Tourism boom, rising spend give wings to travel companies' IPO plans

Last week, airport quick service restaurant player Travel Food Services listed on BSE to raise Rs 2,000 crore

Travel companies are riding high on the post pandemic growth in domestic and international tourism and are taking this opportunity to list on the bourses.

 

Last week, airport quick service restaurant player Travel Food Services listed on BSE to raise ₹2,000 crore.

 

On the other hand, Cordelia Cruise Operator Waterways Leisure Tourism had filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (Sebi) last month for an initial public offering (IPO) of ₹727 crore.

 

The closely-connected hospitality industry is also expected to see a flurry of IPOs this year. LaRiSa Hotels and Resorts, for instance, has filed DRHP for an IPO expected to take place within a quarter.

 

“We’re planning to raise ₹45 crore. Equity dilution is about 25 per cent. Documents have been filed with Sebi and we’re awaiting approval,” Randhir Narayan, director at LaRiSa, told Business Standard. 

 

India’s own economic growth amid global uncertainties, the expanding middle class and a younger demographic tourism surge are all aiding growth of the travel and hospitality sectors.

 

Bengaluru-based Brigade Enterprises has filed for a ₹900 crore public issue for its hospitality arm, Brigade Hotel Ventures.

 

Prestige Group is looking to raise ₹2,700 crore via listing Prestige Hospitality Ventures, including a possible ₹340 crore pre-IPO placement.

 

Lemon Tree Hotels is preparing to take its subsidiary, Fleur Hotels, public by FY29. 

 

Priya Thakur, director at LaRiSa, which owns a mix of owned resorts, leased and managed hotels, said that while the discretionary spend among consumers had risen, there was more demand for experiential travel. This has prompted several hotel chains to provide better quality of services.

 

“Share of wallet is increasingly shifting towards consumer-related services, and travel is among the few sectors which have a strong long-term outlook. This would explain why companies are increasingly moving towards IPOs and raising money to expand operations,” a senior sector expert told Business Standard.

 

Apart from the economic tailwinds, prior successful IPOs within the travel industry have also paved the way for newer companies.

 

While MakeMyTrip was the first to list, it did so on NASDAQ in 2010 raising $68 million, and is now valued at $8.5 billion.

 

EaseMyTrip, through its parent company Easy Trip Planners Ltd, raised ₹510 crore in 2021. Its market cap is ₹3,767 crore. More recently, Le Travenues Technology Ltd, the parent of travel aggregator Ixigo, raised ₹740 crore in June last year, while its current market cap is ₹8,484 crore.

 

Yatra Online, Thomas Cook India are among other listed players.