluru, a luxury hotel under the InterContinental brand in Hyderabad, and a wellness resort in Vaikom, Kerala.
Brigade Hotel Ventures Limited IPO Objective
As per the draft red hearing prospects, the IPO issue consists only of fresh issue.
- Brigade Hotel Ventures IPO offer only has fresh issue of Rs. 9, 000 million. As per DRHP document, the company aims to utilize IPO proceedings towards payment of certain loan obligation of company and its subsidiary; for buying land from its promoter; for acquisitions and general purposes.
| Particulars | Estimated amount proposed to be funded from the Net Proceeds |
| Payment of certain outstanding borrowings availed by | 4810 |
| (i) Company | 4120 |
| (ii) Materiality Subsidiary, namely, SRP Prosperita Hotel Ventures Limited; | 690 |
| Proceeds for buying undivided share of land from promoter | 1075.19 |
| Pursuing inorganic growth and general corporate purposes( | (Rest of the funds) |
(₹ Million)
IPO Details of Brigade Hotel Ventures Limited:
| IPO Open Date | N.A. |
| IPO Close Date | N.A. |
| Basis of Allotment | N.A. |
| Listing Date | N.A. |
| Face Value | ₹10 per share |
| Price | N.A. |
| Lot Size | N.A. |
| Total Issue Size | XXXX equity shares |
| Aggregating up to ₹ 9,000.00 million | |
| Fresh Issue | XXXX equity shares |
| Aggregating up to ₹ 9,000.00 million | |
| Offer For Sale | NIL |
| NIL | |
| Issue Type | Book Built Issue IPO |
| Listing At | BSE & NSE |
| QIB Shares Offered | Not less than 75% of the Net Issue |
| Retail Shares Offered | Not more than 10% of the Net Issue |
| NII (HNI) Shares Offered | Not more than 15% of the Net Issue |
Issue Price & Size: Brigade Hotel Ventures Limited IPO
The issue price of Brigade Hotel Ventures Limited hasn’t been released yet. Upon releasing the dates, the investors can bid between those price ranges. The company only has a fresh issue of Rs. 900 crores.
Launch Date of Brigade Hotel Ventures Limited IPO
The IPO opening date of Brigade Hotel Ventures hasn’t been officially announced yet, upon the declaration of dates investor can bid for IPO.
Brigade Hotel Ventures Limited Financial Statements
| Particular | June 30, 2024 | FY24 | FY23 | FY22 |
| Income | ||||
| Revenue from operations | 1018 | 4017 | 3502 | 1464.8 |
| Other income | 4 | 31.5 | 61.9 | 54.7 |
| Total income | 1022 | 4048.5 | 3564.1 | 1519.5 |
| Expenses | ||||
| Cost of materials consumed | 99.1 | 403.4 | 350.8 | 163.5 |
| Employee benefits expense | 193.2 | 762.6 | 633.1 | 367.3 |
| Depreciation and amortization expenses | 104.1 | 436.4 | 493.5 | 584 |
| Finance costs | 183.4 | 688.9 | 691.7 | 615.4 |
| Other expenses | 393.6 | 1436.4 | 1550.4 | 825 |
| Total expenses | 973.4 | 3727.7 | 3719.5 | 2555.2 |
| Restated Profit/(loss) before exceptional items and tax | 48.6 | 320.8 | -155.4 | -1035.7 |
| Restated Profit/(loss) before tax | 48.6 | 320.8 | -45.4 | 1146.9 |
| Restated Profit/(loss) for the period/year | -57.8 | 311.4 | -30.9 | -827.2 |
| Key performance indicators | Units | Brigade Hotel Ventures Limited | Chalet Hotels Limited | Samhi Hotels Limited | Juniper Hotels Limited |
| Total income | ₹ in million | 4048.5 | 14370.39 | 9787.26 | 8263.06 |
| Total income growth (%) | % | 13.59% | 21.99% | 28.54% | 15.20% |
| Revenue from operations | ₹ in million | 4017 | 14172 | 9573.93 | 8176.63 |
| Revenue Growth (%) | % | 14.70% | 25.59% | 29.63% | 22.61% |
| F&B revenue | ₹ in million | 1272.68 | 4008.13 | 2401.72 | 2469.73 |
| F&B revenue contribution (As a % of revenue from operations) | % | 31.68% | 28.28% | 25.09% | 30.20% |
| EBITDA | ₹ in million | 1446.1 | 6043.78 | 2879.51 | 3196.55 |
| EBITDA growth (%) | % | 26.87% | 20.32% | 10.46% | -0.84% |
| EBITDA margin (%) | % | 35.72% | 42.06% | 29.41% | 38.68% |
| Profit / (loss) for the period/ year | ₹ in million | 311.4 | 2781.81 | -2346.18 | 237.98 |
| Profit/ (loss) margin for the period/ year (%) | % | 7.69% | 19.36% | -23.97% | 2.88% |
| Net borrowings | ₹ in million | 5809.3 | 28180.56 | 19289.23 | 4125.19 |
| Net borrowings/ total equity | Number | 8.09 | 1.52 | 1.86 | 0.16 |
| Inventory/ Keys | Number | 1474 | 3052 | 4801 | 1895 |
| Number of hotels | Number | 8 | 10 | 31 | 7 |
