IPO-bound Park Hotels set to nearly double room keys. Here’s all you need to know

IPO-bound Apeejay Surendra Park Hotels (Park Hotels) has announced plans to double its room capacity to 3,996 from 2,111 keys within the next five years. The expansion is through an asset-light model as the company increases its portfolio of managed and leased properties.

As part of this growth strategy, The Park will focus on operation and management agreements, along with lease or licence deeds with property owners, particularly in the upper midscale category. The shift toward managed hospitality is significant, which is likely to increase its share of managed rooms in Park’s portfolio from 39 per cent to 55.41 per cent over the next few years.

The company currently operates 20 hotels and has 19 additional properties under development. These new properties will add 1,505 rooms under the company’s “Zone by The Park” and “Zone Connect by The Park” brands, reflecting Park Hotels’ commitment to an asset-light business model that minimizes capital outlay while maximizing management fee revenues.

“The Park is focused on leveraging brand equity for our growth through asset-light model with minimal capital expenditure and creating a high-quality diversified portfolio of managed hotels. We believe that our diverse model of business of operating owned, leased, and managed hotels under our brands, complement each other and capitalise on our brand for achieving growth, without substantial capital outlay,” said Priya Paul, chairperson and executive director.

The Park Hotels is the eighth largest hotel chain with asset ownership in India, operates under a diverse portfolio of brands. In FY23, The Park hotels reported a RevPAR of approximately Rs 5,571, backed by a high occupancy rate of 91.77 per cent and average room revenue of Rs 6,070.51, indicating strong revenue-generating efficiency.

This performance marks a significant recovery from the fiscal year 2021, where the average occupancy rate was recorded at 67.26 per cent, with RevPAR at Rs 2,186.00. The substantial growth is evident when comparing the average room revenue which increased from Rs 3,251 in FY21 to Rs 6,070 in FY23.

Further, the sale of food and beverage has been a significant revenue driver for The Park Hotels, contributing over 40 per cent to the company's overall revenues consistently for the past three years.

“We have developed a portfolio of creative food and beverage outlets within our hotels. Our food and beverage offerings provide a diversified and holistic offering to our customers and have since gained popularity with the local community and international customers,” said Paul.

In a significant move to strengthen its balance sheet, The Park Hotels is set to launch an Initial Public Offering (IPO) with a primary offering of Rs 650 crore. A substantial portion of the proceeds from the issue is earmarked for debt reduction.

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