Intellistay, a hotel management company backed by Mahesh Gandhi-led PRAMA Hotels and IL&FS Investment Management Ltd (IIML), is tapping strategic investors for growth capital. The company has raised Rs 52 crore over the last six years and is currently in talks to raise a larger sum for business expansion.
Prashanth Rao Aroor, chief executive officer, IntelliStay Hotels Pvt Ltd (IHPL), told DNA Money, "We are concluding one small round of funding that's coming from existing investors. Thereafter, we will be doing another round from strategic investors of around $10 million."
Apodis Hotels & Resorts (AH&R), owned by Gandhi, holds over 80% stake in Intellistay. AH&R is owned by PRAMA (promoted by Pravin Rathore and Mahesh Gandhi) and IIML, wherein the latter holds a majority stake.
The existing business, according to Aroor, has almost achieved break-even. "The same portfolio is expected to make a million dollar in profit next year," he said, adding some hotels that have joined the portfolio are yet to complete full year of operations.
Intellistay currently operates 20 hotels across four brands – i-Stay, Mango.Hotels, Mango.Suites and Apodis Collection. Over the coming years, the company is targeting 200 hotels to be operated under revenue share and management contract by 2020.
The brand Mango has been raised from an entry-level budget hotel to a mid-scale boutique product priced between Rs 3,000 and Rs 5,000 a night. A new budget hotel brand iStay, priced under Rs 3,000 was introduced earlier this year with two hotels and now has eight hotels. Catering to the leisure travellers is a luxury upscale resort brand called Apodis Collection priced upwards of Rs 6,000 a night. Currently, there are two operational projects under Apodis in Ganpatipule (Maharashtra) and Thekkady (Kerala) while the third one is soon coming up at Jaipur.
"We already have a pipeline of 24 hotels joining the portfolio this fiscal. Opening hotels requires bandwidth and we are building on it to ensure smooth operations. It will be done in a gradual manner so that cash position and profitability is retained and protected. The idea is to grow organically and add 100 hotels overall but will also look at inorganic opportunities either to merge or be strategically aligned with another hospitality company," Aroor said.
A large part of the of the portfolio will comprise budget hotels under i-Stay brand. "Approximately 100 hotels will be under i-Stay brand, another 70 under the Mango brand and the rest under Apodis Collection," Aroor said.
While revenue share has been the model earlier, the company is also building on the management contract approach to expand the hotel portfolio. "We will continue to do revenue share as it gives us a good topline, which is essential for a hotel management company. The 30:70 ratio between revenue share and management contract helps us maintain an employee base of 75 at our corporate office – they don't work in any specific hotel though," he said adding that the company has a full-fledged in-house design and development team, soft architectural team, distribution, software and technology to support the business.