| Average room rate | ₹ | 6260 | 10718.44 | 2718 | 10165 |
| Average occupancy | % | 74.64% | 73.00% | 73% | 75.00% |
| RevPAR | ₹ | 4672.83 | 7776 | 4123 | 7645 |
| Employee benefit expense (As a % of Total Income) | % | 18.90% | 13.54% | 17.15% | 17.51% |
| Staff per room ratio | Number | 0.74 | 0.98 | N.A. | 1.14 |
| Return on adjusted capital employed | % | 3.40% | 9.71% | 5.59% | 6.54% |
Brigade Hotel Ventures Limited Promoters & Shareholding
As of date, there is only one promoters of the company i.e. BEL (Brigade Enterprises Limited).
The promoter along with promoter group in aggregate collectively holds 100% of the paid-up share capital of company.
Should You Subscribe to Brigade Hotel Ventures Limited IPO or Not
While investing or subscribing to any IPO, consider the investment rationales related to the company. Hence, here you can find out the strength of the company that will be its growth factors. And also check the risk factors that can affect the growth and operational efficiency of the company.
Competitive Strengths of Brigade Hotel Ventures Limited:
Strategically Located
Brigade hotels venture business model involves owning or leasing hotel assets and engaging global hospitality companies for operation. As of June 30, they own at least 500 rooms in South India. They have a portfolio of nine operating hotels across Bengaluru, Chennai, Kochi, Mysuru, and GIFT City, with 1,604 keys.
The company's hotels are strategically located near key business hubs, technology parks, and leisure options, making them suitable for both corporate and leisure travelers. These hotels are operated by global hospitality companies like Marriott, Accor, and InterContinental Hotels Group. The company selects best hotel brands to offer best services to their visitors. Along with strategically placement of their assets, the number of rooms in the hotels is higher than the average in India within the same segments. The company's average occupancy in Fiscal 2024 was 73.29%, higher than the industry average of 64%.
The company plans to develop five additional hotels, including a luxury beach resort in Chennai and two upper midscale hotels in Bengaluru. The luxury beach resort will be developed under the Grand Hyatt brand, while the upper midscale hotels will be developed under the Fairfield by Marriott brand. The company also plans to develop a luxury hotel under the InterContinental brand in Hyderabad. The company benefits from the experience of its senior management team, guided by directors with extensive experience in the hospitality and real-estate industry.
Focus on Asset Management
The company operates hotel assets through management contracts, attracting a global clientele and efficiently managing operations. They engage with global hospitality companies to optimize performance and access industry best practices. They closely monitor and oversee hotel performance, focusing on space utilization, energy consumption, shared services, facility upgrades, staffing optimization, and technology.
The company focuses on enhancing staff productivity and efficiency through training and learning exercises to optimize the staff per room ratio. As of June 30, 2024, their ratio was 0.74. Current trends suggest luxury business hotels have a ratio below 2.0 and three and four-star hotels between 0.8 to 1.2.
They have implemented initiatives to reduce energy consumption and focuses on shared services, upgrading facilities, and optimizing staffing. They leverage technology such as biometric authentication, cloud property management systems, and digital menus to enhance operations and customer experiences.
Focus on ESG Factors
They aim to create a win-win situation where providing memorable guest experience doesn’t compromise on sustainability efforts. They use advanced fixtures to reduce water usage and optimize energy usage by integrating energy-efficient technologies. They also prioritize safety and well-being through comprehensive occupational health and safety practices, ensuring staff are well-versed in safety protocols. They provide generic OHS training and targeted training sessions, such as the 'Introduction to Ergonomics' program.
