Hyderabad-based investment management firm JV Ventures and real estate developer Terminus Group will jointly establish a $200 million (about Rs 1,680 crore) hospitality development platform, the two companies said on Sunday.
The proposed platform, under the Madison brand, will see equal investment from both partners. The platform aims to focus on the development and management of mid-market branded luxury hotels across cities like Thiruvananthapuram, Visakhapatnam, Tirupatiand Hyderabad.
It plans to develop 25 assets encompassing more than 3,000 keys over the next five years.
“Hospitality industry owners have historically grappled with the seasonal and cyclical nature of the business. Our goal is to present investors with a distinctive opportunity that reduces operational risks while preserving the prestige of hotel ownership,” said S P Reddy, chairman of Terminus Group and Madison. “Ownership structures within the hospitality sector are progressing and aligning with those in western countries, and we have strategically positioned ourselves to embrace this trend.”
Jasmeet Singh Chhabra, cofounder of JVVentures, said Madison will be the flagship product in their thematic living space, called PowerPod, which will target all age groups. “Our earlier platforms, PowerEd and PowerRx, have a combined portfolio of $500 million across the life sciences and education sectors. The hospitality platform will greatly complement our overall portfolio offering to investors,” he said.
India is rapidly emerging as a highly desirable travel destination, fuelled by a significant increase in leisure and business travel. This has resulted in unprecedented growth within the hospitality sector. Additionally, 2023 saw a notable influx of new investors entering the industry, with first-time hotel buyers accounting for an unprecedented 19% of the total global hotel investment volume for the year.
“Private equity firms, backed by substantial available capital, continue to dominate the global market as the primary acquirers of hotel assets. Our strategy will be to focus on greenfield development, where we see the potential to develop new-age, world-class hospitality infrastructure across both entry-level and luxury segments,” said Vishal Goel, cofounder of JV Ventures.
Terminus Group is a real estate development firm operating across business verticals, including residential, commercial, hospitality and life sciences. The company has developed over 5 million sq ft, with another 10 million in the pipeline. Separately, Reddy has developed, owned and managed over 20 hotels across the US and India.
Last year, Cappella Educore, an education specialist platform started and managed by JV Ventures, received an equity commitment of $200 mn from Alta Capital. The firm has also raised $200 mn from Actis for its life science development in year 2022.
In the first quarter of this year, the Indian hospitality sector experienced significant growth, fueled by an 8.5% increase in average daily rates, leading to an 11.4% rise in revenue per available room (RevPAR). Notably, the first quarter saw 90 branded hotel signings, adding 9,710 rooms to the inventory. This included converting 13 hotels from other establishments, which accounted for 12% of the signings in Q1 2024, mentioned JLL.
This positive trend is expected to continue into the second quarter, driven by business travel, MICE (meetings, incentives, conferences, and exhibitions), weddings, and an anticipated surge in leisure travel.
