Schloss Bangalore Ltd. IPO: Key Details

Schloss Bangalore

• Schloss Bangalore is coming out with a 100% book building; initial public offering (IPO) of 8,47,45,762 shares of Rs 10 each in a price band Rs 413-435 per equity share.
• Not more than 75% of the issue will be allocated to Qualified Institutional Buyers (QIBs), including 5% to the mutual funds. Further, not less than 15% of the issue will be available for the non-institutional bidders and the remaining 10% for the retail investors.
• The issue will open for subscription on May 26, 2025 and will close on May 28, 2025.
• The shares will be listed on BSE as well as NSE.
• The face value of the share is Rs 10 and is priced 41.30 times of its face value on the lower side and 43.50 times on the higher side.
• Book running lead managers to the issue are JM Financial, BofA Securities India, Morgan Stanley India Company, J.P. Morgan India, Kotak Mahindra Capital Company, Axis Capital, Citigroup Global Markets India, IIFL Capital Services, ICICI Securities, Motilal Oswal Investment Advisors and SBI Capital Markets.
• Compliance Officer for the issue is Jyoti Maheshwari.

Profile of the company

Schloss Bangalore owns, operates, manages and develops luxury hotels and resorts under “The Leela” brand. The Leela brand was ranked as #1 among the world’s best hospitality brands in 2020 and 2021, and among the world’s top three hospitality brands in 2023 and 2024, by Travel + Leisure World’s Best Awards Surveys. In 1986, the Late Captain C.P. Krishnan Nair laid the foundation of The Leela brand, and it has since then focused on building a luxury brand specializing in Indian hospitality. The Leela brand and properties have won over 250 awards since January 2021, which demonstrates its contribution to India’s luxury hospitality landscape. Its mission is deeply rooted in the traditional Indian hospitality belief of “Atithi Devo Bhava” (Guest is God). Its goal is to offer its guests luxury experiences with premier accommodation, exclusivity and personalized service, inspired by the ethos of Indian hospitality. It aims to maintain its position as a world-class luxury hospitality brand.

The company’s Portfolio includes five owned hotels, seven hotels that are managed by it pursuant to hotel management agreements and one hotel which is owned and operated by a third-party owner under a franchise arrangement with it. The company has a strategic footprint across 10 key Indian business and leisure destinations, covering 80% of international air traffic and 59% of domestic air traffic in India in the Financial Year 2025. Further, its portfolio is present in all seven top business markets and three of the top five leisure markets of India, as of December 31, 2024. It accounts for nearly 18% of the total existing luxury keys across these markets that it is present in as of December 31, 2024.

The company’s Owned Portfolio includes five iconic hotels located in the top luxury hospitality destinations in India. Built at attractive locations, these hotels are designed as “modern palaces” and aim to blend traditional Indian architecture with contemporary world-class amenities and services. Its modern palace hotels in Bengaluru (Karnataka), Chennai (Tamil Nadu) and New Delhi (Delhi) are recognized hospitality landmarks and benefit from high barriers to entry. Its properties are a luxury ecosystem, comprising of luxurious accommodations, curated experiences, wellness programs and award-winning food and beverage (F&B) options.

Proceed is being used for:

• Repayment/ prepayment/ redemption, in full or in part, of certain outstanding borrowings, interest accrued and prepayment penalties, as applicable, availed by: (a) The company; and(b) Certain of its wholly owned Subsidiaries and step-down subsidiaries, namely, Schloss Chanakya, Schloss Chennai, Schloss Udaipur and TPRPL, through investment in such Subsidiaries
• General corporate purposes

Industry Overview

India’s hospitality industry has an inventory of approximately 3.4 million keys as of March 31, 2024, of which the organized sector, which includes branded, aggregators, and quality independent hotels, represents only approximately 11% or approximately 375,000 keys. The organized hotel stock is further segmented into branded and independent hotels, of which branded hotels constitute approximately 45% of the keys, i.e., approximately 170,000 keys. The stock of luxury hospitality remains constrained - constituting only 17% of the branded hotel market i.e., approximately 29,000 keys. Hospitality in India is typically undertaken through Owner, Manager and Franchiser business models and any combinations of these. The business model of an Owner-Manager combines asset ownership and management and provides alignment with an optimal focus on asset level profitability, brand progression and management fee growth. The hospitality industry comprises luxury, premium (upper upscale and upscale), economy and midscale segments, which provide a wide range of offerings, services, and experiences.