Strong Parentage
Brigade Enterprises, BEL, a leading real estate developer in India. BEL has completed 33 projects from Jan 2021 to June 2024, with an aggregate developable area of 17.49 million square feet. BEL's extensive experience in real estate and commercial projects allows them to locate strategic land parcels for their hotels, combining hospitality with other amenities and services.
Well Positioned to Leverage Industry Tailwinds
The Horwath HTL Report predicts that India's travel and tourism sector will contribute significantly to the country's economy, with the World Travel & Tourism Council estimating its contribution at ₹ 15.7 trillion in 2022, ₹ 16.5 trillion for 2023, and ₹ 37 trillion by 2034. The Hotel Association of India (HAI) predicts foreign tourist arrivals (FTA) to cross 30 million by 2037, and 5 billion domestic visits by 2030. The demand for chain-affiliated hotels has also increased, with FTA recovering post-Covid to 9.2 million in 2023. The services sector, which is among the fastest-growing in the Indian economy, is also expected to benefit from the growth. Domestic travel visits have grown at a CAGR of 13.5% between 2001 and 2019, with the spend on tourism projected to rise by 170% from USD 150 billion spent in 2019 to USD 410 billion in 2030.
Future plans
- Expand its operations and market presence by developing new hotels in select locations in India.
- Capitalize on market demand and strengthen its position in the hospitality sector in India.
- Improve operating efficiency and increase revenues by implementing various measures to reduce operating expenses.
- Implement initiatives such as annual rate increases, weekend packages, long weekend gateway packages, food festivals, F&B up sell programs, and online booking platforms.
- Explore opportunities for acquisitions, particularly in operating hotels.
Risk Factors of Brigade Hotel Ventures Limited:
Hotel operator services agreements
The company operates nine hotels, with four under Accor brands, three under InterContinental Hotels Group, and two under Marriott brands. The company benefits from agreements with various hotels chain like Marriott, Sheraton brands for use of their brand name. For using their brand name, the company is required to pay fees for licensing the use of certain trademarks, reservations and loyalty programs, and other technical services.
If any of these agreements are terminated or not renewed, the company may not have access to their brands and loyalty programs, may seek to rebrand its hotel assets subject to approval of the hotel operators.
| Revenue from hotels operated by | Average period of relationship / tenure (in years) | Number of hotels operate d | 3-mon ended June 30, 2024 | FY24 | FY23 | FY22 |
| Percentage of revenue from operations | ||||||
| Marriott | 18 | 2 | 45.22% | 42.52% | 41.08% | 38.92% |
| Accor | 16 | 3 | 22.08% | 23.81% | 25.53% | 28.04% |
| InterContinental Hotels Group | 12 | 3 | 31.94% | 33.00% | 32.64% | 31.88% |
Revenue concentration
The company operates nine hotels in Bengaluru, Chennai, Kochi, Mysuru, and GIFT City, with 1,604 key. The company operates nine hotels, with four in Bangalore (Karnataka), which generates a significant portion of its revenues. Analyzing the data shows that the hotels in Bangalore and Kochi have shown rising share of revenue but the hotels in Mysure, Chennai and Ahmadabad have shown falling revenue in previous periods . The hotels Sheraton Grand Bangalore at Brigade Gateway, Holiday Inn Chennai OMR IT Expressway, and Holiday Inn Bengaluru Racecourse have generated a significant portion of their revenues.
Any decrease in revenues from these hotels, whether due to increased competition, oversupply of rooms, or reduced demand, could negatively impact the company's business, results of operations, financial condition, and cash flows.
