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Whitbread may buy Berggruen's India unit

UK hotelier in talks to either acquire, merge or form a joint venture for Berggruen Hotels's portfolio that includes 14 Keys branded hotels

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Whitbread, one of the UK's largest hotel, restaurant and coffee shop operators, is in talks to acquire or merge the portfolio of Berggruen Hotels in India.

The management of 'Premier Inn', a mid-market hotel brand owned by Whitbread, ' is understood to be in very advanced stage of negotiations with Berggruen Hotels to either acquire or merge or enter into a joint venture arrangement for India operations.

The deal, if struck, would mark the consolidation in the Indian mid-market/budget hotel accommodation space.

Backed by New York-based Nicolas Berggruen's investment firm Berggruen Holdings, the eight-year-old Berggruen Hotels currently operates 14 mid-market hotels under the 'Keys Hotels' brand and one five-star hotel under the 'Klub Keys' brand.

This apart, it is likely to operationalise over 20 projects by 2017.

The Premier Inn network in India comprises three hotels and two projects under development that are expected to get operational in a few years.

While details of the arrangement have been kept under the wraps, industry sources said a deal between Premier Inn and Berggruen has been finalised already.

Post the deal, the combined entity will have 18 operational hotels and 25-odd projects in the development pipeline in the country under Premier Inn, Keys and Klub Keys brands.

?When contacted by dna, V V Giri, regional director-operations (South Asia), Premier Inn India Pvt Ltd, declined to comment.

Sanjay Sethi, MD and CEO, Berggruen Hotels Pvt Ltd, said, "Efforts have been on to consolidate as much as possible and we have had some discussions, but nothing has fructified as yet."

Both Premier Inn and Berggruen have been looking to expand business operations in India for some time now. While Berggruen has managed to build a sizeable network of owned, managed and franchised hotels, Premier Inn branded hotels haven't had similar traction.

"Berggruen has been looking at raising funds or bringing in a strategic investor on board for sometime now. However, difficult market conditions posed significant challenges in this area. Similarly, The Premier Inn has been trying to expand network but its plans did not materialise owing to overall economic slowdown with the real estate community not wanting to build hotels anymore.

"This deal would be a win-win for both parties and they would be in a position to collectively tap the mid-market hospitality segment in India," said a senior industry executive.

Having invested over $62 million since 2006 and Rs 135 crore through debt, Berggruen Hotels currently operates 15 hotels of which six are owned, another six are management contracts and three hotels under franchise arrangement with asset owners.

Berggruen has set itself a target of 75 hotels across various stages of development by 2016-17.

Whitbread, which has already invested Rs 300 crore in the Indian hospitality for five hotels under the Premier Inn brand, currently has three operational hotels in Delhi, Bangalore and Pune and two under development. The British firm was targeting 70-80 budget hotels in India in the long term. Its portfolio consists of over 650 Premier Inn hotels, and 55,000 hotel rooms across locations in the UK, Ireland, India and Arabian Gulf.

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