Louvre Hotels acquires majority stake in Sarovar

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NEW DELHI: Louvre Hotels Group, the second-largest in the hospitality industry in Europe, has bought a majority stake in Sarovar Hotels in India, beating Wyndham Hotel Group in the race. The deal makes the combined entity one of the biggest hotel chains in India in terms of number of properties.

The companies did not disclose the size of the transaction. Some experts estimated that Louvre, which is part of Shanghai-based Jin Jiang International Holdings, bought a 75% stake in Sarovar for about $50 million.

With the deal, private equity funds Bessemer Venture and New Vernon have exited Sarovar. The hotel chain with the Sarovar Premiere, Sarovar Portico and Hometel brands, will continue to be run by the existing management.

Louvre is considering buying out the company completely over the next three years, people familiar with the deal said.

Avendus Capital was the sole advisor to the shareholders of the Sarovar Group for the transaction, while consulting firm HVS advised Louvre.

Sarovar, founded by Anil Madhok in 1994, operates 75 hotels in the premium, mid-range and budget categories. It also runs F&B brands Geoffrey’s The Pub and Oriental Blossom, apart from managing 10 hotels under the Radisson, Park Plaza and Park Inn brands.

The mid-sized hotel chain has grown from 4,500 rooms to almost 6,000 rooms in over 50 cities over the past five years. Executive director Ajay Bakaya said it was getting increasingly difficult to handle competition from international chains on aspects such as technology and distribution.

“The association will help the company expand its wings further with local and international capabilities,” said Madhok, executive chairman of Sarovar.

The contours of India’s hospitality sector have changed since Sarovar started out. Other mid-market chains including Lemon Tree and Ginger have entered, as have aggregators such as OYO. Last year, Marriott International completed its acquisition of Starwood Hotels & Resorts Worldwide and overtook Taj Hotels Resorts and Palaces as India’s biggest hotel chain with close to 100 hotels in the country.

Industry experts said the Louvre-Sarovar deal could mark a turning point in India.

“It’s not very big in terms of sheer size, but what’s interesting is that it is a portfolio acquisition of a management company done using Chinese money. Given that an organisation like Jin Jiang has shown interest, more Chinese investors could look towards India. Deal activity could pick up further,” said Achin Khanna, managing director of consulting and valuation practice at HVS.

Louvre Hotels was founded in 1976 by the Taittinger Family as a French business and was acquired by Jin Jiang in February 2015. Louvre operates 1,233 hotels in 54 countries. It entered the Indian subcontinent in 2007 and currently manages 22 hotels under its Golden Tulip umbrella brand.

“We are present in all major markets and in all the hospitality segments. Sarovar is a fantastic platform, very promising for the future, mostly due to the professionalism and the local expertise of its smart team,” said Pierre-Frédéric Roulot, CEO of Louvre Hotels.