On one hand both homegrown and international hotel majors are stepping up their presence in the India market, on the other domestic players are eyeing foreign markets and acquiring properties abroad. A Delhi-based travel conglomerate, Bird Group, recently acquired London?s landmark hotel Royal Park. In December last year, Sahara India Parivar acquired Grosvenor House hotel in London from The Royal Bank of Scotland Group for ? 470 million (about R 3,290 crore).
That?s not all. Some other hotel biggies might as well jump on to the bandwagon soon, especially in the wake of discounted values at which hotel properties are available in some western markets and in the Middle-East. Hospitality major East India Hotels, which operates Oberoi and Trident brand of hotels, is scouting for properties in Europe for expanding its footprint. Similarly, Delhi-based Claridges Hotels and Resorts is also scouting to buy a property in the Middle-East market.
Hit by downturn, the value of real estate properties and hotels saw a sharp decline in many markets of Europe and the US. The Dubai crisis also led to availability of discounted assets such as hotels, business jets and yachts.
Many homegrown players have since been eyeing properties abroad for rapid expansion and to create differentiators in their portfolio. ?There are several trophy hotels available in markets like Europe, but it?s all about the right price,? says Arjun Oberoi, chief planning officer, The Oberoi Group, when asked about expansion plans in Europe.
The executive director of the Bird Group, Ankur Bhatia, agrees that as compared to India the prices of properties abroad are definitely more competitive. Though he has not given the exact deal size for the acquisition of the Royal Park Hotel, he says that the Bird Group will be investing $400 million to develop its hotel portfolio. This investment includes cost of developing five properties in India and also the cost of acquisition of the 48-room five star boutique property Royal Park in London, which it bought from an Irish fund. ?US-based Interstate Hotels and Resorts will continue to manage the London hotel,? adds Bhatia. In India, Bird Group has a joint venture with Thailand-based Dusit International to develop hotels.
It?s not a new trend for homegrown companies to acquire hotels abroad. The Taj Group of Hotels entered the UK market in 1982, with the acquisition of St James Court Hotel in Westminster, London. In 2006, it acquired the Ritz-Carlton Boston for $170 million and then Hotel Campton Place of San Francisco for $60 million in 2007. However, in 2007, the proposed alliance of India?s iconic hotel brand went sour with the US-based Orient Express.
?In the past, Indian hotel companies have acquired hotels overseas. Right now, there is action in the London market as the valuations haven?t reached their peak in these markets, unlike India. Also, even though valuations are not very high, the iconic properties in the UK market still command very high room rates. In Dubai, even though valuations are low, average room rates are not very high, therefore, do not attract many buyers,? says CG Srividya, partner, specialist advisory services, Grant Thornton. For now, domestic companies are busy checking in to foreign markets.
