About Ventive Hospitality Limited

BUSINESS OVERVIEW

Ventive Hospitality specializes in owning luxury hospitality assets across business and leisure segments, operated or franchised by global brands such as Marriott, Hilton, Minor, and Atmosphere.

Portfolio Highlights:

• 11 operational hospitality assets across India and the Maldives, with a total of 2,036 keys in the luxury, upper-upscale, and upscale segments (as of September 30, 2024).
• Iconic properties include:
  • JW Marriott, Pune: The largest luxury hotel in Pune by keys, with 400-500 rooms and Western India's largest luxury hotel ballroom, ideal for MICE events and weddings.
  • The Ritz-Carlton, Pune: One of only two Ritz-Carlton hotels in India.
  • Conrad Maldives: Features the Muraka, an undersea private residence and Ithaa, a renowned underwater restaurant.
  • Anantara Maldives: Offers nine F&B outlets spanning three islands.
  • Raaya by Atmosphere, Maldives: Positioned within the highly sought-after "one island, one resort" Maldives concept.

Global Recognition:

• The Maldives: Consistently ranked among the world's best tourist island destinations, including Indian Ocean’s Leading Destination (2024) at the World Travel Awards.
• Muraka Suite at Conrad Maldives: Named one of the 50 Greatest Luxury Hotel Suites globally by Robb Report.

Dining Excellence:

• Eight restaurants in Pune rank among TripAdvisor’s top 10 fine dining spots, including Alto Vino, Tao Fu, and Ukiyo.
• Conrad Maldives and Anantara Maldives are renowned for their diverse, award-winning F&B offerings.

Annuity Assets:

• Occupied by marquee tenants such as HSBC, Deutsche Bank, Nokia, Vodafone, PwC, Sephora, Starbucks, and Vero Moda.

Ventive Hospitality stands as a leader in luxury hospitality, combining exceptional properties with premium service, global recognition, and innovative dining experiences.

As at September 30, 2024, Ventive Hospitality had 2,791 permanent employees and employed 632 personnel on a contract basis across their hospitality assets (excluding 210 permanent employees of Raaya by Atmosphere, Maldives, which is held by their Joint Venture, Kudakurathu Island Resort Private Limited). The Banker of the Company is Hongkong and Shanghai Banking Corporation Limited.

INDUSTRY ANALYSIS

Indian Hotel Industry
Some key characteristics of India’s hotel industry, relevant for a better understanding of the market and more particularly the upper-tier segments i.e. luxury, upper upscale and upscale segments, are briefly set out herein.

1.1 Indian GDP growth to drive hotel demand: India is the 5th largest global economy and among the fastest growing economies in the world. The hotel sector has a strong multiplier effect that contributes materially to India’s economy by way of GDP, asset and investment growth, employment, foreign exchange earnings and tax revenues. Hotel demand is driven by business and leisure travel, staycations and travel for weddings, conferences and events. The travel and tourism sector contributed Rs. 19.1 tn in CY23 (5.6% of GDP) and is expected to contribute about Rs. 21.2 tn in CY24 and over Rs. 43 tn by 2034. The sector was estimated to employ about 43 mn persons by CY23.4 Demand for chain affiliated hotel rooms has increased to 120k rooms per day (2.48 rooms per Rs crore of GDP) in FY24 from 71k rooms per day (2.24 rooms per Rs. crore of GDP) in FY16, and is expected to increase further to 167k rooms per day by FY275 .

1.2 Indian hotel market – potential for greater penetration: India has only 195k chain affiliated hotel rooms, across segments, as of 30 September 2024 compared to 56k keys in San Francisco and 150k keys in London as of 31 December 2023. The sector is underpenetrated compared to global counterparts in terms of ratio of rooms to commercial office stock with top 8 cities of India having 118 keys per msf of office space, compared to 637 keys per msf of office space in London and 486 keys per msf of office space in San Francisco as of 31 December 20236 . Total hotel keys penetration basis population as of 31 December 2023 is also lower in India at 0.3 keys per 1,000 people compared to 22.1 / 2.7 keys per 1,000 people in the USA / globally.

1.3 Shift towards chain affiliated hotels: Prominence of chain affiliated hotels has evolved materially over last 10 years and the trend is expected to continue over next few years. International hotel chains are also gaining market share with inventory share of international chains increasing from 21% in FY01 to 45% as at YTD Sep-24. Guest preferences for chain hotels have increased materially due to greater consistency of product, better appreciation of lifestyle and boutique hotel offerings, well-curated F&B experiences, leisure, recreation, loyalty points and entertainment.

