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Juniper Hotels, on the brink of a late January or early February IPO, is charting a course to enhance its portfolio with the development of large-scale luxury hotels in prominent metro cities like Delhi, Mumbai, and Bengaluru. This strategic move aligns with the company's decision to distance itself from the mid-market segment, which it perceives as less lucrative and increasingly saturated.
In an interview with Mint, Arun K. Saraf, the company's CMD, emphasized the consistent year-on-year demand surge of approximately 10% in the upper-upscale and luxury hotel categories since the early 2000s. Due to a projected minimal increase in the supply of new luxury hotels over the next five years, Juniper Hotels anticipates robust growth prospects in this segment.
This shift underscores the company's commitment to maximizing returns by concentrating on asset ownership and development. Arun K. Saraf expressed confidence in strong growth prospects over the next five years, given the limited projected growth in luxury hotel supply.
Beyond the metros, Juniper Hotels is eyeing additional assets in Goa and Hyderabad, particularly those featuring large convention facilities. The company remains optimistic about the potential for substantial growth, underlining its focus on asset ownership and development as well as capitalizing on fresh opportunities.
Juniper Hotels' business model extends beyond conventional hospitality. The company integrates commercial areas within its hotels, venturing into serviced apartments and office spaces where feasible. This strategic diversification leverages its land holdings and maximizes potential revenue streams.
With approximately 1,950 keys across its existing hotels, Juniper Hotels has plans for rapid expansion. Arun K. Saraf will contribute about Rs 1,800 crore in capital through the IPO. This injection of funds will serve as a capital raise to deleverage existing structures and support future growth.
Saraf clarified that the company would maintain its brand agnosticism, willing to partner with any Indian or international hotel management firms, not limiting itself to Hyatt. This approach aligns with the company's goal of owning profitable 'big-box' or large hotel assets in every market they operate in, emphasizing EBITDA and capital appreciation.
The IPO-bound company has strong ties with global hospitality company Hyatt. The two entities have collaborated since 1998 when they joined forces on the Grand Hyatt Mumbai hotel project. The IPO is expected to bring in fresh capital without altering ownership structures, further solidifying the enduring partnership between Juniper Hotels and Hyatt.
The IPO's objective is to access fresh capital for growth while maintaining ownership structures. Of the Rs 11,800 crore to be raised through the IPO, Rs 11,500 crore will be earmarked for capital raise, deleveraging, and future expansion. The remaining Rs 1,300 crore will be allocated for general corporate purposes. This strategic move reflects Juniper Hotels' optimism about the burgeoning hospitality opportunities in India.
Arun K. Saraf expressed enthusiasm about the company's trajectory, emphasizing its focus on owning and developing large-scale luxury hotels. This approach positions Juniper Hotels to capitalize on the evolving landscape of the hospitality sector in key metro cities and beyond. The company's commitment to asset ownership, strategic development, and brand agnosticism positions it for continued success in India's dynamic hospitality market.
This story was earlier published in The Mint.
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