Saj Hotels Limited is a prominent player in the hospitality industry, offering a wide range of services that cater to diverse clientele. Their portfolio includes Business-to-Business (B2B), Business-to-Business-to-Customer (B2B2C), and Business-to-Customer (B2C) offerings. This range encompasses traditional resort accommodations, villa rentals, and restaurant and bar properties, underscoring the company’s commitment to providing a memorable experience for every visitor.

Diverse Accommodation Options

The company prides itself on offering an array of accommodation options across various destinations, ensuring comfort and convenience for guests. Their resorts feature well-appointed rooms and suites, complemented by a variety of dining venues, including restaurants, bars, and in-room dining services.

One of their key projects includes the development of Saj Villas in Goa, featuring a curated selection of 2BHK and 4BHK options. These villas are designed to cater to family vacations, group gatherings, and romantic escapes, complete with a swimming pool for an enhanced guest experience.

Strategic Investments

In addition to their core hospitality offerings, Saj Hotels has made a strategic investment in My Own Rooms Dot In Private Limited, holding a 50% stake in this associate company. This partnership operates the Morjim Retreat, a resort in Goa that offers hotel rooms, shops, and spa facilities, catering to travelers seeking relaxation and rejuvenation.

The Landscape of Hotel Leasing in India

Investment Dynamics

Investing in hotels is often capital intensive with a lengthy gestation period. Investors are frequently required to meet 100% of the investment via a mix of equity and debt, often facing challenges due to the lack of guaranteed returns. This environment has led to an increasing preference for fixed or operating leases, where hotel management companies act as lessees and share development risks by investing capital in hotel projects.

Growth of Hotel Leasing

In recent years, hotel leasing has gained traction in India, where management companies negotiate contracts for warm shell or fully fitted-out structures. The specific terms of these leases can vary significantly, influenced by the capital contributions of both investors and lessees. Various leasing models exist based on multiple factors, such as market strength, asset quality, and the risk appetite of the investor.

India’s Tourism Growth Potential

According to the World Travel and Tourism Council (WTTC), India ranked 10th among 185 countries regarding the total contribution of travel and tourism to GDP in 2019. The sector's contribution to India's economy reached approximately ₹15.9 trillion (US$191.25 billion) in 2022, with a projected annual growth rate of 7.8% over the next decade.

In 2021, the industry contributed US$178 billion to the GDP, with expectations to soar to US$512 billion by 2028. By 2029, the sector is anticipated to generate around 53 million jobs. The domestic travel market is set to expand from US$75 billion in FY20 to US$125 billion by FY27, driven by increased accessibility to travel and improving airport infrastructure.

Recent Trends

Recent statistics highlight a significant recovery in India's tourism sector, with Foreign Tourist Arrivals (FTAs) in October 2023 reaching 8,11,411, a notable increase compared to prior years. Additionally, domestic visitor spending grew by 20.4% in 2022, indicating a robust rebound in travel activities.

The cumulative FDI equity inflow in the hotel and tourism industry reached US$17.29 billion from April 2000 to September 2023, highlighting the sector's attractiveness to foreign investors.

Saj Hotels Limited: Competitive Advantages

Saj Hotels boasts several competitive strengths that set it apart in the hospitality sector:

Location Advantage: Strategic placements in popular tourist destinations enhance visibility and accessibility.

Diverse Revenue Streams: A broad spectrum of hospitality offerings allows for multiple income sources.

Experienced Management Personnel: The management team’s expertise fosters innovation and operational excellence.

Customer Experience Focus: A strong commitment to exceptional guest experiences cultivates loyalty and repeat visits.

Community Integration: Active engagement with local communities enhances brand reputation and support.

Strategic Directions

Saj Hotels has outlined a clear strategy for growth, which includes:

Brand Expansion: Expanding the portfolio of resorts and villas to attract diverse clientele.

Sustainable Architecture: Commitment to environmentally friendly building practices.

Marketing Engagement: Innovative marketing strategies to enhance brand visibility and attract guests.

Dynamic Pricing Structure: Adaptive pricing models that reflect market conditions and consumer demand.

Commitment to Quality Assurance: Upholding high standards of service and facilities across all properties.

Risk Factors and Concerns

Despite its promising outlook, Saj Hotels faces several risk factors, including:

Land Lease Issues: One property, Saj in the Forest, Pench, operates on leased land, presenting potential regulatory challenges.

Regulatory Risks: Proximity to protected areas may impose government restrictions affecting operations.

Dependence on Online Travel Agents: A significant portion of bookings comes from intermediaries, which could impact profitability.

Leased Land for Operations: The registered office is situated on land leased from Mahindra Holidays & Resorts India Limited.

Development Risks: Vulnerability associated with the construction and development of resort properties.

Regional Exposure: Operations concentrated in Maharashtra, Madhya Pradesh, and Goa may be affected by regional developments.

Saj Hotels Limited IPO Details

Saj Hotels is currently conducting a Fixed Price Issue amounting to ₹27.62 Crores, consisting of a fresh issue of 42.50 Lakh shares. The subscription period opened on September 27, 2024, and will close on October 01, 2024. Allotment is expected to be finalized on October 03, 2024, with a tentative listing on the NSE SME set for October 07, 2024.

Financial Details

The share price for the Saj Hotels IPO is set at ₹65 per share, with a minimum lot size of 2,000 shares. Retail investors must invest a minimum of ₹1,30,000, while High-Net-Worth Individuals (HNIs) need to invest in at least 2 lots (4,000 shares), amounting to ₹2,60,000.

CORPWIS ADVISORS PRIVATE LIMITED serves as the book-running lead manager, while SATELLITE CORPORATE SERVICES PRIVATE LIMITED is the registrar for the issue. NNM Securities Private Limited is the sole market maker for Saj Hotels.

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