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PEs checking in hotels more frequently now

Economic revival fuels interest in both budget and business hotels

Shubham Parashar  |  Mumbai 

PEs checking in hotels more frequently now
Last year, Goldman Sachs invested $66 million in Samhi Hotels, which has high-end hotels under partnership with Marriott, Starwood, Hyatt and Accor. Photo: iSTOCK

Till a few years ago, business of standalone budget such as Exotica on Noida Expressway could hardly be of interest to marquee global financial such as But things change. 

Last month, Investment Partners along with Accel Partners invested $25 million in FabHotels, an online aggregator of budget such as Exotica. To be sure, budget is not the only segment that is attracting private equity or firms. Last year, invested $66 million in Samhi Hotels, which has high-end under partnership with Marriott, Starwood, and  

In the last five years, Indian hospitality industry including the technology-led aggregators such as has seen investments worth over $700 million from the likes of Blackstone, APG, across 37 deals.

“We see significant growth potential in the budget lodging market in India and believe itis ripe for disruption,” said Shweta Bhatia, head of Asia investments at the and Growth Equity team at Investment Partners.

Also, last year following the investment in Samhi Hotels, Sonjoy Chatterjee, chairman of India, said, “On the back of reform momentum, India is witnessing a steady recovery in economic activity driven by domestic demand. We anticipate this to lead to an upturn in the hotel sector.” 

A report by Google India pointed out that only 20 per cent of the total hotel inventory is currently available online. With over 300 million Indians online and growing rapidly, several players including new and established ones are focused on bringing quality budget accommodation online across the country. While the availability of this new inventory works for online aggregators such as FabHotels, growing business travel to India is fuelling demand for high-end that such as Samhi are building.

PEs checking in hotels more frequently now
Data from the Ministry of Tourism shows that domestic tourist visits to states/union territories (UTs) grew by 15.5 per cent y-o-y to 1.65 billion (provisional) during 2016. The top 10 states/UTs are accounting for about 84.2 per cent to the total number of domestic tourist visits. Foreign tourist arrivals (FTAs) in India increased 19.5 per cent year-on-year to 630,000 in May 2017. FTAs on e-tourist visa increased 55.3 per cent year-on-year to 68,000 in May 2017.

Global consultancy firm KPMG in a report said India was expected to move up five spots to be ranked among the top five business travel market globally by 2030. 

Business travel spending in the country was expected to treble until 2030 from $30 billion in 2015, it said. “Hotel industry is seeing interest from private equity for both asset light and asset heavy models as rising economy is fuelling demand for both budget and business hotels,” said Arun Natarajan, founder Venture Intelligence. 

“While budget are largely targeting sales representatives travelling to small towns, premium are looking for opportunity from rising business travel by senior executives,” Natarajan added.

First Published: Sat, August 05 2017. 22:52 IST
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