However, what's not very exciting about this strategy is the fact that hotel companies might be compromising on the brand specifications in an attempt to establish market presence
Goldman Sachs-backed hotel investment and development company SAMHI Hotels is exploring a tie-up with British multinational hospitality chain InterContinental Hotels Group (IHG) for its hotels in India. Industry sources told DNA Money that the association is primarily to rebrand the Formule 1 portfolio under Barque Hotels that SAMHI will control fully post the acquisition of AccorHotels India's 40% stake in the company.
"SAMHI is looking at a possibility of rebranding Formule 1 hotels portfolio as Holiday Inn Express, which is a midscale brand from IHG. Another option being looked at is IHG's newly launched Avid brand which will have room rates that are slightly lower than Holiday Inn Express," said a source.
Both SAMHI Hotels and IHG declined to comment on queries emailed by DNA Money seeking a confirmation and related details.
Co-founded by Ashish Jakhanwala, Manav Thadani and Steve Rushmore in 2010, SAMHI Hotels is backed by global private equity investment firms like Equity International, GTI Capital Group, International Finance Corporation. The company has been on an acquisition spree of late, the most recent one being five Premier Inn hotels owned Whitbread Plc, which is the UK's largest hospitality company. SAMHI is also planning to rebrand the Premier Inn portfolio under Fairfield by Marriott.
Hotel conversion, more popularly referred to as flag-hopping in the hospitality industry, has been pursued aggressively by Indian and international chains over the last few years. The concept involves replacing an existing hotel brand with a new brand, thus leveraging on the distribution network of the new hotel operator, thereby improving the hotel's topline and bottomline.
However, what's not very exciting about this strategy is the fact that hotel companies might be compromising on the brand specifications in an attempt to establish market presence. For instance, the Premier Inn hotel specificatios are very different compared to Fairfield by Marriott.
The scenario with Formule 1 and Holiday Inn Express is quite similar as well. "There will be a lot of dilution in terms of brand specifications if this happens. For instance, Formule 1 doesn't have any food and beverage because the restaurant is outsourced. The rooms are also small compared to Holiday Inn Express," said sources familiar with offerings by both hotel brands, adding that the hotels will call for additional investments to be able to bring them at par with the specifications offered by the new brand.
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