Hotel operating structures are stratified into layers, each performing a key role. This specialization of focus can create greater efficiency in the operation of the overall asset. While property owners are largely focused on maximizing asset value and underlying profitability, operators/managers are generally incentivized to drive revenues with lesser focus on asset value growth. The business model of an owner-manager combines asset ownership and management and provides alignment with an optimal focus on asset level profitability, brand progression and management fee growth. The Leela is one of the few players with an owner-manager model and the only institutionally managed and owned pure-play luxury hospitality company in India.

Rising disposable income, widening demand-supply gap, shift in consumer preference towards premium experiences, and limited inventory of luxury hotels in India have driven ARR growth and occupancy for the luxury segment from Financial Year 2014-24. Further, supply in the luxury segment is expected to remain constrained due to high barriers to entry including limited availability of land, extensive regulation, restrictive zoning, high cost of capital and long gestation periods. As a result, a favorable demand-supply outlook is expected for the luxury hospitality segment in India, with total demand estimated to grow at a CAGR of 10.6% over Financial Year 2024 to Financial Year 2028 against supply growth of a CAGR of 5.9% over the same period.

Pros and strengths

Leading luxury hospitality brand with rich heritage and global appeal: With over 250 industry awards since January 2021, The Leela brand is associated with luxury and is established as a leading luxury hospitality brand in the world. Its properties are widely recognized for the superior quality of architecture, guest facilities and services, repeatedly earning top rankings among the world’s best hotels and travel experiences by recognized publications such as Travel + Leisure and Conde Nast Traveler. The Leela brand was ranked as #1 among the world’s best hotel brands in 2020 and 2021 and among the world’s top three best hotel brands in 2023 and 2024 by Travel + Leisure World’s Best Award Surveys, reflecting its brand’s strong global recognition.

Comprehensive luxury ecosystem resulting in diversified revenue sources: The hotels in its Portfolio have a comprehensive luxury ecosystem that caters to evolving customer preferences, by providing luxurious accommodation, curated experiences, and F&B venues offering award-winning dining experiences spanning multiple cuisines, award-winning wellness offerings and several other amenities. This ecosystem has enabled it to attract a diverse clientele spanning leisure travelers, business travelers and groups, while also diversifying its revenue base across non-room revenue sources such as F&B, MICE and banqueting venues. For the Financial Year 2025, it derived 56.96% of its room revenues from retail and leisure guests, 16.97% from corporate bookings and 25.45% from group bookings, demonstrating the strength of its diversified customer base.

Track record of driving operational efficiency by its active asset management approach: As owners and operators of properties, it drives operational efficiencies through its structured and disciplined approach to asset management, which has helped it to deliver superior EBITDA margins. It has also been able to increase its RevPAR for its Owned Portfolio from 1.2 times in the Financial Year 2019 to 1.4 times in the Financial Year 2025, as compared to the luxury hospitality segment in India.

Highly experienced, cycle-tested senior management team, guided by an experienced and distinguished board: The company is a professionally managed, institutionally backed company, committed to creating long-term shareholder value. It has a highly experienced management team with deep domain expertise that has helped drive operational excellence as demonstrated by the growth in key metrics such as RevPAR, TRevPAR, revenue from operations, EBITDA and the expansion of its Portfolio. Its leadership team comprising of three Key Managerial Personnel and seven members of its Senior Management team, who are responsible for its strategic direction, and are supported by 13 general managers and regional vice presidents, who oversee various aspects of its daily operations.

Risks and concerns

Maximum revenue comes from five hotels owned by the company: The company derived a significant portion of its total income for the past three Financial Years from its five owned hotels, namely The Leela Palace Bengaluru, The Leela Palace Chennai, The Leela Palace New Delhi, The Leela Palace Jaipur and The Leela Palace Udaipur. These hotels are directly owned and managed by the company. For the Financial Years 2025, 2024 and 2023, its direct ownership keys as a percentage of total keys across its overall portfolio was 34.45%, 35.96% and 35.96%, respectively. Any decrease in its revenues from these hotels, including due to increased competition and supply or reduction in demand in the markets in which these hotels operate, any other unfavorable state or local economic, policy or political developments, the occurrence of political elections or adverse weather conditions (including heatwaves) in these regions affecting the demand for its hotels, may have an adverse effect on its business, results of operations and financial condition.

