About Grand Continent Hotels Limited

Business Overview

Grand Continent Hotels Company operates in the mid-scale hotel sector, covering the upper-mid priced, mid-priced, and economy segments, catering to Indian middle-class guests and business travelers with a value-for-money proposition. The company, along with JV Partner Entities, has 16 operational hotels with 753 keys as of September 30, 2024, across Karnataka (Bengaluru/Mysuru), Tamil Nadu (Hosur), Goa (Anjuna/Morjim), Andhra Pradesh (Tirupati), and Telangana (Secunderabad).

A strong presence in Bengaluru includes 10 hotels with 458 keys, contributing 71.43% of total hotel properties, 60.82% of total keys, and 60.39% of revenue. The asset-light model focuses on properties under direct lease, with two properties under a JV partnership agreement and two owned properties in Bengaluru.

For most hotel properties, trademark license/franchise agreements exist with Sarovar Hotels Private Limited and Royal Orchid Associated Hotels Limited, enhancing sales, marketing, and lead generation. These properties operate under "own brand" or "co-branded" models, with licensors receiving a fixed percentage of gross revenues.

As at February 28, 2025, the Company have 658 permanent and contractual employees. The Banker to the Company is ICICI Bank Limited.

Industry Analysis

India’s Mid-Scale Hotels Industry: Growth, Trends, and Market Positioning

India's hospitality sector has experienced a remarkable resurgence post-pandemic, driven by rising discretionary spending, revenge tourism, economic recovery, corporate travel demand, and an uptick in large-scale events like weddings and festivals.

As of 2023, India's hotel industry comprises over 400,000 rooms, including both branded and independently operated properties. Branded hotels account for approximately 180,000 rooms, representing 44% of the total supply.

Hotels in India are categorized based on Average Daily Rate (ADR), catering to a broad spectrum of travelers. Among these segments, mid-scale hotels (mid-priced and upper mid-priced) dominate the market, comprising 56% of the total room supply. Their appeal lies in providing a balance between quality service, affordability, and convenience, making them the preferred choice for business and leisure travelers alike.

Mid-Scale Hotels: A Key Growth Driver

The mid-scale segment has emerged as a significant force within India’s hospitality landscape, propelled by increasing domestic travel, rising disposable incomes, and evolving consumer preferences. Positioned between budget and luxury hotels, mid-scale hotels cater to a growing base of value-conscious travelers, offering affordable yet comfortable stays.

Today’s travelers expect more than just accommodation—they seek modern amenities, seamless service, and an experience that aligns with international standards. This demand has transformed the mid-scale segment into one of the most competitive and innovative categories in India.

Market Expansion and Key Players

The increasing popularity of branded mid-scale hotels has led to rapid expansion beyond metropolitan hubs, with Tier 2, 3, and even Tier 4 cities emerging as key growth centers. Both domestic and international hotel brands are capitalizing on this trend by strengthening their mid-scale portfolios.

Indian hospitality chains such as Bloom Hotels, Fortune Park, Ginger, Lemon Tree Hotels, Royal Orchid, Sarovar Hotels, Sayaji Hotels, and The Grand Continent Hotel have expanded their presence across the country, offering standardized yet budget-friendly experiences. Simultaneously, global hotel chains like Holiday Inn Express, ibis, and Fairfield by Marriott have increased their footprint in India's mid-scale segment.

Evolving Service Model

The mid-scale segment has evolved from a traditional economy, select-service model to a more comprehensive full-service approach. Initially focused on clean rooms, limited dining, and essential amenities, mid-scale hotels are now enhancing guest experiences with:

• Multiple dining options

• Wellness centers & recreational facilities

• Meeting & conference spaces

• Personalized services and flexible booking options

This transition reflects the changing expectations of modern travelers and the need for mid-scale hotels to differentiate themselves in an increasingly competitive market.

Growth Projections & Market Potential

The Indian mid-scale hotel market generated INR 316.3 billion in revenue in 2023 and is expected to grow at a CAGR of 9.0%, reaching INR 530.1 billion by 2029.

Similarly, the total room supply within this segment stood at 230,000 in 2023 and is projected to expand at a CAGR of 5.0%, driven by continuous hotel developments.

