Ventive Hospitality IPO

The company’s hospitality assets feature leading food and beverage outlets. Some notable ones are Alto Vino (Italian) and Tao Fu (Chinese) at JW Marriott, Pune, and Ukiyo (Japanese) at The Ritz-Carlton, Pune.

Ventive Hospitality has experienced substantial growth, expanding from 83 keys in 2007 to 2,036 keys as of September 30, 2024.

As of September 30, 2024, Ventive Hospitality’s operating portfolio comprises seven hospitality assets with 1,331 keys developed by the company, its promoter, promoter group, and their affiliates. Additionally, the portfolio includes four acquired assets with 705 keys.

The company’s hospitality assets are strategically located in key business hubs like Pune and Bengaluru, popular tourist destinations such as the Maldives, and significant cultural and spiritual centres like Varanasi.

The company’s portfolio includes prominent luxury properties managed by globally recognised hospitality brands. Pre-acquisition assets include JW Marriott, Pune, while post-acquisition additions comprise JW Marriott, Pune; The Ritz-Carlton, Pune; Conrad Maldives; Anantara Maldives; and Raaya by Atmosphere, Maldives.

Ventive Hospitality has a dedicated asset management team that works closely with hotel operators. They oversee critical functions such as procurement, marketing strategies, and capital expenditure planning.

The company claims to prioritise strong Environmental, Social, and Governance (ESG) practices. Their management actively integrates ESG initiatives into business goals, monitors progress, and identifies areas for improvement.

The company has seen a consistent increase in revenue from operations and profit after tax (PAT). Revenue from operations increased from Rs 229.17 crore in FY22 to Rs 430.81 crore in FY23 to Rs 477.98 crore in FY24. PAT increased from Rs 29.43 crore in FY22 to Rs 131.27 crore in FY23 to Rs 166.32 crore in FY24.

The company relies on third-party operators for the quality of services at its hospitality assets. These assets are operated by or franchised from third-party brands. Any negative impact on the reputation of these assets or brands, or failure in the quality control systems, could adversely affect the company’s business, financial performance, and operations.

A major portion of the company’s assets are operated by or franchised by Marriott and Hilton, which account for 8 out of 17 hospitality assets. These assets contributed substantial revenue, with Rs 430.83 crore (49.19%) for the six months ended September 30, 2024. In FY24, FY23, and FY22, they contributed Rs 971.23 crore (50.92%), Rs 891.89 crore (50.61%), and Rs 499.70 crore (41.72%) to the company’s pro forma total income, respectively. If the long-term agreements with these third-party operators are terminated or not renewed, it could negatively affect the company’s operations and financial condition.

A large portion of the company’s total income comes from the revenue generated by hotel operations. For the six months ending September 30, 2024, this segment contributed Rs 599.76 crore (68.47%) to the pro forma total income. In FY24, FY23, and FY22, it contributed Rs 1,374.06 crore (72.04%), Rs 1,281.28 crore (72.71%), and Rs 820.77 crore (68.53%), respectively. Additionally, a substantial share of the income is derived from the company’s four largest hospitality assets. These assets contributed Rs 462.71 crore (52.83%) for the six months ended September 30, 2024, and Rs 1,111.20 crore (58.26%), Rs 1036.27 crore (58.81%), and Rs 727.01 crore (60.71%) in FY24, FY23, and FY22, respectively. Any adverse changes affecting these key assets could adversely impact the company’s business operations and finances.

Before the recent acquisitions, the company’s total income was derived solely from assets located in Pune. However, a large portion of its total income now comes from assets concentrated in Pune and the Maldives, accounting for 58.40% and 32.03% of the pro forma total income for the six months ended September 30, 2024, respectively. Any adverse developments in these locations could have a significant impact on the company's operations and financial position.

The company’s annuity assets contributed Rs 245.45 crore (28.02%) as of the six months ended September 30, 2024. In FY24, FY23, and FY22, these assets contributed Rs 466.10 crore (24.44%), Rs 416.12 crore (23.61%), and Rs 339.20 crore (28.32%), respectively, to the pro forma total income. If demand for office and retail properties declines, the company’s business and financial results could be adversely impacted.

Low occupancy rates at the company’s hospitality assets could adversely affect its business, financial condition, and cash flows.

As of the six months ending September 30, 2024, Rs 87.36 crore (26.47%) of the company’s pro forma revenue from room income came from bookings through travel agents, intermediaries, and other channels. In FY24, FY23, and FY22, this amounted to Rs 249.90 crore (32.50%), Rs 238.34 crore (33.07%), and Rs 179.54 crore (40.60%), respectively. If these distribution channels continue to capture a larger share of bookings compared to direct booking channels, the company may face higher commission costs. Additionally, if competitors negotiate more favourable terms with these agents and intermediaries, it could lead to a reduction in the company’s total income, negatively affecting its business.

As of September 30, 2024, the company had outstanding borrowings of Rs 3,609.52 crore. Any inability to repay or service these loans could adversely affect the company’s financial stability.

The company, its directors, promoters, and subsidiaries are involved in certain ongoing legal proceedings. Any adverse judgment in any of these cases could be detrimental to the company’s business prospects.