Hyatt Hotels Corporation, the New York Stock Exchange (NYSE) listed global hospitality company, has entered into an agreement with IHHR Hospitality Pvt Ltd (IHHR) to take over management of five Ista hotels in India. As a result of this agreement, the Ista hotels will now be re-branded as Hyatt. This development in the works was first reported in August, 2012. You can read the earlier story here.
Commenting on the development, Ratnesh Verma, senior vice president - real estate and development, Hyatt Hotels & Resorts-Asia-Pacific, said the company sees a perfect fit with IHHR's forward-thinking philosophy and vision. "It is our endeavor to create preference for our brand by having hotels in markets where our customers are traveling. This opportunity allows Hyatt to further consolidate its distribution in India and offer customers a choice in new markets such as Bangalore, Amritsar and Ahmedabad," said Verma.
While industry experts had earlier expressed that an arrangement of this nature might call for an equity position by Hyatt Hotels, a company spokesperson cleared the air saying, "There is no equity investment from our side and this is a management agreement for the five hotels."
This deal is expected to be a trend setting development in the Indian hospitality market potentially paving way for more such arrangements in the near future.
However, a section of the industry experts are of the opinion that Hyatt has only created confusion in the minds of the customers by signing this deal.
"One also needs to question the dilution of the brand's equity in its haste to get the portfolio. Just to cite an example, the Hyatt Regency hotel in Pune is struggling with 38 sq m rooms and now there will be another plain Hyatt right opposite with a 28 sq m room. To the market who call the present hotel Hyatt and the new a Hyatt as well, this is nothing but a confusion. I mean how is Hyatt going to distinguish the brands when a guest will wonder what's different between a Regency, Place and just Hyatt. And so will Hyatt owners, I believe.
"Everyone in the hospitality industry wants growth but it should not be done at the cost of diluting the equity of their brands. Imagine a Park Hyatt owner spending upwards of Rs 1.5 crore per key seeing his hotel called Hyatt vis-a-vis a Hyatt or Hyatt place owner spending Rs 50 lakh a key and also being called Hyatt. You got to feel sorry for the Park Hyatt owner. I think the same is true for Marriott as well. Whether a JW or a core Marriott or a Courtyard or Fairfield, Marriott is Marriott," said a top industry official.
As per the agreements, signed by both parties on Monday i.e. October 29, 2012 in London, the entire re-branding exercise is expected to be completed by the end of this fiscal i.e. March 2013. IHHR Hospitality entered the five-star business hotels accommodation segment with the launch of its first Ista branded hotel back in 2006 in Bangalore. Featuring 143 guestrooms and suites, it was followed by Ista hotel launches in other cities like Hyderabad (165 guestrooms), Amristar (248 guestrooms), Pune (221 guestrooms) and Ahmedabad (169 guestrooms). The five hotels portfolio collectively have a total inventory of 946 guestrooms and suites.
Among investors in IHHR Hospitality include US-based financial services provider Morgan Stanley, which had bought 26% stake for about $40 million (Rs 160 crore) sometime in 2007. Media reports had earlier indicated that Morgan Stanley was looking to sell this stake and that the London-based C&C Alpha Group founded by Bhanu Choudhrie (IHHR Hospitality's biggest stakeholder) was likely to acquire it. Once concluded, C&C Alpha Group's 62% stake in IHHR Hospitality (held by its hospitality subsidiary Shanti Hospitality Group Ltd) would increase to over 80%.
Industry sources indicated that the Morgan Stanley exit transaction has been concluded and that the exit has happened either at par or at a loss. An email send to C&C Alpha Group's UK office remained unanswered. Morgan Stanley could not be reached for a comment.
C&C Alpha Group currently has investments across six sectors viz. healthcare, hospitality, real estate, aviation, utilities and agriculture. According to the company website, Shanti Hospitality currently has portfolio and pipeline projects spread across the Indian, Asian and European continents. The hotel company owns eight operational hotels and manages 12 hotels and resorts across the globe under the brands of Ananda, Nira, Ista, Amritara and Nidra.
While officials at IHHR Hospitality were not available to comment on this development, Ashok Khanna, managing director, IHHR, in a media statement, said, "The time is now right to step back to our role as owners and hand these Ista hotels to Hyatt, which can take the business to the next level, through its marketing and brand strength," said Khanna adding that the deal will also allow IHHR to re-focus its efforts on further developments and its other brands, which include destination spa brand Ananda in the Himalayas.
The re-branding will mark the entry of the fourth brand from Hyatt Hotels' portfolio into India. It is, however, not very clear what happens to the Ista brand post this management takeover. Industry experts however, said that IHHR Hospitality is likely to bury the six-year old identity it created to enter the city hotels segment of the Indian hospitality industry.
Currently, India has five Hyatt Regency hotels (Mumbai, Pune, Delhi, Chennai and Kolkata), two Grand Hyatt hotels (Mumbai and Goa), and three Park Hyatt hotels (Goa, Chennai and Hyderabad). The Hyatt Place brand will be the next to enter India, with Hyatt Place Hampi opening later this year, followed by Hyatt Place Pune, Hinjewadi. The next six months will also mark the opening of three other Hyatt hotels in India viz. Hyatt Regency Gurgaon, Hyatt Regency Ludhiana and Hyatt Raipur. The international hotel company's current development pipeline in India include more than 50 Hyatt-branded hotels, which are expected to add more than 12,000 rooms.
