InterContinental Hotels Group has opened seven more Holiday Inn Express hotels as a result of its partnership with Samhi.
The openings took IHG to 10 sites under the brand, as the global operators found renewed enthusiasm for expansion into India.
Vivek Bhalla, RVP, SWA, IHG said: “The brand has gained tremendous momentum in the country and we have also made significant progress towards our commitment to strengthen our midscale portfolio in India. We are confident that all newly-opened Holiday Inn Express hotels in partnership with Samhi, will successfully cater to the needs of the modern business and leisure travellers, across cities.”
Ashish Jakhanwala, founder, MD & CEO, Samhi, added: “We began this journey with IHG in 2017 when we signed an agreement for 14 Holiday Inn Express hotels in India. With the opening of 10 Holiday Inn Express hotels from the portfolio, across seven key markets, we are excited and ‘more than ready’ to empower our guests to achieve their travel goals. Holiday Inn Express is a powerful offering that combines great design and a strong service culture, and therefore, we are confident that the newly opened hotels are well positioned to cater to the business as well as leisure travellers visiting these cities.”
When IHG signed the deal with Samhi, it said it would increase its current system size in India by 34% after rebranding 2,000 hotels under the Holiday Inn Express flag, with the hotels under management contracts.
The hotels were owned by Samhi Hotels, which is backed by Goldman Sachs, Equity International, GTI Capital Group & IFC. The same year saw Samhi acquire Whitbread’s Premier Inn estate in the country, as well as Accor’s 40% shareholding in its Indian subsidiary Barque Hotels, giving Samhi 100% ownership. The five-strong Premier Inn portfolio was rebranded as Fairfield by Marriott hotels. Samhi has a joint venture partnership with Marriott International to develop the Fairfield brand in India.
The portfolio signed with IHG comprised 14 hotels, including 10 hotels across cities such as Ahmedabad, Bengaluru, Chennai, Delhi NCR, Hyderabad, Kolkata, and Mumbai. The signing saw IHG grow its pipeline to 41 hotels, positioning IHG as one of the largest players in India’s growing midscale hotel market. The deal meant that 90% of the Holiday Inn Express portfolio in India was concentrated in Tier 1 cities.
The agreement followed the joint venture partnership signed with Duet India Hotels Group, the hotel investment arm of global asset manager Duet Group, in 2011 to develop 19 new Holiday Inn Express hotels across India. IHG was to invest through a 24% equity stake, making a multi-year investment of USD30m into the partnership.
In 2017 the company sold its equity stake back to Duet, commenting at the time that this was in line with its asset-light expansion strategy.
IHG has been expanding its other brands in the country, signing a management agreement with Indroyal Hospitality Services for the Crowne Plaza Amaravati, which was due to open by 2024.
IHG currently has 39 hotels operating across four brands in India, including InterContinental Hotels and Resorts, Crowne Plaza, Holiday Inn and Holiday Inn Express. The pipeline has 39 hotels due to open in the next three years.
IHG was not the only company to be eyeing India for expansion, with Marriott International commenting last year that demand for its select service brands was driving growth in the country. The company said that it expected to open more than 50 new hotels in India and raise inventory to more than 30,000 rooms over the next few years, thanks to demand for mid-market hotels, under brands such as Courtyard by Marriott, Fairfield by Marriott and Four Points by Sheraton.
“India is one of Marriott International’s most important markets in Asia, with the second highest- number of hotels and rooms after China,” said Paul Foskey, CDO, Marriott International. “Given India’s robust economy and rising middle class, we see incredible opportunity to continue working with owners to open hotels from across Marriott’s extensive array of brands.”
HA Perspective [by Katherine Doggrell]: As we have noted before on India, everyone wants a bit of it but, as Whitbread found out, it’s not always possible to access that dream. IHG, through pursuing management contracts, was able to control the brand standards and its hotels and lay a foundation for future growth through franchises.
As one of observer of the market told us, what made the country intriguing at the moment was the problem of growing rate. This was laid at the door of Airbnb and Oyo and of course it is always appealing to blame the disruptors rather than just excess or misplaced supply, but in the case of Oyo there may be some justifcation. The company’s contracts see it take full pricing control of those properties franchised to it – which has caused ructions with some sites – but also gives it more influence over price than other hotel chains.
Whether Oyo has any influence on the growth of the global operators in India depends on what consumers view it as. It may take a hard stance on pricing, but it is soft on branding. Consumers who want to know what they are getting and not just what it costs are likely to seek comfort in the flags.
Additional comment [by Andrew Sangster]: Just as this issue of HA Perspective was about to hit the electronic presses, Brookfield announced it is paying USD576m to buy four hotels from debt-laden Hotel Leelaventure.
The properties contributed about 80% of Leela’s income and the Indian company is left with just one Mumbai hotel and some other development projects. Brookfield is acquiring the Leelaventure name.
A bunch of other financial firms had been in talks with the Nair family that own Leelaventure including Blackrock, SSG Capital and RB Capital. In January it was thought the buyer would be Rashid Al Habtoor but this deal failed to complete.
Brookfield has been active in India for some years buying a range of non-hotel assets, notably infrastructure.
What this all means is that India’s indebted hotel industry is at last being restructured. In theory, India could offer the same opportunities as the now huge Chinese hotel industry. Whether that transpires is going to depend a lot on how well the authorities manage the growing economy and in particular, do something about the desperately inadequate infrastructure. One to watch with interest.