Key factors fueling this expansion include:
✅ Surge in domestic tourism
✅ Rising middle-class incomes and changing lifestyles
✅ Increase in business travel, particularly from SMEs
✅ Growing demand in Tier 2, 3 & 4 cities
✅ The rise of online travel agencies (OTAs), enhancing visibility and accessibility

Performance Metrics & Future Outlook

Following the COVID-19 pandemic’s impact on occupancy rates and revenue, India’s mid-scale hotel segment staged a strong recovery in 2022, surpassing pre-pandemic levels in Average Daily Rate (ADR) and Revenue per Available Room (RevPAR).

As of 2023:

• ADR stood at INR 4,806

• Occupancy rate reached 63.7%

• RevPAR was INR 3,061

By 2029, the ADR is projected to rise to INR 5,798, reflecting a CAGR of 3.2%, while occupancy rates are expected to improve to 64.4%, driving RevPAR growth to INR 3,734.

In Conclusion, India’s mid-scale hotel segment is poised for sustained growth, driven by domestic travel trends, increased business tourism, and the digitalization of hospitality services. The industry’s shift towards value-driven offerings, seamless guest experiences, and expanding footprints beyond metro cities will continue to shape its future, making mid-scale hotels a key pillar of the country’s hospitality landscape.

Business Strengths

1. Premium Hospitality in the Mid-Priced Segment
Delivering high-quality service and elegant accommodations at competitive rates, ensuring exceptional value without compromising on luxury. Spacious rooms, diverse culinary options, and efficient room service enhance the guest experience.

2. Strategic Presence in Prime Locations
Properties are situated in key business districts and entertainment hubs, ensuring easy access for business and leisure travelers. This strategic positioning enhances market visibility and competitiveness.

3. Strong Asset Management for Value Enhancement
A dedicated asset management team focuses on increasing occupancy rates, revenue, and cost efficiencies through optimized procurement, marketing, and capital expenditures.

4. Experienced and Professional Leadership
Led by Chairman and Managing Director Ramesh Siva, with over two decades of hospitality experience, the management team brings expertise in private equity, investments, real estate, and hotel operations.

5. Positioned for Growth Amid Industry Tailwinds
India’s rapid economic growth, rising urbanization, and a young workforce are driving increased discretionary spending and travel demand, boosting the mid-scale hotel sector’s expansion opportunities

Business Strategies

1. Expanding Hospitality Assets
Strengthening presence in Southern India while actively expanding into Northern and Western India, focusing on business hubs and leisure destinations. Plans include exploring Central and Eastern India for a well-rounded footprint. The goal is to double capacity annually for the next five years, with future international expansion to serve business travelers and enhance global market presence.

2. Enhancing Operational Efficiency
Implementing holistic asset management with cost optimization, workforce efficiency, and technology-driven productivity. Key initiatives include cloud-based SaaS integration for accounting, procurement, HR, and revenue management, along with advanced hospitality management systems for improved reservations and loyalty programs.

3. Optimizing Capital Efficiency with an Asset-Light Model
Maintaining an optimal mix of owned and leased hotels to expand brand presence. As of September 30, 2024, operating 16 hotels with 753 keys, with two more properties adding 97 keys by November 2024. Signed MOUs/LOIs for five additional properties, contributing 346 rooms in the upper mid-priced and mid-priced segments

Business Risk Factors and Concerns

1. Dependency on Franchise Agreements
A majority of properties operate under Sarovar and Royal Orchid brands through franchise agreements, posing risks related to non-renewal, termination, and disputes.

2. Non-Exclusive Franchise Model
Franchise agreements with Sarovar and Royal Orchid are non-exclusive, increasing competition from other hotels under the same brand in cities like Tirupati, Bengaluru, Anjuna, Hosur, and Secunderabad, potentially weakening brand differentiation.

3. Revenue Concentration Risk
A significant portion of hotel keys and revenue is concentrated in Bengaluru (Karnataka) and Tirupati (Andhra Pradesh). Any adverse regional developments, increased competition, or demand fluctuations may negatively impact financial performance.

4. Changing Consumer Preferences
Evolving travel costs, spending habits, alternative accommodation options, and shifts in business and leisure travel patterns could reduce demand for hotel rooms, impacting revenue and occupancy rates.

5. Quality and Hygiene Risks in F&B Services
Maintaining high-quality food and hygiene standards is critical, as issues like contamination, inventory spoilage, or service lapses could lead to customer dissatisfaction, legal liabilities, and revenue loss in the F&B segment.

Grand Continent Hotels Company faces key operational risks, including contract dependencies, non-exclusive franchise agreements, revenue concentration, shifting consumer preferences, and quality control challenges. These risks could impact financial performance, brand positioning, and overall business stability.