| Cities | Number of Hotels | Three months ended June 30, 2024 | FY24 | FY23 | FY22 |
| Bengaluru | 4 | 65.60% | 62.91% | 64.77% | 64.59% |
| Mysuru | 1 | 7.87% | 8.29% | 9.30% | 10.47% |
| Chennai | 1 | 13.68% | 14.31% | 13.66% | 15.64% |
| Kochi | 1 | 8.80% | 9.01% | 7.45% | 7.59% |
| Ahmedabad | 1 | 3.95% | 5.18% | 4.82% | 4.71% |
| Hotels | Three months ended June 30, 2024 | FY24 | FY23 | FY22 |
| Percentage of revenue from operations | ||||
| Sheraton Grand Bangalore at Brigade Gateway | 36.34% | 33.51% | 33.63% | 31.34% |
| Holiday Inn Chennai OMR IT Expressway | 13.68% | 14.61% | 13.67% | 15.64% |
| Holiday Inn Bengaluru Racecourse | 13.72% | 13.59% | 14.30% | 11.82% |
| Hotels | Hotel Operator |
| Grand Mercure Bangalore (Karnataka) | Accor |
| Sheraton Grand Bangalore at Brigade Gateway (Karnataka) | Marriott |
| Grand Mercure Mysore (Karnataka) | Accor |
| Holiday Inn Chennai OMR IT Expressway (Tamil Nadu) | InterContinental Hotels Group |
| Holiday Inn Bengaluru Racecourse (Karnataka) | InterContinental Hotels Group |
| Four Points by Sheraton Kochi Infopark (Kerala) | Marriott |
| Grand Mercure Ahmedabad GIFT City (Gujarat | Accor |
| Holiday Inn Express & Suites Bengaluru OMR (Karnataka | InterContinental Hotels Group |
| ibis Styles Mysuru (Karnataka) | Accor |
Revenue from F&B
The company's operations rely on the quality of food and beverages served at its 28 restaurants and bars. The company's revenue from food and beverages (F&B) is dependent on occupancy rates, which can decrease if the number of guests decreases. Additionally, the company maintains an inventory of dry groceries and liquor, which may be subject to contamination or deterioration. Any contamination or deterioration could lead to customer dissatisfaction and liabilities hitting companies financials directly and denting brand image.
| Particulars | Three months ended June 30, 2024 | FY24 | FY23 | FY22 |
| Percentage of revenue from operations | ||||
| Revenue from F&B | 32.80% | 31.68% | 31.30% | 34.59% |
Revenue from travel agents and intermediaries
Hotels receive a significant portion of its bookings from online travel agents and intermediaries. These intermediaries platform offer a wide range of services and can create the perception of lower prices from the comfort of their home compared to direct booking. These companies may also have strong marketing budgets and aim to commoditize hotel brands through price and attribute comparison. Although these platforms provide booking to hotels but if they continue to gain market share, they may impact company’s profitability, undermine direct booking channels, and negotiate better terms with hotels. If due to hotels in-capabilities, they don’t provide sufficient incentives to their online platforms it might lead to directing tracking to its competitors.
| Particulars | 3-mon ended June 30, 2024 | FY24 | FY23 | FY22 |
| No. of room nights sold by travel agents and intermediaries | 22409 | 79494 | 82310 | 67653 |
| Total Number of room nights sold | 100122 | 395364 | 374420 | 247131 |
| Percentage of total room nights sold | 22.38% | 20.11% | 21.98% | 27.38% |
Competition amid seasonality
The hotel industry in India is highly competitive and changes in demographic, geographic, tourism among factors impact the convenience and desirability of destination sites and hotel occupancy rates. Competitors may be larger, with strong alliances having more resources, which could impact rates, services, amenities, and facilities. Seasonality like winter months affects leisure travel and meetings, incentives, conferences, and exhibitions bookings, including weddings. Seasonal and cyclical variations can result in fluctuations in the company's results of operations, financial condition, and cash flows.
The success of the company depends on its ability to compete in areas such as room rates, location, amenities, service quality, and brand recognition.
| Particulars | From Apr 1, 2023 till Sep 30, 2023 | From Oct 1, 2023 till Mar 31, 2024 | From Apr 1, 2022 till Sep 30, 2022 | From Oct 1, 2022 till Mar 31, 2023 | From Apr 1, 2021 till Sep 30, 2021 |
| Avg. occupancy | 70.01% | 74.38% | 64.55% | 65.30% | 34.09% |
Brigade Hotel Ventures Limited Grey Market premium
Grey market premium is the premium quoted over the IPO issue price. GMP shows that investors are ready to pay above the upper band of the IPO issue price. GMP is determined in the grey market as per the demand and supply of the shares in the primary market. A grey market is that unofficial ecosystem of unlisted companies' stocks that start trading even before the launch of the IPO to the date of its listing.
Also Read: What is Grey Market Premium in IPO: How is GMP Calculated & Reliable
However, GMP is not a reliable factor, as it keeps fluctuating as per the demand and supply of shares in the primary market. There are numerous factors that affect the stock market in India and individual stock prices of different companies that are already listed and trading in the secondary market. However, for an IPO-bounded company, you can consider the GMP as the speculative listing price of the share
According to various online sources, the Grey Market Premium or GMP of the Brigade Hotel Ventures Limited is trading around Rs XX in the grey market. It means shares are trading at the upper band issue price of Rs XX with a premium in the grey market and may list around the same price.