Commenting on the development, Ratnesh Verma, senior vice president - real estate and development, Hyatt Hotels & Resorts-Asia-Pacific, said the company sees a perfect fit with IHHR's forward-thinking philosophy and vision. "It is our endeavor to create preference for our brand by having hotels in markets where our customers are traveling. This opportunity allows Hyatt to further consolidate its distribution in India and offer customers a choice in new markets such as Bangalore, Amritsar and Ahmedabad," said Verma.
While industry experts had earlier expressed that an arrangement of this nature might call for an equity position by Hyatt Hotels, a company spokesperson cleared the air saying, "There is no equity investment from our side and this is a management agreement for the five hotels."
This deal is expected to be a trend setting development in the Indian hospitality market potentially paving way for more such arrangements in the near future.
However, a section of the industry experts are of the opinion that Hyatt has only created confusion in the minds of the customers by signing this deal.
"One also needs to question the dilution of the brand's equity in its haste to get the portfolio. Just to cite an example, the Hyatt Regency hotel in Pune is struggling with 38 sq m rooms and now there will be another plain Hyatt right opposite with a 28 sq m room. To the market who call the present hotel Hyatt and the new a Hyatt as well, this is nothing but a confusion. I mean how is Hyatt going to distinguish the brands when a guest will wonder what's different between a Regency, Place and just Hyatt. And so will Hyatt owners, I believe.
"Everyone in the hospitality industry wants growth but it should not be done at the cost of diluting the equity of their brands. Imagine a Park Hyatt owner spending upwards of Rs 1.5 crore per key seeing his hotel called Hyatt vis-a-vis a Hyatt or Hyatt place owner spending Rs 50 lakh a key and also being called Hyatt. You got to feel sorry for the Park Hyatt owner. I think the same is true for Marriott as well. Whether a JW or a core Marriott or a Courtyard or Fairfield, Marriott is Marriott," said a top industry official.
As per the agreements, signed by both parties on Monday i.e. October 29, 2012 in London, the entire re-branding exercise is expected to be completed by the end of this fiscal i.e. March 2013. IHHR Hospitality entered the five-star business hotels accommodation segment with the launch of its first Ista branded hotel back in 2006 in Bangalore. Featuring 143 guestrooms and suites, it was followed by Ista hotel launches in other cities like Hyderabad (165 guestrooms), Amristar (248 guestrooms), Pune (221 guestrooms) and Ahmedabad (169 guestrooms). The five hotels portfolio collectively have a total inventory of 946 guestrooms and suites.
Among investors in IHHR Hospitality include US-based financial services provider Morgan Stanley, which had bought 26% stake for about $40 million (Rs 160 crore) sometime in 2007. Media reports had earlier indicated that Morgan Stanley was looking to sell this stake and that the London-based C&C Alpha Group founded by Bhanu Choudhrie (IHHR Hospitality's biggest stakeholder) was likely to acquire it. Once concluded, C&C Alpha Group's 62% stake in IHHR Hospitality (held by its hospitality subsidiary Shanti Hospitality Group Ltd) would increase to over 80%.
Industry sources indicated that the Morgan Stanley exit transaction has been concluded and that the exit has happened either at par or at a loss. An email send to C&C Alpha Group's UK office remained unanswered. Morgan Stanley could not be reached for a comment.
C&C Alpha Group currently has investments across six sectors viz. healthcare, hospitality, real estate, aviation, utilities and agriculture. According to the company website, Shanti Hospitality currently has portfolio and pipeline projects spread across the Indian, Asian and European continents. The hotel company owns eight operational hotels and manages 12 hotels and resorts across the globe under the brands of Ananda, Nira, Ista, Amritara and Nidra.
While officials at IHHR Hospitality were not available to comment on this development, Ashok Khanna, managing director, IHHR, in a media statement, said, "The time is now right to step back to our role as owners and hand these Ista hotels to Hyatt, which can take the business to the next level, through its marketing and brand strength," said Khanna adding that the deal will also allow IHHR to re-focus its efforts on further developments and its other brands, which include destination spa brand Ananda in the Himalayas.
The re-branding will mark the entry of the fourth brand from Hyatt Hotels' portfolio into India. It is, however, not very clear what happens to the Ista brand post this management takeover. Industry experts however, said that IHHR Hospitality is likely to bury the six-year old identity it created to enter the city hotels segment of the Indian hospitality industry.
Currently, India has five Hyatt Regency hotels (Mumbai, Pune, Delhi, Chennai and Kolkata), two Grand Hyatt hotels (Mumbai and Goa), and three Park Hyatt hotels (Goa, Chennai and Hyderabad). The Hyatt Place brand will be the next to enter India, with Hyatt Place Hampi opening later this year, followed by Hyatt Place Pune, Hinjewadi. The next six months will also mark the opening of three other Hyatt hotels in India viz. Hyatt Regency Gurgaon, Hyatt Regency Ludhiana and Hyatt Raipur. The international hotel company's current development pipeline in India include more than 50 Hyatt-branded hotels, which are expected to add more than 12,000 rooms.
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