Park Hotels plans to float Rs 1,500 crore-IPO in September 2023, ET RealEstate

June 24, 2023

The Apeejay Surrendra Park Hotels Ltd (ASPHL), which runs hotels under THE Park and Zone by The Park brands, has revived its fundraising plans and is likely to float a Rs 1500 crore IPO by September this year. It will file revised draft papers in May, said people aware of the development.

Axis Bank, JM Financial and ICICI Securities are the lead managers for the IPO. Park Hotels will be valued at Rs5000 crore and about 30% stake will be offered in this IPO, which will be a mix of primary and secondary sale of equity, said sources.

The hotel chain had filed its draft red herring prospectus for a ₹1,000-crore IPO in January 2020 and received regulator’s nod. However, the Covid-19 pandemic had postponed its IPO plans, first in March-April 2020 and again in April 2021.

Mail sent to Apeejay Surrendra Park Hotels spokesperson did not elicit any responses.

The company has 22 hotels covering 2,000 rooms currently and it will add another 2,000 keys to take the number of hotels to 40 in the next four years. It has 7 own properties, 13 under the management contract and the balance under the lease model -diversified across Bangalore, Chennai, Hyderabad, Kolkata, Navi Mumbai, New Delhi and Vishakhapatnam.

The chain also owns the famous Flurys brand that it acquired in 1965. It has 65 Flurys outlets across West Bengal, Mumbai and Delhi, and it plans to have 200 Flurys outlets across the country in the next two years, chain’s MD Vijay Dewan had told ET in September.

At present, Apeejay promoters and group companies own more than 75% stake in the hotel chains, while its private equity investor, RECP IV Park Hotel Investors—a Mauritius-based investment vehicle owned by global investment bank Credit Suisse— which invested in the firm in 2007, holds about 8% stake.

In the existing portfolio, out of the total rooms, 1264 rooms are under THE Park hotels brand and the rest are under Zone by The Park brand. The company has launched a new brand, Zone CONNECT in FY2022, with signing of three hotels (around 153 keys) under management contract. Further, The PARK Indore was launched in FY2022 with 99 keys.

In FY2019 end, ASPHL commissioned a 117-key property in Kolkata Biswa Bangla under the long-term lease model. The same has been developed by the Government of West Bengal and will be managed by ASPHL.

Like other established hospitality brands in India, the company has been increasing its presence in the management contract segment. This asset-light model enables the company to increase its presence while limiting the capital outlay, said a last year ICRA report.

The Indian hospitality industry, which experienced a prolonged downturn during FY2009-FY2015 because of excess supply in several key markets in India, posted an improvement (as measured by Revenue per Available Room or RevPAR) over 2-3 years before the pandemic hit. ASPHL’s properties have recorded a considerable increase in both ARRs and occupancy levels during FY2017 to FY2020, with the average occupancy across the properties standing at 86% (before the lockdown). However, the pandemic adversely impacted occupancy and ARR in FY2021. The occupancy levels hovered around 85% and 79% in Q3 and Q4 of FY2022, respectively, notwithstanding the recurrence of the pandemic in January 2022, said the report.

  • Published On Feb 16, 2023 at 05:30 PM IST

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