Bangalore-based Prestige Estate to Double Hospitality Holdings with INR 1700 Crore Investment

Bangalore-based Prestige Estate Projects is set to significantly expand its hospitality portfolio, planning to double it within the next three to four years through a ₹1700 crore investment. Currently, the company manages 1,849 keys across India, with its hospitality assets expected to potentially generate revenues of ₹1,800 crore, effectively doubling the current revenues of ₹900 crore.

Strategic Market Expansion and Consistent Performance

The company is actively seeking opportunities in new markets including Srinagar, Ayodhya, Goa, and Mumbai, while also aiming to enhance its presence in existing territories. Zaid Sadiq, the executive director of hospitality at Prestige Group, noted the consistent cash flow generated by the hospitality assets, which maintain an average occupancy rate of 70%. He highlighted the branded segment’s substantial growth potential and the company’s proactive strategy for portfolio expansion.

Potential Monetization Strategies

Prestige is exploring options to monetize its hospitality portfolio, which could significantly reduce its gross debt by ₹900 crore and alleviate cash flow pressures associated with the remaining capital expenditures in this segment. Zaid Sadiq suggested that upon full operation of the assets, potential monetization avenues could include the creation of a real estate investment trust (REIT) or pursuing an initial public offering (IPO), each offering distinct advantages and requiring thorough evaluation and strategic planning.

Collaboration with Marriott and Expansion in Key Locations

Further bolstering its expansion, Prestige Estate Projects has entered into an agreement with Marriott Inc. to introduce new brands in India. This collaboration will add 801 keys across Goa and Karnataka with an investment close to ₹1000 crore. The new properties include Marriott Executive Apartments, Moxy Bengaluru ORR, Bengaluru Marriott Hotel South, and JW Marriott Sakleshpur Plantation Resort in Karnataka, along with Tribute Portfolio Dabolim Hotel and the first Autograph Collection in South Asia located in Goa.

Demand Drivers and Market Outlook

The expectation for the next financial year is that demand will primarily be driven by sustained domestic leisure travel including meetings, incentives, conferences, and exhibitions (MICE), weddings, and business travel. Spiritual tourism and emerging tier-2 cities will also contribute to industry growth.

According to JLL, 2023 saw a record number of hotel signings, totaling 25,176 keys with openings of 12,647 keys, of which approximately 54% were concentrated in tier-2 cities.