Suba Hotels
- Suba Hotels is coming out with an initial public offering (IPO) of 67,99,200 equity shares in a price band of Rs 105-111 per equity share.
- The issue will open on September 29, 2025 and will close on October 1, 2025.
- The shares will be listed on SME Platform of NSE.
- The face value of the share is Rs 10 and is priced 10.50 times of its face value on the lower side and 11.10 times on the higher side.
- Book running lead manager to the issue is Unistone Capital.
- Compliance Officer for the issue is Sonam Aggarwal.
Profile of the company
The company is one of India’s largest domestic hotel chains in the mid-market sector with 88 operational hotels as of July 2025, comprising 4,096 keys across over 50 cities, around 81% of which are located in emerging markets in tier 2 and 3 cities. The hotel chain also boasts a portfolio of 40 hotels in the pre-opening phase, encompassing 1,831 rooms. The company operates in the mid-market hotel sector, consisting of upscale, upper-midscale, midscale, and economy brands domestic as well as international. It primarily caters to guests across business, leisure, and religious tourism, delivering superior service standards at attractive price points. Its hotel portfolio encompasses a diverse range of business models, including owned, managed, revenue share & lease, and franchised properties. It currently categorizes its hotel portfolio into four distinct hotels categories based on business models that includes owned, managed, revenue share & lease and franchised hotels.
The company’s diverse range of hotel categories such as owned, managed, revenue share & lease and franchised hotels and extensive portfolio of domestic and international brands are strategically designed to cater to various market segments. Positioned in prime locations and competitively priced, it offers exceptional value, which has driven its rapid expansion into markets traditionally underserved by chain-affiliated hotels. As of July 31, 2025, its portfolio of operating hotels consists of 5 owned hotels consisting of 227 rooms, 19 managed hotels consisting of 823 rooms, 16 hotels on revenue share & lease basis consisting of 577 rooms and 48 franchised hotels consisting of 2,469 rooms.
Proceed is being used for:
- Funding Capital Expenditure Requirements towards upgradation and last-mile funding of hotel premises.
- General Corporate Purposes.
Industry Overview
India's travel and tourism sector experienced severe pandemic disruption, with contributions falling to $191 billion in 2019 and plummeting further to $122 billion (-36%) in 2020, marking the lowest point. Recovery began dramatically in 2021, with a remarkable 46% growth to $178.00 billion, though still below pre-pandemic levels. It is worth noting that international demand made up a modest 5% of the total, while domestic demand accounted for the remaining 95%, showcasing the country's strong domestic tourism market. The sector continued its rebound with $175.00 billion in 2022, before surging to $231.50 billion in 2023 (32.29% growth). By 2024, the contribution reached $256.10 billion with 10.63% growth, finally exceeding the 2018 pre-pandemic benchmark and demonstrating the sector's resilience and recovery from COVID-19 impacts. As per World Travel and Tourism Council (WTTC), by 2034, India will have one of the largest travel and tourism contribution to the GDP, worth $523.6 billion.
The travel and tourism industry also plays a significant role in generating employment opportunities. At the end of 2024, the sector generated around 40 million jobs, with this number rising to 42.3 million by 2025. Approximately 31% of these jobs will be direct, including diverse roles like tour operators, hotel staff, etc. Foreign exchange earnings from tourism in India are also on the path to recovery in comparison to previous years. Month-wise foreign earnings have shown an upwards trajectory and will be further supplemented by the increasing number of FTAs in India. Recovery began in 2021 with $8.80 billion (around 26.5% growth), followed by dramatic acceleration in 2022 with a remarkable 100% increase to $17.6 billion. The momentum continued in 2023 with 59.5% growth and by 2024, earnings reached an all-time high of $31.5 billion, finally surpassing pre-pandemic levels. Despite the challenges posed by the global pandemic, the industry has rebounded strongly, primarily driven by domestic tourism. It signifies the immense potential and importance of the domestic market in driving economic recovery and job creation within the country.
Pros and strengths
Wide geographical coverage: The company’s hotels are strategically located in close proximity to central and secondary business districts, SEZs, industrial centers, airports, ports, railway terminus and other demand drivers. Operating in various regions allows the company to tap into different markets, reducing reliance on any single market. Further, different regions have different seasonal patterns, ultimately helping it to balance revenue fluctuations throughout the year. Also, a broader presence increases its brand awareness and visibility, thereby attracting more customers.
Established distribution network: The company has an established sales and marketing network which operates out of its hotels located in North, South, and West India. Its dedicated team of 30 sales executives operates from these locations, supported by additional sales teams as and when required. This allows it to enhance its sales strategy and effectively cross-sell hotels within its portfolio. Its sales team network drives its presence across market segments, attracting corporate travellers from sectors such as BFSI, IT/ITES, FMCG, Pharmaceutical, and PSUs. It has pan India contract with major financial institutions of India. It is a preferred partner with major travel agencies having widespread presence across India and outside India. Its presence in various trade fairs (e.g. TTF, OTM, SATTHE etc.) helps it to strengthen its brand presence across India.
