Sarovar group to open six new properties in 2016; eyeing opportunity in the Middle-East

The expansion drive of domestic hospitality mid-segment major, Sarovar Group, is all set to roll on smoothly in 2016 with the commissioning of nearly half-dozen new properties in 2016. This would also include a major international opening in Kenya, a market which has emerged as a favourite turf for the Sarovar Group’s international footprint design. “We will open at least six new hotels this year. The largest would be a 5-star, 150 keys hotel at the international airport in Nairobi, Kenya. Within India, the important openings we are going to have this year include Chennai and Jaisalmer markets,” Ajay Bakaya, Executive Director, Sarovar Hotels told TourismFirst on the sidelines of a recently held event in Delhi.

Ajay Bakaya Executive Di rector, Sarovar Hotels

The 5-star property at Nairobi airport (Sarovar Premiere brand) would be Sarovar’s fourth property in Africa. Currently, it is managing two more properties in Kenya’s capital apart from having a unit in its kitty in Darussalam. According to Bakaya, the company is now also looking at new management opportunities in the Middle-East markets as part of its international expansion drive. “We are looking at replicating what we have done in India and Africa. And we are looking for opportunities in the Middle East as bridge to Africa. We are discussing some properties, we will share the details shortly,” he said. Meanwhile, with the proposed six new openings in 2016, the total property count of the company will shoot up to 76 by this year end. The company presently has a portfolio of 70 units (three abroad) in 48 destinations in the country. With the new openings, the room inventory base of the company will also increase by a modest margin. “We have already crossed the room inventory base of 6000 and the addition of another six hotels will bring in an additional 600 rooms in our kitty,” Bakaya informed.

In the realm of the organised hospitality segment, it is widely believed that industry representatives are averse to the idea of aligning with the new age budget aggregators. The latter is probably considered more of a disruptive force which is growing in scale at the expense of those who have put in painstaking efforts in creating fixed assets. Sarovar group, however, seems to be veering to the view that these aggregators can’t be taken lightly and could be an effective partner in enhancing the marketing canvas of a hospitality company. On an experimental basis, it has tied up with an aggregator now. “Digital marketing has evolved big time and there seems to be a larger mood to align with the market aggregators. Everybody is getting involved at some scale. We have already started working with them and our five properties are enrolled now. You can say we are working on an experimental basis. Let’s see how it goes,” he informed. Bakaya was, however, quick to point out that the partnership between Sarovar and the new age aggregators would be on its own terms. “We are a mid-market company and we are clear in our mind that we will not allow any aggregator to put up his signage on my property,” added he.

Commenting on the current market sentiments, Bakaya emphasised that the business trends are improving and it is likely to get stronger in the near to medium run. “After a period of six-seven years, we are noticing an upward trend. 2015 winter has seen an increase both in terms of ARR and occupancy rates vis-à-vis 2014 winter. It has not been a big boom but there is a positive move. Considering the fact that India continues to sustain a higher growth trajectory when other important markets are in a struggling mode, we expect the demand drive would further grow for our business,” he said.

Meanwhile, on the critical issue of the possible equity dilution of the two foreign partners in Sarovar in favour of Wyndham group, Bakaya said nothing has been finalised as yet. “30 percent of the company has been up for sale for the last two-three years. Our foreign partners would like to sell their stake but they are clearly not in a hurry. The negotiations are on,” he responded succinctly. The investors in Sarovar Hotels – Bessemer Venture Partners and New Vernon Private Equity- had pumped in $10 million around 2007 picking up 30 percent stake in the venture. The majority stake of 70 percent is held by Indian partners and there would be no change in their equity holding pattern after foreign partners exit from the venture.

Leave a Reply

Your email address will not be published. Required fields are marked *