Prestige Estate Projects to Double Hospitality Portfolio with Rs 1,700 Crore Investment

Prestige Estate Projects (PEPL) plans to double its hospitality portfolio over the next three to four years, investing Rs 1,700 crore in expanding its assets. Currently, the firm manages 1,849 keys of hospitality properties across India. The expansion aims to capitalize on the segment's potential to generate revenue of Rs 1,800 crore, doubling its current revenue of Rs 900 crore. PEPL is exploring new markets such as Srinagar, Ayodhya, Goa, and Mumbai, as well as expanding its presence in existing markets.

Zaid Sadiq, Executive Director of Hospitality at Prestige Group, noted that hospitality assets are yielding consistent cash flow with an average occupancy rate of 70% across operational assets. The branded segment is seen as offering significant potential, and the firm is actively pursuing expansion opportunities for portfolio growth.

To support its expansion plans, PEPL is evaluating options to monetize its hospitality portfolio, potentially unlocking value and reducing its gross debt by Rs 900 crore. Potential monetization strategies include creating a real estate investment trust (REIT) or pursuing an initial public offering (IPO). Both options offer distinct advantages and would require careful planning and evaluation before proceeding.

In addition to its expansion plans, PEPL has partnered with Marriott International to introduce new brands in India, with a total inventory of 801 keys across Goa and Karnataka. This investment of around Rs 1,000 crore includes various properties such as the 177-key Marriott Executive Apartments in UB City, Bengaluru; 130-key Moxy Bengaluru ORR on Outer Ring Road, Bengaluru; 152-key Bengaluru Marriott Hotel South on Kanakapura Road, Bengaluru; and 160-key JW Marriott Sakleshpur Plantation Resort in Sakleshpur, Karnataka.

In Goa, PEPL is developing the 62-key Tribute Portfolio Dabolim Hotel in Dabolim and the 120-key Autograph Collection in Chopdem, with the latter being the first Autograph Collection in South Asia.

Sadiq expects sustained domestic leisure travel, meetings, incentives, conferences, and exhibitions (MICE), weddings, and business travel to drive demand in the next financial year. Spiritual tourism and growth in tier-2 cities are also expected to contribute to the industry, with domestic tourism as the primary driver.

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

Investment momentum in the hospitality sector is projected to increase throughout 2024, with pan-India premium hotel occupancy estimated to reach decade highs of 70-72% during the 2024-2025 financial year, as per credit rating agency ICRA. These favorable market conditions support PEPL's plans for significant growth in its hospitality portfolio, which includes tapping into emerging markets and exploring potential monetization opportunities to fuel further expansion.