Score another win for Chinese capital.
France-based Louvre Hotels Group, owned by China's Jin Jiang International, has reportedly acquired Indian hotel chain Sarovar Hotels and its 73-hotel portfolio, the majority of which are management contracts.
The acquisition is another in a long run of consolidation within the hotel industry. And while it's far smaller than Marriott's deal for Starwood or AccorHotels' deal for FRHI, it's further indication that regional hotel companies and portfolios are ripe for the picking as larger hotel groups look to grow scale.
This acquisition is notable for another reason: It is believed that Wyndham Hotel Group had serious intention of making a play for Sarovar. Wyndham has long been looking to augment its India presence. In November of last year, we noted that Wyndham was looking to open 50 new hotels in India by 2018, and, citing local sources, Wyndham was "scouring" several acquisition targets in India. Though Wyndham has more than 7,500 hotels globally, it only has around 25 in India.
DNA Info reported that Wyndham Hotel Group President and CEO Geoff Ballotti had taken meetings with executives of Sarovar, which also was partially owned by U.S. private equity group KKR—the same group that, in conjunction with KSL, recently purchased Apple Leisure Group.
And while noise about a Sarovar acquisition went quiet for a year—due, in part, to a valuation disagreement, it resurfaced this past November, when it was reported that Wyndham was back at the table looking to make a deal. However, by that time, Louvre Hotels was said to have swooped in in an attempt to make a deal of its own for Sarovar. Here's a timeline:
- October 11th, reports surfaced that France's Louvre Hotels Group, which also holds 50 percent in Golden Tulip Hospitality Group in India was making a play for the hotel chain.
- However, reports are that their offering was lower than that of Wyndham.
- Now, Wyndham could be taking another swing at Sarovar. "Both Sarovar and Wyndham have reinitiated talks," sources told DNA India.
- Dec. 22: Report that Louvre acquires Sarovar.
"A share purchase agreement has been signed with Louvre Hotels. In fact, this is the first time that Chinese money is coming into the Indian hospitality market," a source told DNA.
A formal announcement has not yet been made, but the source told DNA Money that it "is likely to be done in the first 10-15 days of January 2017."
A call HOTEL MANAGEMENT put into Wyndham Hotel Group for comment was not returned.
DNA Money further writes that the price of the acquisition was between Rs 330 crore to Rs 350 crore, slightly hire than what Wyndham had offered, DNA's source further said.
Louvre's current brands include Premiere Classe, Campanille, Kyriad, Tulip Inn, Golden Tulip and Royal Tulip, which together represent more than 1,100 hotels in 51 countries.
Notably, Sarovar's portfolio includes hotels under Carlson's Radisson and Park brands. Earlier this year, Carlson was acquired by another Chinese company, HNA Group. And while neither HNA or Jin Jiang have a relationship, there is no doubt of China's powerful and growing position within the global hotel industry.
And while Wyndham appears to have lost out on Sarovar, it did grow its Latin America footprint earlier this year when it acquired Argentinian company Fën Hotels, adding 26 management contracts across Argentina, Peru, Costa Rica, Uruguay, Paraguay Bolivia, and the U.S. The deal included two new Fën-built Wyndham Grand hotels opening in Montevideo, Uruguay, and Asunción, Paraguay.