Indian Hotels-GIC platform, which was formed in 2019 to acquire stressed hospitality assets, is yet to make its first acquisition. Puneet Chhatwal, MD and CEO, Indian Hotels Company, says once the ECLGS scheme ends there could be entities that could come for a change in ownership.
In May 2019, IHCL, along with GIC, set up a ₹4,000-crore investment platform, with the aim of acquiring fully operational hotels in the luxury and upscale segments in India. The equity contribution from IHCL was set to be at 30 per cent, and the balance would be contributed by GIC. However, due to the pandemic, the investment plans were stalled.
Earlier this year, on the sidelines of the IHCL Capital Markets Day 2022, Chhatwal had said that the JV was for three years; it has now been extended by two more years.
IHCL posted a record profit in Q2 FY23; post the results, when businessline asked for an update on the platform, Chhatwal said it continues to exist. However, during the pandemic, and even as the industry comes out of the pandemic, not many properties are changing hands.
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“No movement or change of hands for assets has happened in the past few years. The reason is that the sellers’ and buyers’ [cost] expectations were completely opposite.” Citing the example of Hyatt Mumbai that shut down recently, he explained that even if the hotels had shut shop, they weren’t being sold. Albeit, “the gaps of expectations have narrowed.”
He further pointed out, that the Emergency Credit Line Guarantee Scheme (ECLGS) gave a breather to the stressed hospitality industry during the pandemic, comes to an end next year. This scheme was floated to help the distressed sectors get a fully protected credit line. On the other hand, there were moratoriums on acknowledging non-performing assets, loans, and defaults.
Chhatwal said that being the chairholder at the Hotel Association of India, he has pushed the ECGLS scheme, because, “the growth needs to be responsible, unlike in the US where due to a few non-payments or delays, renowned brands are getting bought by the big fish. Having said that Emergency Credit Line Guarantee Scheme, which is still valid, may or may not get extended.”
The platform had plans to acquire a stressed asset for over ₹120 crore. However, the plan was deferred in June 2020 after rising Covid-19 cases hit the hospitality industry.
Responding to a question on whether the company was evaluating assets to acquire, during the post earnings call, Giridhar Sanjeevi, Executive Vice-President & CFO said: “Yes, we keep looking out for what do you say acquisition opportunities for sure. I think with the ending of the moratoriums and all that and we continuously see evaluating but we don’t have any deal to report at this point of time actually. No deal to report.”
IHCL has a portfolio of 247 hotels including 65 under development globally across 4 continents, 11 countries and in over 100 locations.
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Published on November 15, 2022
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