Constant dollars

Suba Group signs master franchise agreement with NYSE-listed Choice Hotels

Choice Hotels Asia Pacific, a NYSE-listed hospitality company, has signed a 15-year master franchise agreement with Suba Group of Hotels in India. Under the agreement, which took effect July 1, Suba Hotel Group will assume responsibility as the master franchisee for all 58 Choice Hotels properties open and under development in India. The development comes shortly after the US hotel chain closed its Indian subsidiary.

This is the second major milestone for Mumbai-based Suba Group, which hopes to become the country’s largest hotel chain. Last June, Suba-owned Click Hotels bought a majority stake in Gurgaon-based 1589 Hotels for an undisclosed amount. He increased the company’s total number of hotels which until then was confined to Maharashtra and Gujarat, to 50 from 15 at the time and added 1800 keys to 400 keys.

READ ALSO | Suba Group’s Click acquires majority stake in leisure group 1589 Hotels

“With the latest decision, we are becoming a one-stop-shop for an asset owner with franchisees adding to the mix of revenue-sharing models,” said Mansur Mehta, Managing Director of Suba Group, adding, “Our goal is growing at a rapid pace, adding 400 rooms each year.

On how Suba will handle the interaction of different brands within its fold, Mehta said the inclusion of Choice brands will open up several options for Suba. For example, in cities where international brands are in demand, Suba will launch with Choice. In smaller towns that do not have such a preference, Suba’s brands will substitute.

According to Mehta, India’s growth story in the hospitality sector has only just begun and we have only scratched the surface. The pandemic has brought many changes and unlike the pre-Covid years, small towns are on everyone’s radar as people travel much more inland in order to explore their own land.

The master franchise agreement with Choice Hotels is in line with Suba’s vision to become India’s largest hotel chain, Mehta said. This will bring the total number of keys managed by the Mumbai-based chain to 5,100 from the current 2,900, with a presence in almost 57 destinations across India. Suba will be able to cater to clients looking for budget as well as featured properties to meet business and leisure requirements.

JLL was an advisor for the deal. Jaideep Dang, Managing Director of JLL Hotels and Hospitality Group South Asia, added that “deal flow looks much healthier compared to the prior year.”

Other investment advisory firms also have their deal pipelines jam-packed. If the growth momentum seen in the first two months of the current fiscal year continues over the next four quarters, the hospitality sector should see investment worth two billion dollars (one billion dollars each in debt and equity) over the next three years, according to estimates by Noesis Capital & Advisors. He added that deal flow looks much healthier compared to the prior year.

Dear reader,

Business Standard has always endeavored to provide up-to-date information and commentary on developments that matter to you and that have wider political and economic implications for the country and the world. Your constant encouragement and feedback on how to improve our offering has only strengthened our resolve and commitment to these ideals. Even in these challenging times stemming from Covid-19, we remain committed to keeping you informed and updated with credible news, authoritative opinions and incisive commentary on relevant topical issues.
However, we have a request.

As we battle the economic impact of the pandemic, we need your support even more so that we can continue to bring you more great content. Our subscription model has received an encouraging response from many of you who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of bringing you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practice the journalism we are committed to.

Support quality journalism and subscribe to Business Standard.

digital editor