Mumbai: French hospitality major Accor is looking to sell its 40% stake in Sofitel hotel in Bandra-Kurla Complex (BKC), Mumbai, according to sources.
Realtor Shree Naman Builders is the asset owner of Sofitel BKC, which has not had a good run in terms of business.
Accor had invested Rs 70 crore for a 40% stake in the 310-room BKC hotel in 2006, when the overall project cost was estimated to be Rs 475 crore.
However, delays in getting the hotel operational increased the overall project cost to over Rs 700 crore. As a result, Accor had to make further investments into the project to maintain its 40% stake. Considering the overall project cost, Accor's investment is likely to be in the Rs 280-300 crore range.
"The overall business environment is also not conducive enough for stake divestment as there are hardly any players in the market who would be interested as overall hospitality business is currently on shaky ground," said an expert.
On asset owner buying out hotel operator's stake in the company, experts said the real estate sector itself is in deep trouble given the slowdown.
"Besides, I don't think the asset owners really have the financial muscle to buy out the hotel operator's stake. So it will be interesting to see how this deal gets conclude, if at all it does," said an industry official.
The hotel may also see a brand change because the new investor would want to have a new hotel operator/brand to make the property operationally viable.
Also, in a major restructuring of operations, French hospitality major Accor is folding its standalone luxury brand Sofitel into itself.
This will include all Sofitel hotels in India including the operational 310-room hotel in Bandra Kurla Complex (BKC), Mumbai.
"This exercise will not have any impact on the consumers because it is being done primarily for operational efficiencies," said an industry source.
The development will see Robert Gaymer-Jones, CEO of Sofitel Worldwide, leaving the company, according to sources.
Accor officials were not available for a comment.
Accor plans to bring all its luxury/upscale hotel brands including Pullman, MGallery, Grand Mercure and The Sebel under one roof, said another industry source.
"Operations of this luxury hotel brands will be relocated to Accor office in Singapore," said the source.
A market leader in Europe, Accor enjoys presence in 92 countries with nearly 3,500 hotels and 440,000 rooms. Its portfolio of hotel brands includes Sofitel, Pullman, MGallery, Novotel, Mercure, ibis, and Formule1 across budget to luxury segment.
The largest hotel operator in Asia Pacific, Accor has operations in 16 countries in the Asia-Pacific region with over 550 hotels and more than 250 projects in the pipeline for the next three years.