Global hospitality major InterContinental Hotels Group (IHG) today said its joint venture with Duet India Hotels will open 19 hotels in India by investing about Rs 1,300 crore in the next five years.
As per the memorandum of understanding (MoU) between the two companies, the JV 'Duet Smart Hotels India' will invest Rs 1,300 crore for setting up the properties under the Holiday Inn Express brand across the country.
This is the fourth brand for IHG in India after the InterContinental, the Crowne Plaza and the Holiday Inn brands.
The first hotel under the Holiday Inn Express brand under the JV was opened today in Ahmedabad.
"The joint venture with Duet India Hotels is for setting up 19 hotels under the Holiday Inn Express brand in India," InterContinental Hotels Group(IHG) South West Asia VP Operations Douglas Martell told reporters here.
In the JV, Duet India Hotels has 76% stake while InterContinental Hotels Group holds 24% stake.
On the time line and investments for these hotels, Duet India Hotels President Naveen Jain said: "All the 19 hotels will be opened in the next five financial years. The investments will be raised through a mix of debt and equity.
"Nearly 55% of it will be raised by debt mainly from Indian banks, while 45% will be through equity."
The partnership is specifically geared towards the mid market segment, a segment that holds the greatest growth potential in India.
"We have been in the market for a long time and we realised that there is a gap in the mid scale hotels market in India. Mid scale hotels in the country represent just 15% of all hotel rooms and this means there is incredible headroom for growth," Martell said.
The JV entity is looking at locations like Chennai, Hyderabad, Navi Mumbai, which are already in various stages of development for expansion in the first stage. It is also looking at NCR, Kolkata, Bangalore and Goa, Jain said.
InterContinental Hotels Group currently has 12 hotels under its brands in India and 37 hotels are in the pipeline.
"The room tariff will be between $80 and $100 depending on the city and location," Jain said.
IHG currently has 672,000 rooms in over 4,500 hotels in nearly 100 countries and territories around the world. It operates hotels in three different ways -- as a franchiser, a manager and on an owned and leased basis with largest part of business being under the franchising model.
It operates nine hotel brands including InterContinental, Crowne Plaza, Hotel Indigo, Holiday Inn, Holiday Inn Express, Staybridge Suites and Candlewood Suites.