Transactions and transactions are back in the hospitality industry, industry insiders expect more activity in the coming year

Transactions and transactions are returning to the hospitality industry which has been hit hard by the Covid-19 pandemic, and acquisition interest in light asset operating companies is growing. Distress sales didn’t quite materialize as expected after the pandemic began last year, but industry insiders now expect significant commercial activity over the next 12 months. last week announced the acquisition of hotel management company Spree Hospitality, while another publicly traded company, Sayaji Hotels, acquired a majority stake in Intellistay Hotels this week. Intellistay Hotels is a light hotel management company with brands such as Mango Suites, Mango Hotels and i-Stay Hotels. Sayaji, which operates hotels in cities such as Indore, Vadodara and Bhopal and owns brands such as Sayaji Hotels, Effotel by Sayaji and Enrise by Sayaji, said the partnership would add 27 hotels in 15 cities to its network of 14 properties. EaseMyTrip said Spree Hospitality will add a new revenue vertical to the business and allow it to expand its hotel and vacation portfolio. Spree Hospitality has 1,220 operational keys and hotels in places such as Bengaluru, Mumbai, Pune, Chennai, Goa and Hyderabad.

Nandivardhan Jain, CEO of hospitality consultancy firm Noesis Capital Advisors, which acted as the exclusive transaction advisor for the EaseMyTrip Spree Hospitality deal, said the company expects to see at least three more deals. materialize over the next two to three quarters.

“You will see a strengthening of the budget and the middle segment. When the lockdown took place last year, everyone had a feeling the industry will see massive distress acquisitions, but that assumption was corrected within 35-40 days. It was a similar experience to 2008. Transactions and sales did not materialize as buyers demanded significant discounts of 40-50% on fair value, ”he said.

He said sellers would have no motivation to sell if they have debts and loans and have to pay back the banks.

“We understood that these transactions would not take place. We started to interact with all the players in the market and started to assess their balance sheets to see what made sense financially. new market flavor. There is little involvement in capital expenditure and the scalability is high. There is the element of technology and these companies are more available, ”he added.

Mandeep S Lamba, president, South Asia at HVS Anarock, said there were signs that investors are valuing hotel assets, but buyers and sellers are taking a wait-and-see approach as hotel valuations have been difficult in a near zero cash flow scenario and the spread between asking and offered prices widened. “It’s currently a race to see who blinks first. However, as we are actively working on multiple transaction mandates, we expect to see significant transaction activity over the next 12 months, particularly as lenders begin to seek recourse in the National Company Law Tribunal (NCLT) due to the increase in non-performing assets. Value deals where both the lender and the owner have haircuts are the most likely to find buyers, ”he said. gain momentum, “he added.

Jaideep Dang, Managing Director, Hotels and Hospitality Group, South Asia at JLL, said the company is working on a few exclusive mandates, including operational hotels, entirely new hotel sites and joint ventures in mixed-use developments led by hotels. “There is enough and more activity planned for 2022. The market has recovered faster than we expected. Every time we get out of a wave the hotels fill up so fast. Domestic tourism is robust. Room rates are rising for leisure properties. Until last year, money was flowing through secure asset classes such as warehousing or residential segments. Now people are also talking about shopping malls and tourism. Things that had no flavor last year, ”he said.

“If people were apprehensive about international tourism, it was replaced by domestic tourists – independent as well as group travelers. There are so many weddings going on, which is surprising considering the second wave. The F&B business is back. If you see our third quarter report, there is a huge percentage of occupations, not only compared to the third quarter of last year, but also the second quarter of this year, ”he added.

India’s hotel industry saw a 169.4% growth in revenue per available room (RevPAR) in the third quarter of 2021 (July – September) compared to the third quarter of 2020, according to consulting firm JLL Hotel Momentum India Q3 2021, a quarterly monitor of the hotel sector.

At the pan-Indian level, there was a 122.9% growth in RevPAR in the third quarter of 2021 compared to the second quarter of 2021, due to a strong recovery in leisure demand as travel restrictions were relaxed. after the second wave of the pandemic.