Acing The Mid-Scale Market

IntelliStay Hotels is focusing on technology and talent upgrade on the back of the fresh round of equity it just raised. CEO Prashanth Rao Aroor decodes the potential of Tier 2 and 3 markets, and why overleveraging and irresponsible specs are hurting the hospitality industry.

- Deepali Nandwani

IntelliStay Hotels raised a fresh round of equity from its promoter, PRAMA, earlier this year. What do you envisage using it for?

In a back-to-back deal, PRAMA off-loaded stake to Maryland USA based TripBorn Inc (listed on NASDAQ OTC), who are an emerging last-mile provider to agents for travel and fintec services. It is a B2B2C model, which goes deep into the heartland where a mobile-only strategy struggles. Most of the capital that PRAMA raised came subsequently to us and to Apodis Foods and Brands Ltd (AFBL), which is our sister entity servicing other budget hotel chains with F&B as a service. They have grown quite substantially since incorporation three years ago.

More capital will be invested subsequently as well. Our mandate is to use our capital and our profit accruals for 'platforms of scale' — technology, talent, and learning and development. Some brands like iStay hotels will be given a lighter contract, like a manchise, to grow faster. We will continue to service management contracts and revenue share contracts for mid-scale brands such as Mango Hotels, Mango Hotels SELECT, Mango Suites, Mango Suites SELECT, and the Apodis Collection and offer it more selectively. We care as much for revenue per hotel as the number of hotels. We will keep stabilising and optimising our assets. Since we are asset-light and don’t build the assets; we have a responsibility to our partners who build them, to sweat these assets. These are longterm associations; we are their people and they are ours.

The affordable, quality branded hospitality segment has seen immense growth. What potential does it hold?