Hospitality sector witnesses an uptick in M&A activity

Improved occupancy rates and higher revenue per available room (or Rev-PAR) are the two words that defined the hospitality sector in India during 2015. The superior performance can be ascribed to several factors including the success of e-tourist visa facility (now available to 113 countries); the onset of budget-hotel aggregators such as Oyo Rooms; and lower cost of travel, especially air travel.

Findings by JLL, a global real estate services firm, indicate that M&A activity in the Indian hospitality sector hit a multi-year high in 2015. The table below enlists some of the deals that defined the year.

Shangri-La learns to live with project delays in India

In September 2015, Hong Kong based luxury hotel chain Shangri-La Hotel and Resorts announced the opening of its first hotel in Bengaluru, the second Shangri-La hotel in India. Built by Adarsh Developers for INR 780 crore, the 19 story Shangri-La Bengaluru on the Palace Road has 397 guest rooms and suites – the largest inventory of accommodation in Bengaluru; eight food and beverage venues; a Health Club; salon; spa; a 739 sq m ballroom with six function rooms; and a business centre.

Unfortunately, just like the Mumbai project, the completion of the Bengaluru hotel project faced enormous delays. Yet, Shangri-La Hotel and Resorts held its patience. In 2013, Shangri-La Hotel and Resorts had moved out of a similar sized hotel project in Mumbai (established at a cost of over INR 1100 crores by a large real estate company based in Mumbai), citing delays in project completion. Though, it seems it was largely due to differences with the property owners.

Nonetheless, I just hope that Shangri-La Bengaluru does not face a similar fate as the Mumbai project and instead does a roaring business like Shangri-La’s – Eros Hotel in New Delhi.

Shangri-La Hotel and Resorts happily runs the Shangri-La’s – Eros Hotel, which opened doors in September 2005. The Shangri-La’s – Eros Hotel was purchased by the Eros Group (Jagdish Rai Sood) from India Tourism Development Corporation (ITDC) for INR 96 crores in 2002. Eros spent an additional INR 200 crores on refurbishing the hotel.