New Delhi/Bangalore: Hospitality investment firm Samhi Hotels Pvt. Ltd has bought a majority stake in 15 wholly-owned Formule 1 hotel projects of Accor SA .
Samhi acquired 60% ownership in Barque Hotels Pvt. Ltd, the company that owns all the 15 Formule 1 hotels in India, through the purchase of a stake from Accor and infusing fresh capital.
Inclusive of this deal, Samhi is investing $40-50 million to complete existing projects and for new projects in due course, said Samhi co-founder and chief executive Ashish Jakhanwala.
With this acquisition, Samhi has bought into a total 21 hotel projects, both operational or under development, across nine cities, with a total inventory of about 3,500 rooms.
The deal allows Samhi to venture into the entry-level segment of the hospitality sector, Jakhanwala said.
Formule 1 will compete with the Ginger brand of hotels, with average room rates of Rs.1,800-2,200 a night.
Accor, which will hold the remaining 40% in the Formule 1 hotels and will continue to operate them under long-term agreements, said on Monday that the sale was in line with its plan to pursue an “asset-light” strategy. It will also retain the rights to own and develop further Formule 1 projects in India.
Samhi, founded by Jakhanwala and Manav Thadani, received a $100 million investment from Equity International and GTI Capital Group last year. It also has a joint venture with Marriott International to develop Fairfield by Marriott branded hotels in India.
Of Accor’s 15 Formule 1 hotels, the first two have opened and the third will start in Pune by the year-end. Accor, which has other hotels brands such as Ibis, Pullman, Novotel and Sofitel, has 19 properties operational in India and four in the pipeline for 2012.
There are several acquisition opportunities in the sector, analysts said.
“This is a strategic decision. The deal may be an opportunistic move, where the company got a good deal with a good price, so decided to go ahead with it,” said Sudip Bandyopadhyay, managing director and chief executive, Destimoney Securities. “Most of the hotel companies are now pursuing a combination of asset-heavy and asset-light strategies—acquiring properties whenever the opportunity arises on the one hand and expanding through management and franchise contracts on the other.”
With Formule 1, Samhi will have a presence across the value-for-money segment starting with the brand at the entry level, then Fairfield by Marriott and, finally, Hyatt Place and Royal Orchid, Ahmedabad, in the mid-segment.
“We are also looking actively at more deals,” said Jakhanwala.
Accor, which plans to open 90 hotels by 2015 in India, may continue to look at investment opportunities in the country.
“We do not have any confirmed deals beyond these 15 hotels within this transaction, but we do see continued potential for the Formule 1 brand in India and for its expansion,” said Gaurav Bhushan, chief development and investment officer, Accor Asia-Pacific. “While investment cannot be ruled out, Accor’s focus is on asset-light business models wherever possible, including in India.”
Accor has invested in excess of Rs.250 crore in its budget and economy hotels—Formule 1 and Ibis—in India as of now. In April, Accor said it invests around Rs.15-16 lakh per key (room) in budget hotels Formule 1 and Ibis, which have a combined inventory of around 1,600 rooms.
“Accor has no plans at this time to sell its stakes in other hotel properties in India,” Bhushan said.