Open to IPO, expect a better valuation in the next two years: Pride Hotels CEO Satyen Jain

Satyen Jain, CEO, Pride Hotels, believed that ‘wait and watch’ was a prudent strategy in the current business milieu before taking the IPO route, and suggested that a better market valuation was possible in the next two years. In a freewheeling chat, he spoke on several issues, including the much-awaited second property in South Goa. Excerpts: 

That Pride Hotels was keen on taking the IPO route was a known fact but not much headway had been made in that direction. When prodded on the reason behind the delay, Mr Jain suggested that the plan had been shelved for at least another year, owing to the possibility of a subdued valuation. “It is because of the downcycle we have had for the last so many years. The average rates in the industry are low and while valuing a company capital markets look at the next two years,” he explained. He insisted that the time was not ripe for an IPO and it was possible to be undervalued as a company. With occupancies growing steadily in the last year, room rates were also subsequently expected to head north, leading to stronger demand for hotel stocks, he noted. 

Management contracts was the flavour of the season, said Mr Jain, adding that the hotel company had added two more hotels to its portfolio. “We have added two new properties – one in Ranchi and the other one in Gangtok. Both are Pride Resorts,” he said. The hotel company was also planning an expansion of some of its existing properties, such as the ones in Nagpur and Pune, we were told. “We are adding 50 additional rooms in Pune and 75 additional rooms in Nagpur,” he informed. 

Pride hotels had also been eyeing its second hotel in Goa. It already had a property in North Goa and planned a second hotel on its seven-acre property in South Goa, he said. “Our land has sea and a river in proximity and owing to a strict CRZ, judicious utilization of land is not possible in the current regulatory framework. We are not able to build because of the wastage of land and FSI issues,” he informed, sharing that the company was going to take up the project as soon as there was some relaxation in the stringent CRZ guidelines, which was expected soon. 

Why a leisure hotel scored over a business hotel for an owner

Most hotel chains, especially in the mid-market and upper mid-scale segment preferred business hotels as the ROIs and utilization of space could be maximized, but like many others, Pride Hotels was also witnessing a more pronounced tilt towards leisure hotels among hotel owners. Mr Jain suggested that the brand was recognized more for its “Pride Plaza and Pride Resorts”, thus attracting more owners to these two brands. A steeper real estate price was equally driving the trend, he added, noting that an already constructed hotel at an attractive location further reinforced an owner’s preference for a mid-market or upscale leisure brand positioning, if it qualified. “The possibility of a hotel falling under the Pride Biznotel brand is much higher if it is a greenfield project and the room size is controlled,” he explained, implying that a smaller room size helped to curtail the overall cost and consequently the owner’s expectation of ROI. “It is more difficult to do so if the hotel has already been constructed and the room size is on the bigger side,” Mr Jain explained. 

Both Pride Plaza and Pride Hotels dominated the overall company portfolio, Mr Jain told us, adding that given the larger size of Pride Plaza hotels, its headcount was slightly lower than Pride Hotels. Going forward, however, a more pronounced growth was expected in the Pride Resort segment, he shared. 

Leave a Reply

Your email address will not be published. Required fields are marked *