JV Ventures and Terminus Group Launch $200 Million Hospitality Platform
Tuesday, 13 August 2024, 10:11 IST
Hyderabad-based investment management firm JV Ventures and real estate developer Terminus Group have announced the formation of a $200 million (approximately Rs 1,680 crore) hospitality development platform under the Madison brand. The platform, unveiled on Sunday, marks a significant collaboration between the two companies, with both partners contributing equal investments.
The new venture will focus on developing and managing mid-market branded luxury hotels across key Indian cities, including Thiruvananthapuram, Visakhapatnam, Tirupati, and Hyderabad. The platform's ambitious plans include the development of 25 hotel assets, comprising over 3,000 keys, over the next five years.
S P Reddy, chairman of Terminus Group and Madison, emphasized the strategic significance of this initiative, particularly in addressing the challenges traditionally faced by hospitality industry owners. "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", Reddy said. He added that ownership structures in the hospitality sector are evolving and becoming more aligned with those in Western countries, positioning Madison to capitalize on this trend.
Jasmeet Singh Chhabra, Co-Founder of JV Ventures, highlighted Madison's role within their broader thematic living space, branded as PowerPod, which is designed to cater to all age groups. "Madison will be the flagship product in our thematic living space, called PowerPod. 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", Chhabra stated.
India's hospitality sector is experiencing robust growth, driven by a significant increase in leisure and business travel. The sector's expansion is attracting new investors, with first-time hotel buyers making up an unprecedented 19% of the total global hotel investment volume in 2023.
Vishal Goel, Co-Founder of JV Ventures, elaborated on the strategic focus of the new platform. "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", Goel explained.
Terminus Group, a real estate development firm, has extensive experience across various business verticals, including residential, commercial, hospitality, and life sciences. The company has developed over 5 million square feet, with an additional 10 million square feet currently in the pipeline. Reddy, separately, has a wealth of experience, having developed, owned, and managed over 20 hotels across the United States and India.
In recent years, JV Ventures has secured significant capital for its various initiatives. Last year, Cappella Educore, an education platform started and managed by JV Ventures, received an equity commitment of $200 million from Alta Capital. Additionally, in 2022, the firm raised another $200 million from Actis for its life science development projects.
The Indian hospitality sector has seen substantial growth in 2024, particularly in the first quarter, where average daily rates increased by 8.5%, leading to an 11.4% rise in revenue per available room (RevPAR). This growth was bolstered by 90 branded hotel signings, adding 9,710 rooms to the inventory, including the conversion of 13 hotels from other establishments. The sector's positive momentum is expected to continue into the second quarter, driven by business travel, MICE (meetings, incentives, conferences, and exhibitions), weddings, and a surge in leisure travel.
The new venture will focus on developing and managing mid-market branded luxury hotels across key Indian cities, including Thiruvananthapuram, Visakhapatnam, Tirupati, and Hyderabad. The platform's ambitious plans include the development of 25 hotel assets, comprising over 3,000 keys, over the next five years.
S P Reddy, chairman of Terminus Group and Madison, emphasized the strategic significance of this initiative, particularly in addressing the challenges traditionally faced by hospitality industry owners. "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", Reddy said. He added that ownership structures in the hospitality sector are evolving and becoming more aligned with those in Western countries, positioning Madison to capitalize on this trend.
Jasmeet Singh Chhabra, Co-Founder of JV Ventures, highlighted Madison's role within their broader thematic living space, branded as PowerPod, which is designed to cater to all age groups. "Madison will be the flagship product in our thematic living space, called PowerPod. 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", Chhabra stated.
India's hospitality sector is experiencing robust growth, driven by a significant increase in leisure and business travel. The sector's expansion is attracting new investors, with first-time hotel buyers making up an unprecedented 19% of the total global hotel investment volume in 2023.
Vishal Goel, Co-Founder of JV Ventures, elaborated on the strategic focus of the new platform. "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", Goel explained.
Terminus Group, a real estate development firm, has extensive experience across various business verticals, including residential, commercial, hospitality, and life sciences. The company has developed over 5 million square feet, with an additional 10 million square feet currently in the pipeline. Reddy, separately, has a wealth of experience, having developed, owned, and managed over 20 hotels across the United States and India.
In recent years, JV Ventures has secured significant capital for its various initiatives. Last year, Cappella Educore, an education platform started and managed by JV Ventures, received an equity commitment of $200 million from Alta Capital. Additionally, in 2022, the firm raised another $200 million from Actis for its life science development projects.
The Indian hospitality sector has seen substantial growth in 2024, particularly in the first quarter, where average daily rates increased by 8.5%, leading to an 11.4% rise in revenue per available room (RevPAR). This growth was bolstered by 90 branded hotel signings, adding 9,710 rooms to the inventory, including the conversion of 13 hotels from other establishments. The sector's positive momentum is expected to continue into the second quarter, driven by business travel, MICE (meetings, incentives, conferences, and exhibitions), weddings, and a surge in leisure travel.