1.4 Robust domestic demand: The domestic travel industry has been robust and has grown materially. Having touched 2.3 bn visits in 2019, the post COVID recovery has been strong with 1.7 bn visits in 20227 ; while 2023 data has not been announced by MoT, WTTC research reports that domestic visitor spending rose by 15% in 2023, surpassing the 2019 level. Leisure, weddings and social demand, MICE demand, and increased number of sports / other events have significantly contributed to overall hotel revenues. Continued growth of domestic travel is expected and would be beneficial for the industry in the future. Pilgrimage related travel has also grown significantly with spiritual tourism sector projected to expand at 9% CAGR, from US$ 60 bn in 2023 to US$ 130 bn by 2032, also gaining from GOI’s PRASHAD Scheme and Swadesh Darshan 2.0 programme8 . Air passenger movement for Varanasi has risen at 13% CAGR from FY15-24. For 2023, RevPAR for over 100 hotels across several pilgrim centres has risen 38.5% since 2019, to Rs. 3.2k9 . The supply pipeline (October 2024 to FY27) includes 6.7k rooms at pilgrim centres and this will support continued demand growth in this segment.

1.5 Foreign tourist arrivals on an improving trajectory: FTA was 9.3 mn in CY23, reflecting 85% recovery compared to 10.9 mn in CY19. FTA for CY24 (January to July 2024) has risen to 5.6 mn compared to 5.3 mn for the same period in CY2311. HAI estimates FTA to grow materially, to cross 30 mn by 2037. Growth of FTA will further strengthen hotel ADRs, besides demand and occupancy, particularly for the upper-tier hotels. Inbound hotel demand (i.e. from FTA) are a significant contributor to the hotel sector.

1.6 Future demand drivers: Demand will be driven by diverse domestic and inbound travel needs - business, leisure, MICE, weddings, social events and international political and business delegations. Each segment is expected to be robust based on a positively growing economy, improved travel infrastructure, new convention centres, and increased airline services. Newer demand will arise for international and national sports and entertainment sector events. Continued urbanisation and changing demographics, with millennials and younger travellers seeking experiences and willing to spend on entertainment, recreation, wellness and lifestyle will drive discretionary travel.

1.7 Hotel demand in Key Markets in India: Hotels have generally enjoyed positive demand conditions in the aftermath of COVID pandemic. Aggregate demand for the ten Key Markets (Mumbai, Delhi NCR, Bengaluru, Chennai, Hyderabad, Kolkata, Pune, Ahmedabad, Jaipur and Goa) was 27.4 mn rooms for FY24 compared to 25.5 mn rooms for CY19. This growth is particularly notable considering that inbound travel for business and leisure is yet to fully recover, and further that the IT sector is yet to fully implement ‘return to office’. Cities with wider reach across multiple demand segments have gained more speedily; thus, Pune gained from its advantage as a significant hub for the services sector (GCCs, IT, ITeS, banking, professional services, retail) and for manufacturing (mainly automotive and engineering) to achieve demand of 5k rooms per day for FY24 compared to 4.8k rooms per day for CY19. As an emerging metro city, Pune has absorbed large supply growth (7.4k chain affiliated hotel rooms; ranked eighth in India) and is ahead of Kolkata, Ahmedabad, and Gurugram as of FY24. Bengaluru with material concentration on the IT and ITeS sector has taken longer to recover from COVID pandemic – demand for FY24 was 11k rooms per day compared to 9.4k rooms per day for CY19. Business has regained momentum, with this large and growing hotel market gaining from expanding air travel to the city and growth in aero and defence activities in addition to IT services.

All India inventory growth from YTD Sep-24 to FY27 is estimated at 11.3% CAGR; in contrast Pune and Bengaluru have a more limited pipeline reflecting inventory growth at 1.6% and 5.4% CAGR, respectively.

Overview of Hotel Industry Demand
The key demand drivers are briefly described herein:

a. Business Travel: This comprises of foreign and domestic visitation for business related purposes. Such travel is either on corporate account or by individual business travellers, visiting primarily business-oriented locations. IT, automobile, banking and financial services, healthcare, manufacturing, consulting, retail etc are the key sectors which drive demand for business travel. Pune is an important hub for IT, automobile and manufacturing sectors, and Bengaluru the leader in IT and ITeS sectors, further bolstered by biotech and defence sector activities.

b. Tourism: India is popularly known for its rich cultural heritage, historical sites, diverse landscapes, and vibrant festivals. Growth of domestic and inbound tourism contributes significantly to the demand for hotels.

c. Leisure Travel: This travel is discretionary and comprises long / short vacations, staycations at city hotels, weekend stays for recreation and entertainment, leisure attached to a business trip or to a trip for weddings and meetings. Greater affordability and propensity, changing lifestyle, and improved connectivity have materially benefitted hotels with good F&B, recreation and entertainment facilities.

d. Weddings and Social demand: This segment comprises destination weddings and other social / celebratory events, as well as substantial use of hotels for weddings and social events for local (non-residential) events. The trend for hosting weddings in city hotels or as destination weddings has grown materially and is gaining further momentum, as it percolates to the mid-market segment as well. Several city hotels attract large residential weddings, akin to destination weddings in leisure centres.

