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Peerless Group to go solo, not to renew ties with Sarovar Hotels

Peerless owns four hotels, one each in Kolkata, Durgapur, Port Blair (Andaman) and Hyderabad. The Durgapur property is not listed on the company's website

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As fifteen years of partnership comes to an end, Kolkata-based Peerless Group's hospitality vertical has decided not to renew ties with Sarovar Hotels & Resorts, according to sources.

Peerless had given management contract for three of its hotels to Sarovar, which was acquired in January last year by France-based Louvre Hotels. Louvre is now owned by one of China's leading travel and tourism conglomerates Jin Jiang International Holdings Co Ltd.

The duo had entered into an arrangement wherein Peerless was to build and own the hotel assets while Sarovar would operate/manage them under the Peerless brand or a co-branded hotel. With the contract ending on March 31, Peerless has decided to go solo and operate the properties under its own brand.

Industry sources told DNA Money that Peerless owns four hotels, one each in Kolkata, Durgapur, Port Blair (Andaman) and Hyderabad. The Durgapur property is not listed on the Peerless Hotels' website though.

"Three hotels i.e, Kolkata, Durgapur and Port Blair were being operated/ managed by Sarovar for 10-15 years now. The contract for these hotels ends on March 31, post which these hotels will go out of the Sarovar network. That's because the asset owners i.e, Peerless Hotels don't want to continue with the Sarovar association and operate/manage the hotels on their own," said a source.

The asset owner operates/manages the fourth hotel, ThePeerless Inn in Hyderabad, which is a full-service three-star property with 65 guestrooms located in the vicinity of the city's financial and information technology (IT) hub.

An upscale four-star hotel, The Peerless Inn, Kolkata, is their biggest property with 168 guestrooms and suites. The Peerless Sarovar Portico, Port Blair, is the only resort in Andaman located on Corbyn's Cove beach and features 50 guestrooms. The Peerless Sarovar Portico Durgapur is a business hotel with 61 rooms and suites.

When contacted, Peerless Hotels did not comment on the development saying, "It's an internal matter."

Ajay Bakaya, executive director, Sarovar Hotels & Resorts, while confirming the non-renewal of the contract by Peerless Hotels, said, incidents like these are a part and parcel of the company's business model. "We have had a tie-up that lasted 15 years post which either party has the right to continue or go to another player. In this case, they (Peerless) wanted to run the hotel by themselves," said Bakaya, adding that the hotel company has a 22-year record of over 90% retention.

Sarovar Hotels & Resorts currently operates 75 hotels and over 6,000 rooms largely in India, with a few hotels in Africa. At the time of acquisition by Louvre last year, the chain had 73-odd hotels in its portfolio and has added six new hotels in the last 12 months.

Taking the new additions into account, the total number should have been 79-odd hotels. A look at the management company's current portfolio shows that while Sarovar has added new hotels, it has also witnessed at least four exits. The three hotels from Peerless group take the total number to at least seven exits in the last over 12 months.

On the number of new hotels that are likely to be added this year, Bakaya said, "We should have between seven to eight new openings at least. The company continues to grow and keep adding new hotels. Besides, there will always be some cases and it's only fair for both parties. If the asset owners believe they would want to run the show themselves, then so be it."

While a majority of the new openings will be fresh management contracts, there will be some conversions too. In fact, the latest Sarovar Hotel opening in India will be in the Jaipur market next month.

"The 80-room Jaipur Plaza will be opening as Sarovar Premiere and that's the most interesting and prominent one for us. There will be two new international launches around September–October this year. One is in Lusaka in Zambia and the second one in Dar es Salaam, Tanzania. This will be our second property in Tanzania," said Bakaya.

CHECKING OUT

  • Peerless owns four hotels, one each in Kolkata, Durgapur, Port Blair (Andaman) and Hyderabad. The Durgapur property is not listed on the company's website
     
  • It operates/manages the property in Hyderabad, which is a full-service three-star hotel with 65 guestrooms located in the vicinity of the city's financial and information technology (IT) hub
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