Leisure Hotels Group to expand its hostel segment brand

New Delhi: Leisure Hotels Group (LHG), a hospitality company that owns 22 properties in four states, and entered the branded hostel space under Bedzzz two years ago, is looking to expand its footprint in the category. The company said it will look to scale the hostel vertical with its second property in Varanasi. 

Bedzzz was first set up in Rishikesh and is owned and managed by the company. The Varanasi property, however, will function under a management contract. “These properties have both rooms as well as hostel-style individual beds and lie in the budget to mid-market space and so it is easy to get a return on investment within a few years,” said Vibhas Prasad, director, Leisure Hotels Group.

The company will also expand this brand in locations that have backpackers such as religious locations as well as other leisure markets. “The beds model is the most profitable of all our verticals because it requires less capital to be deployed and the return on investment is much sooner than other hotels. It is a mid-scale offering, yes, but it has dynamic pricing and that makes it quite viable,” added Prasad.

Other than hostels, the group’s portfolio has business hotels, boutique resorts, bespoke villas and luxury camps. At present, the company owns 65% of its assets in the group. The company has about nine promoter companies among which these assets are divided.

The company plans to deploy upwards of 100 crore to build the next nine hotels expected to be ready by 2024. These will be projects across categories in the Uttarakhand and Himachal Pradesh regions. Currently, two of Leisure Hotels’ properties are managed by IHCL-owned Taj Hotels such as Pilibhit House in Haridwar.  In the past, for its owned hotels, the company has also partnered with The Claridges and Club Mahindra (Mahindra Holidays & Resort India Ltd) to run its properties. It also has a villa property, The Bungalows Light House in Goa. “We don’t have a mnemonic that we want to carry forward for our hotel management arm. So we are happy to take on properties from owners that want to keep their own names and brand equity,” Prasad said.

In the luxury segment, Prasad said that its properties are getting a yield of 15,000-25,000, a room night. “In spite of the covid waves, and being shut for almost six months in 2020 and two months in 2021, on an aggregate portfolio level, we were able to recover our 2019 numbers and we have now beaten those figures,” he said.

The company first launched its hotels in 1989 and has experiential luxury resorts in North India, several of them in Uttarakhand. “We began to build our resort chain largely on the back of the domestic Indian traveller. We found there was unutilised potential in the state of Uttarakhand and we had seen markets like Goa, Rajasthan and Kerala evolve on the global map. But we realised markets like Haryana, UP etc., were not very well known and started focusing on building hotels in these places,” Prasad said.

Hospitality consultancy Hotelivate estimates that there are about 59,000 new rooms proposed across the country in the next five years. Of these, 72% or about 35,000 rooms are under active development.

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