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Hyatt to cede management of five hotels

IHHR to take back control of hotels but keep global hospitality firm's branding; start with an Amritsar property

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For the first time, global hospitality player Hyatt would lend its brand name and not manage a property in India.

Ashok Khanna-promoted IHHR Hospitality, owner of the award-winning destination spa resort 'Ananda in the Himalayas', may soon take back management control of its five hotels from Hyatt Hotels Corporation (HHC).

Following this, the management agreement will get converted to a pure franchise deal between the two parties.

Interestingly, this move could also pave way for franchise route for HHC in the local market.

Industry sources told DNA Money that both the companies are at an advanced stage of discussions on the matter. "The conversion is likely to happen in a phased manner. The first hotel to be converted into a franchise arrangement will be the Hyatt Amritsar property. Eventually, the other hotels will become pure franchise wherein Hyatt will cease to have management control of these properties," said a source.

IHHR and HHC executives were not immediately available for comment. An email seeking details remained unanswered at the time of going to print.

In October 2012, IHHR entered an agreement with New York Stock Exchange-listed global HHC to hand over management of its five Ista branded upper upscale (five-star deluxe) hotels. The five hotels were launched between 2006 and 2011 in markets like Bangalore (with 143 guestrooms and suites), Hyderabad (165 guestrooms), Amritsar (248), Pune (221) and Ahmedabad (169). Following this, the five Ista hotels were re-branded 'Hyatt'.

The conversion from management contract to a franchise arrangement could also see a change in the branding of the five hotels, sources said. For instance, the Amritsar hotel is likely to be rebranded Hyatt Regency and may call for renovations of rooms and public areas to be in sync with the new brand standards. This could also mean the newly introduced Hyatt brand (with IHHR Hospitality) may be discontinued given the confusion it has been creating in the market for other asset owning partners of the global hospitality chain.

IHHR Hospitality is backed by London-based C&C Alpha Group founded by Bhanu Choudhrie (IHHR Hospitality's biggest stakeholder). According to C&C Alpha Group website, it has a hospitality subsidiary called Shanti Hospitality Group, which has portfolio and pipeline projects spread across Asia and Europe. The hotel company (Shanti) owns 12 operational hotels and resorts across the globe under the brands of Ananda, Nira, Amritara and Nidra. C&C Alpha Group has investments across six sectors – healthcare, hospitality, real estate, aviation and utilities.

Clarification

Regarding an article in DNA Money edition dated April 12, 2017, titled `Hyatt to cede management of five hotels', Gurmeet Uberai, director, IHHR, and Sunil Ghadiok, CEO, Nidra Hospitality have clarified that neither IHHR nor Shanti Hospitality is currently evaluating conversion of all the five Hyatt hotels to a franchise. Nidra Hospitality, which is the management arm of Shanti Hospitality Group, has a franchise agreement with Marriott Starwood Hotels for the management of the Four Points by Sheraton and Aloft brand of hotels in India. It will also manage a Hyatt Regency hotel in North India.
Ghadiok added, “Nidra Hospitality has been growing its portfolio significantly over the next few years to become a premier player in the franchise space, through third party professional management services. In our goal, to achieve being the largest multi-brand franchise operator in India, we are constantly in conversation with all the global and local brands to evaluate opportunities for franchise management.”

We stand by the story.

- Editor

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