Ventive's IPO announcement was timed perfectly. But not for investors.

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Subscribe to enjoy similar stories. “Strike while the iron is hot," the saying goes. Ventive Hospitality’s recent announcement of an initial public offering (IPO) exemplifies this, as it comes amid a boom in the domestic IPO market and an upcycle in the hotel industry.

The company plans to raise up to ₹2,000 crore through a fresh issue of shares. Industry experts and analysts said that as tailwinds in the hotel industry are starting to slow down, Ventive’s promoters have found the perfect opportunity to cash out while the exuberance in the stock market is still high. A cutback in urban spending and a moderation in occupancy rates at hotels in FY24 are early signs that the upcycle in the hotel industry is reaching its peak, according to analysts.

Major listed hotel companies saw only a 1% on-year rise in their average occupancy rate at 75% in FY24, according to Ventive’s draft red herring prospectus. The occupancy rate at the peak of the previous upcycle in FY06-FY07 was around 71-72%, according to Statista. However, demand for premium properties still has more room to run.

Aspirational spending on lifestyle and experiences by Millennials and Gen Z-ers, the rise of spiritual tourism, and a lucrative domestic wedding industry will continue to generate healthy demand for premium hotels in the near term, analysts said. An IDBI Capital report noted, “In a boost for the Indian hospitality industry, 2,706 new rooms were added in the upscale and premium segment in the first half of this year… amid a notable growth in infrastructure development. Of these, 994 rooms (37%) were upscale while the remaining (63%) consisted of premium inventories." Also read: Tempted by the IPO boom? Sebi and these experts would like a word This seems