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BW Businessworld

Sarovar Hotels Sells Majority Stake to Louvre Hotels

The Chinese-owned French Hotel chain will give Sarovar Hotels more international exposure and invest in the IT side of the business, as well as bring with them a very strong loyalty program

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Ending months of speculation, the Sarovar Hotel Group today announced that it had sold majority stake to Louvre Hotels Group. Members of the press were addressed by Anil Madhok, Executive Chairman, and Ajay Bakaya, Managing Director of Sarovar Hotels as well as Pierre-Frédéric Roulot, CEO, and Saurabh Chawla, Head of Group Development, Louvre Hotels Group.

Details of the deal were not forthcoming as yet and the impression that this reporter got and that Bakaya later shared with us was that the integration of the businesses and other details would probably take around three months to complete.

Where does this deal leave Sarovar Hotels? The group, was a first mover in the mid-market hotels segment in the country, when it was begun by Madhok in 1994. They are currently managing 6,000 rooms in 50 cities with another 20 hotels in the pipeline.

Louvre Hotels Group, which now owns a majority stake in Sarovar Group, were begun by the Taittinger family in 1976 is currently owned by Jin Jiang International of China. The Louvre Group brands include 6 brands: Première Classe, Campanile, Kyriad, Tulip Inn, Golden Tulip and Royal Tulip. They are currently the fifth largest hotel group in the world, with more than 3,000 hotels in operation, thanks to their purchase of majority stake in Sarovar Hotels--again details are not forthcoming as far as the value of the deal or the percentage stake is concerned.

"When we began, we were perhaps the only ones in the mid-market, lower upscale market operating hotels in India. We have had several people follow the queue. We've had the OTA boom. It's a changing horizon. Over the last few years we have put our heads together and said we always wanted to remain ahead of the pack. The biggest factors are technology and distribution. We also wanted to tap into much bigger market. We are delighted to announce our partnership with the Louvre Group, based in Paris," Bakaya told the gathering before explaining that one of the things that really clinched the deal was access to a population larger than India's with potential visitors coming to India.

With 1.1 million members, the Louvre Group had one of the strongest loyalty programs which Sarovar was now a part of, though details of how the two would be equated with each other was still not clear.

"We are looking forward to exciting times and very happy with this tie up. In today's global market, you can no longer grow in isolation. You've got to be part of a larger group. All the strengths of the Louvre Group will benefit us to further our expansions in India and Africa, where we are present," Madhok added.

Roulot clarified that though the group was present across the world, the partners were all local and there was never an expat face to the business. "We are a strong team but a small team. The way we work, is by using the strength of the local partners," he said.

Louvre has a JV with Golden Tulip hotels separate from the deal made with Sarovar, though the two groups would at some point form some sort of synergy, though timelines and details were absent and not commented on.

"I would love to open the first Sarovar in Paris or in the US as a sign of our successful venture," Roulet stated to applause.

Speaking exclusively to BW Hotelier, Bakaya told us that "This deal has given us a presence and reach across the world, to reservation systems which will open up the technology gates for us. It will be better for our loyalty members. It will offer a larger palate to offer our owners in this country and in ones in which we are operating in".

Brands like Campanile, which are very attractive products for millenials was definitely on their minds, he added.

As far as costs were concerned for owners looking to associate with Sarovar, they would not change, though the brands brought in by Louvre could have a small difference in distribution costs, because they are international brands. "But now that we are in the same boat, we could probably offer the franchise at a very attractive price", he told us.

In his exclusive chat with us, Roulot began by saying that he strongly believed that the Indian market would be one of the best in the near future. "You have an unbelievable domestic market and an economy which is growing strongly," he added.

"It's much better if you work with local group, because they know the market so well, especially someone like Sarovar Group, they know the people and are very well respected by third parties. By being part of their business, growth is also faster for us," he told us.

Louvre would contribute with more investments in IT and help Sarovar get better exposure to worldwide customers, he said.

Tags assigned to this article:
sarovar hotels Louvre Hotels Group stake sale Anil Madhok