Business is subject to seasonal and cyclical variations: The hospitality sector in India is subject to seasonal variations. The periods during which the hotels in its Portfolio experience higher revenues vary from property to property, depending principally on their location and the guests they serve. Its room rates and occupancies are generally higher during the second half of each Financial Year due to greater demand for domestic and international leisure travel during this period. Such seasonality can be expected to cause quarterly fluctuations in its operating and financial performance especially for leisure travel destinations such as Jaipur (Rajasthan) and Udaipur (Rajasthan). The timing of opening of new hotels and the timing of any hotel acquisitions or dispositions may cause a variation of revenue and earnings from quarter to quarter. Further, the hospitality sector is also subject to weekly variations. 

Significant proportion of room revenues comes from retail and leisure guests: As the company is a luxury hospitality company, it derives a significant proportion of its room revenues from retail and leisure guests. For the Financial Year 2025, it derived 57.0% of its room revenues from retail and leisure guests. Spending on hospitality by retail and leisure guests is of a discretionary nature. Any factors which lead to a reduction in such spending (which may include factors outside its control, such as macroeconomic factors) could adversely impact its business, financial condition and results of operations.

Inability to increase average occupancy levels at its Portfolio may impact financial condition: Average occupancy for its hotels is a measure of its revenue generation capabilities over a period of time. Average occupancy for its hotels may be affected by a variety of factors, including increased competition and supply or reduction in demand in the markets in which its hotels operate, unfavorable state or local economic, policy or political developments, the occurrence of political elections or adverse weather conditions (including heatwaves) in these regions. If the company is unable to improve its average occupancy across its Portfolio, it will hamper its ability to grow its revenue from operations and adversely affect its business, financial condition and results of operations. The company’s inability to increase average occupancy levels at its Portfolio (65.19% for Financial Year 2025, 63.05% for Financial Year 2024 and 61.06% for Financial Year 2023), may adversely affect its business, results of operations and financial condition.

Outlook

Schloss Bangalore is a luxury hospitality company operating under “The Leela” brand in India. It owns, operates, manages, and develops luxury hotels and resorts, offering premier accommodations and personalised services inspired by Indian hospitality. The owned portfolio comprises five landmark hotels with 1,216 keys across key business and leisure destinations: Bengaluru, Chennai, New Delhi, Jaipur, and Udaipur. These hotels, renowned as modern palaces, blend traditional Indian architecture with contemporary luxury. On the concern side, a significant portion of its total income is derived from the five hotels owned by the company (aggregating to 93.46%, 93.77% and 91.13% of its total income for the Financial Year 2025, Financial Year 2024 and Financial Year 2023, respectively) and any adverse developments affecting such hotels or regions could have an adverse effect on its business, results of operations and financial condition.

The issue has been offering 8,47,45,762 shares in a price band of Rs 413-435 per equity share. The aggregate size of the offer is around Rs 3500.00 crore to Rs 3686.44 crore based on lower and upper price band respectively. Minimum application is to be made for 34 shares and in multiples thereon, thereafter. On performance front, revenue from operations increased by 11.02% to Rs 13,005.73 million for the Financial Year 2025 from R 11,714.53 million for the Financial Year 2024. Moreover, its restated profit was Rs 476.58 million for the Financial Year 2025 as compared to a net loss of Rs 21.27 million for the Financial Year 2024. 

The company’s primary strategic objective is to maintain its position as a leading luxury hospitality brand, resulting in sustainable growth and enhanced stakeholder value. To achieve this, it is focused on optimizing the operating performance of its existing properties through proactive asset management and strengthening its industry position through a focused portfolio expansion, both within India and internationally. It aims to capitalize on the strengths of its core management operations, strong brand reputation and service culture to create value for its stakeholders. It also looks to capitalize on opportunities to leverage its brand through complementary business extensions such as serviced residences, branded residential offerings and members-only clubs. It also seeks to pursue selective partnerships with and acquisitions of luxury hospitality companies that align with its Portfolio.