Brookfield to invest Rs 1,500 crore more in Leela

economictimes.indiatimes.com:

Brookfield Asset Management spoke about additional investments in The Leela Palaces Hotels & Resorts business, the company's 'record' performance and 'robust' margins and the expansion plans going forward. Edited excerpts:
Q: How has Brookfield’s $558 million investment in Leela fared?
A: When we invested in the Leela business, our engagement with them lasted throughout 2018-19. This was prior to the global pandemic, Covid-19.

Institutional capital hadn't yet entered the market. The hotel industry had its challenges, with only a few instances of major global investors taking stakes in operating properties or large platforms. Moreover, there were issues such as low Average Daily Rates (ADRs).

In several markets you had occasional supply shocks. Sometimes supply took longer and sometimes there were extended development cycles.

The pre-pandemic hotel industry in India faced ongoing difficulties. Leela, for instance, grappled with debt issues and had undergone debt restructuring, including an NCLT filing.

Despite these challenges, there existed significant potential when considering the macro perspective. Factors like urbanisation, a growing middle class, and the hotel industry's role as a proxy for infrastructure like returns on the back of a consumer story, which is very difficult for people to underwrite.Our investment approach focuses on micro-level investment. While the macro factors such as GDP growth, real GDP, and inflation favored the hotel industry, certain essential elements were lacking.