Indian Hotels, GIC to invest US$575m in hospitality

The Indian Hotels Co Ltd (IHCL), the owner of the Taj Hotel chain, said on May 17 that it has entered into a strategic partnership with GIC Pvt Ltd, the sovereign wealth fund of Singapore, to jointly invest around US$575 million in luxury hospitality projects over the coming three years

May 17, 2019

The strategic partnership will acquire fully operational hotels mainly in the Luxury, Upper Upscale and Upscale segments across India

During 2018-19, IHCL had booked 22 properties with more than 3,200 rooms through 18 management deals and four operating leases

India’s travel and tourism industry generated revenues of US$91.3 billion in 2017, which is projected to double over the next decade

Between April 2000 - June 2018, the tourism and hotel industry in India received FDI worth US$11.4 billion and has steadily increased

The Indian Hotels Co Ltd (IHCL), the owner of the Taj Hotel chain, said on May 17 that it has entered into a strategic partnership with GIC Pvt Ltd, the sovereign wealth fund of Singapore, to jointly invest around US$575 million in luxury hospitality projects over the coming three years. The venture will acquire fully operational hotels mainly in the Luxury, Upper Upscale and Upscale segments in India. This platform will allow IHCL to pursue acquisitions in an asset light format, with the equity contribution from IHCL at 30 per cent and the balance contributed by GIC. The hotels acquired within the framework will be housed in a separate SPV with its own funding, and will be managed by IHCL under its marquee brands.

IHCL said that the venture will complement its growth aspirations via management contracts as indicated in the company’s development strategy “Aspiration 2022” that was launched in February 2018. IHCL is aiming inventory growth on way to becoming “South Asia’s most profitable hospitality company”. During 2018-19, IHCL had booked 22 properties with more than 3,200 rooms through 18 management deals and four operating leases across India, as well as in leading markets such as London, Mecca, Kathmandu and Dubai. Rising demand from India’s expanding hospitality industry has attracted a string of foriegn funding from entities such as Canada’s Brookfield Asset Management, US’s Goldman Sachs, among others.

In March 2019, a real estate fund led by Brookfield had acquired several assets from Hotel Leela Venture for nearly US$580 million. In the past two years, SAMHI Hotels, backed by Goldman Sachs, had bought UK-based Premier Inn’s India portfolio of five hotel properties, while French hotel brand Louvre Hotels Group, a subsidiary of Chinese travel giant Jin Jiang International Holdings had acquired a majority stake in India’s Sarovar Hotels & Resorts, which runs 75 hotels in the premium, mid-range and budget sectors. Recently, France’s AccorHotels had announced plans to add 20 new properties across India over the next three to five years. Accor presently runs 51 properties across India with more than 9,500 rooms.

On the occasion, GIC said that it was confident in the prospects of India’s hospitality industry, and was looking to pursue attractive opportunities and capture the sector’s growth potential. GIC manages assets worth more than US$100 billion in over 40 countries. In India, the long-term investor is involved in renewable energy, infrastructure, among other sectors.