Ability to acquire non/underperforming hotels: The company’s ability to identify and acquire dislocated or underperforming hotel assets is a key competitive advantage. By strategically investing in these properties and implementing comprehensive renovation and rebranding plans, it has a proven track record of significantly enhancing their performance and value. It prioritizes modernizing its infrastructure to ensure its properties meet the highest standards and exceed guest expectations. Its guest rooms are meticulously redesigned with contemporary decor, comfortable furnishings, and latest technology to enhance comfort and convenience. Additionally, it revitalizes common areas like lobbies, restaurants, and recreational spaces, creating inviting and aesthetically pleasing environments. It also aims to reduce its carbon footprint by implementing eco-friendly technologies such as lighting sensors, LED lighting, energy-efficient HVAC systems, and water-saving fixtures and it also uses sustainable building materials and practices during renovations to promote environmental responsibility.
Risks and concerns
Certain portion of hotel bookings originate from online travel agents: Certain portion of the company’s hotel bookings (average 22.47% of room revenue for financial year 2025) originate from online travel agents and intermediaries. In the event such online travel agents and intermediaries continue to gain market share compared to its direct booking channels, they may be able to negotiate higher commissions for services provided, or demand significant concessions or reduced room rates causing an adverse effect on the company’s margins, business, and results of operations.
Business subject to seasonal, cyclical variations: The hospitality industry in India is subject to seasonal variations. The periods during which the company’s hotels experience higher revenues vary from property to property, depending principally on their location and the guests they serve. Its revenues are generally higher during the second half of each fiscal year. The winter months are preferred for travel into India, particularly for discretionary travel. This seasonality can result in quarterly fluctuations in revenue, profit margins and earnings. As a result of such seasonal and cyclical fluctuations and in the supply of hotel rooms, including periods of excess supply, its room rates, sales, cash flows and results of operations of a given period of the financial year may not be reliable indicators of the sales, cash flows or results of operations of the remaining period of the financial year or of its future performance.
Negative customer experiences: Negative customer experiences or negative publicity surrounding the company’s hotel properties or the CLICK, SUBA, Comfort, Quality, Clarion, RnB, GenX, brands could have an impact on ability to source customers. Thus, the company may also incur higher expenses towards business promotion in the future, to source more customers which may have an adverse impact on its business and financial condition.
Outlook
Suba Hotels is one of India’s largest domestic hotel chains in the mid-market sector with 88 operational hotels as of July 2025, comprising 4,096 keys across over 50 cities, around 81% of which are located in emerging markets in tier 2 and 3 cities. Also, it offers a wide range of hotel categories and brands, catering to various customer segments and preferences. It has an established sales and marketing network which operates out of its hotels located in North, South, and West India. On the concern side, the performance and quality of services at its hotels are critical to the success of its business. Any incident where its hotels lack, or are perceived to lack, high standards of service quality may adversely affect its reputation. Besides, the company operates in the hotel and hospitality sector and provides a range of amenities designed to enhance the guest experience, including the playing of music in various common areas such as the lobby and restaurant. This practice, while integral to its service offering, carries a risk of copyright infringement.
The company is coming out with a maiden IPO of 67,99,200 equity shares of Rs 10 each. The issue has been offered in a price band of Rs 105-111 per equity share. The aggregate size of the offer is around Rs 71.39 crore to Rs 75.47 crore based on lower and upper price band respectively. On performance front, the company's revenue from operations in the financial year 2024-25 is Rs 7,924.32 lakh. This represents Rs 2,696.67 lakh or 51.58% increase compared to the previous financial year's revenue from operations of Rs 5,227.65 lakh. The Profit After Tax (PAT) for the financial year 2024-25 reached Rs 1,515.14 lakh, marking a notable increase from Rs 895.87 lakh in the financial year 2023-24.
The COVID-19 pandemic dealt a significant blow to the hotel industry, disrupting operations and causing financial strain on numerous projects. While many hotels in key markets have recovered, several projects under development remain stalled due to funding shortages. The company intends to offer a strategic solution to address this challenge: i.e. by providing last-mile funding. By providing financial support during the final stages of furniture, fixtures and interior, it intends to enable hotel owners to complete their projects and realize their full potential. It intends to leverage its dedicated team and partnerships to identify hotels that are in need of renovation but have strategic locations and enter into long-term agreements with hotel owners, offering to finance the necessary interior renovations. Its investment will be recovered through a revenue-sharing model, ensuring a symbiotic relationship between the hotel owner and the company.