e. MICE: Conferences, trade shows, corporate events, and training programs are an important demand source, attracting various sectors. IT, banking and finance, retail, FMCG, pharma and automotive sectors are some of the major demand generators - Pune and Bengaluru are well positioned to further deepen the sizeable current demand from this segment. New convention centres in India have increased the potential for larger international and domestic events. The G20 events from Dec-22 to Sep-23 took international visitors to multiple destinations providing occupancy, rate and revenue boost to hotels. The success of those events creates the potential to host varied delegations with international standard offerings and service.

f. Diplomatic Travel: This comprises of government leaders and representatives of other countries, often accompanied by large trade delegations. Besides, diplomats posted to India prefer using upper-tier hotels during the transition period.

g. Airline Crew: Helps create a core of demand at hotels, albeit at discounted pricing. Airlines also generate limited demand for layovers.

h. Transit Demand: Comprises persons on overnight transits during air or road travel to a domestic or international destination.

i. Pilgrim Demand: Chain affiliated inventory and demand at pilgrim centres has materially increased in the past few years. Better quality hotel options have enabled visitors to move away from mediocre independent hotels and other pilgrim facilities.

BUSINESS STRATEGIES

1. Expanding Asset Portfolio : Ventive Hospitality focuses on developing award-winning assets in prime locations, leveraging organic and inorganic growth to enhance its market share in Pune and the Maldives.

2. Driving Organic Growth : The company prioritizes premiumization and guest satisfaction, evidenced by strategic renovations and phasing out lower-yield accounts, leading to significant ARR growth in both India and the Maldives.

3. Leveraging Fine Dining and Amenities : With top-ranked restaurants across its properties, Ventive maximizes revenue through premium dining experiences, showcasing consistent growth in average revenue per customer.

4. Optimizing Event Space : The company capitalizes on upscale events, weddings, and MICE demand by utilizing expansive event spaces, promoting them extensively, and enhancing complementary revenue streams like F&B and wellness services.

5. Selective Acquisition : Ventive maintains a focus on acquisitions supported by stable cash flows, leveraging its high-quality tenant base and consistent rental income growth to fund future growth.

6. Strategic Asset Management : The company enhances shareholder value through proactive asset management, property upgrades, cost-efficiency measures, and close collaboration with hotel operators to boost asset performance.

BUSINESS STRENGTHS

1. Premium Hospitality Assets with Strong Revenue Contribution: Ventive’s portfolio includes marquee luxury assets operated by global hospitality brands like Marriott and Hilton. Luxury assets, including JW Marriott, Pune, and The Ritz-Carlton, Pune, contributed over 80% of pro forma hotel operation revenue and 46%-58% of total income across FY22-FY24.

2. Development and Acquisition Expertise: With a 15-year track record, Ventive has developed and acquired 11 hospitality assets with 2,036 keys across India and the Maldives. Their expertise spans design, development, and value creation in high-demand destinations across the Indian Ocean.

3. Renowned Promoters with Global Reach: Backed by Panchshil Realty (India’s leading luxury developer) and Blackstone (world’s largest hotel investor with 161,000 keys), Ventive combines local market expertise with global best practices.

4. Professional Leadership Team: A skilled management team, guided by Atul Chordia with over three decades of real estate experience, drives the company’s strategic growth with expertise in private equity, real estate, and hospitality.

5. Active Asset Management: Ventive ensures high-quality offerings and superior guest experiences through efficient asset management practices that improve occupancy rates, revenue, and operational cost efficiencies.

6. Commitment to ESG: Guided by its ESG mission, Ventive integrates sustainable practices across operations, promoting environmental responsibility and inclusivity among guests, tenants, and stakeholders.

7. Benefiting from Industry Growth: Positioned in India, one of the fastest-growing global economies, Ventive capitalizes on increasing demand driven by domestic travel, destination weddings, and MICE events, along with recovering foreign tourist arrivals projected to exceed 30 million by 2037.

BUSINESS RISK FACTORS

1. Recent Portfolio Acquisition and Future Plan : Ventive Hospitality acquired the New Portfolio in Fiscal 2025, comprising 14 out of its 17 properties, and may undertake similar acquisitions in the future.

2. Dependence on Third-Party Operator : A majority of Ventive's hospitality assets, including 8 of 11 operational properties, are managed by or franchised from brands like Marriott and Hilton, representing 78.05% of total keys. This dependence requires strict compliance with franchise agreements.

3. Revenue Reliance on Hotel Operation : Hotel operations account for a significant portion of revenue, contributing 68.47% of total income for the six months ending September 30, 2024, and 72.04% for FY24.

4. Income Concentration in Pune and the Maldive : Before acquiring the New Portfolio, Ventive’s income was entirely derived from Pune. Post-acquisition, a substantial share of income continues to originate from 10 Pune-based properties and 3 in the Maldives.

Note : Ventive Hospitality’s key risk factors include a reliance on recent acquisitions and future expansions, dependence on third-party operators for managing its properties, significant income concentration in Pune and the Maldives, and heavy reliance on hotel operations for revenue. These factors highlight the company's operational and geographic dependencies.