One month ago, Best Western International announced that it would not renew its agreement with B.B. Patel and Prabhu Goel of Cabana Hotel Management once their master franchise license expired at the end of 2015. The deal had originally been signed in June 2007, and sources told DNA India that Cabana's "inability to expand the Best Western's presence" in India drove the decision to end the partnership.
A new management company may boost the brand's footprint in the subcontinent: As 2016 got underway, Best Western announced its new partner for developing its brand in India, signing a new 10-year master license agreement with Delhi-based Sorrel Hospitality.
What's the Deal?
The agreement went into effect with the new year, but as several sources have noted, it has not come into force due to "pending financial and commercial issues" with existing Best Western hotel franchisees in India, Cabana Hotel Management and Best Western International. "Payments in terms of franchising fees have not been cleared by the existing hotel owners and or Cabana. Hence, the new India partner will have to get those cleared before getting on with business," an industry source told DNA India.
"We have agreed to procrastinate over the agreement by around two to three weeks because we want to get the old parties sorted out," Sorrel Hospitality director Gurmeet Singh Uberai told the Times of India. "Our attempt is to settle all the old issues between the old partner and franchises so that there's a seamless transition." Uberai told the paper that his company has asked for a No Objection Certificate from the existing franchises that would claim that their dues to Cabana have been paid and Cabana has no objection to their joining the new contract.
DNA India noted another reason why Uberai may not have invoked the right to this master licensing agreement for now, and has given all parties a month's time to solve all of the various issues and disputes: "Once everybody's issues have been addressed, I will be in a position to go out officially," he said, claiming that the company should begin working on the Best Western franchise with "a clean slate."
Industry sources also indicated the possible behind-the-scenes involvement of Ranjan Bhattacharya (the foster son-in-law of former prime minister Atal Bihari Vajpayee) in the new Best Western master licensing company. Executives working with Bhattacharya's Country Development & Management Services firm, a joint venture with Carlson Rezidor Hotel Group, were absorbed by Sorrel after Carlson bought out Bhattacharya's stake in the JV. The paper noted that Uberai was also a director in CDMS and managed a portfolio of Carlson's Country Inns & Suites in India.
Uberai said that Bhattacharya was "not at all" involved in Sorrel Hospitality, and is not connected with the new Best Western International agreement. Some of the CDMS' finance and accounting executives, however, are now employed by Sorrel.
Best Western in India
Under the agreement with Cabana, Best Western hotel network grew from six hotels in 2007 to 34 hotels (including those in operations and various stages of development) in 2011. Today, Best Western's India website lists 23 operational hotels with another 20 in the pipeline. Three of the upcoming hotels will have 100 rooms or more.
People close to the development told the India Times that six hotels will be de-flagged "as they were not compliant with the BWI brand standards." BWI has also reportedly increased its franchise fee. Previously, this fee was based on the number of guestrooms and a percentage of the property's topline.
The master licensing agreement with Sorrel Hospitality is Best Western International's third such deal in the last 20+ years.