With the economy in a tailspin, discretionary spends down and the travel & tourism sector going through its worst phase, the news that a player is looking to grow at the moment should be a surprise. Signum Hotels & Resorts, a relatively new name in hospitality, along with its joint venture partner and real estate player, IQI India has announced an investment of Rs1,100 crore ($150 million) to develop hotel assets across the country and also globally, over the next five years. “We will be running hotels across the country,” says a confident Mehul Sharma, founder & CEO, Signum Hotels.
“We have six operational hotels, and are aiming for 40 in Year One and 65 by Year Two, with about 2,500 keys, employing 5,000 people,” says Sharma. “We will get into the untapped market across metros, Tiers II and III cities in India to promote domestic as well as inbound tourism to experiential destinations, pilgrimage, getaways and key places of interest. We have identified 42 cities across India, where we are exploring acquisitions, mergers and property investments. The investment is going to be in the form of debt convertible into equity in a span of about eight to ten years. We have identified which hotels will see a thrust in the next couple of months and will be a healthy mix of business and leisure destinations.”
“It’s a tough phase we are going through,” admits Pankaz Jaiin, chairman & managing director, IQI India. “Our team’s experience of decades in the Indian real estate and retail market, coupled with our access and network through more than 200 cities across India, has fostered our confidence in the Indian hospitality market and we are eyeing an aggressive expansion in commercial real estate segment”. Sharma feels the sweet spot for them is destinations where there is travel, as also the demand and supply situation that can have ARRs of about 4,500 and 65 per cent occupancy.
“This joint venture will capitalise on IQI’s global real estate prowess to identify and develop the right assets,” Sharma adds, commenting on the partnership. “The partnership, which took about six months to fructify, according to Jaiin, will invest only in hospitality, while IQI is separately investing in Indian real estate. Jaiin, who mentions seeing several cycles of growth and decline in the sector, says this is when “we see an opportunity as there is a lot of distressed real estate in India and there are great deals on offer and we can innovate. We are looking at not just running a hotel, but participate with a hotel owner for a better valuation of the entire property.”
Sharma admits that the industry is making adjustments to cater to a purely domestic and leisure skew of guests though he points out that the long-term plan is to have a mix of leisure, business, MICE and wellness focus in the hotels.
While expansion in the Indian market will remain the focal point of this collaboration, opportunities to expand overseas will also be explored given IQI’s considerable international presence, the partners stress. Regions in South East Asia such as Singapore, Bangkok and Indonesia, significant parts of Europe and the Americas will remain of particular interest for any expansion opportunities. Besides its hotels in India, Signum also operates residences in London, as also hotels in the US, Bosnia and Greece. Given that Indian hospitality industry is at an ebb, any new investments and openings could only act as a beacon of hope.