<article>Deals in the hotel industry picked up in 2015 after a slump of more than four years as market conditions improved and valuations fell.</article>

Deals in the hotel industry picked up in 2015 after a slump of more than four years as market conditions improved and valuations fell.
According to property consultant JLL India, 15 hotel deals were signed in the country in 2015 against two in 2014 and three in 2013.
Real estate advisers and company officials said mergers and acquisitions are picking up as valuations fall and signs of recovery emerge with improving room occupancy in key cities.
“There is a renewed interest in acquiring hotel assets. It is a turnaround time for the sector where mergers and acquisitions are slowly catching up. Transactions, though small in value, are taking place after a slump of over three-four years,” said Gulam Zia, executive director (advisory, retail and hospitality), Knight Frank India, a real estate consultant.
Among the major deals of 2015 was the acquisition of Leela Hotels’ Goa property by Malaysia-based conglomerate MetTube Sdn. Bhd. for Rs.725 crore and ITC Ltd’s acquisition of Park Hyatt Hotel in Goa for Rs.550 crore. Besides, in the past six months, hotel asset firm Samhi Hotels Ltd acquired two properties—Four Points by Sheraton in Visakhapatnam and Ganesh Meridian in Ahmedabad.
It marked a significant improvement over past years when there were few takers for hotel assets.
As the global economic crisis unfolded, real estate firms such as DLF Ltd and Unitech Ltd, which invested in acquiring or developing hotels, sold such assets to reduce debt.
“Most of the properties that are currently up for sale were taken up before 2008 when most builders wanted to be in the hotel business. Due to the exorbitant prices charged for these properties, hardly any deals were happening. However, sellers have finally tapered down their expectations and valuations have come down,” Zia said.
Brigade Group, which runs two hotels—Sheraton Grand at Brigade Gateway and Grand Mercure in Bengaluru—says it was put off by the high prices of existing operational properties.
“We evaluated to buy few of the distressed hotel properties in the past, but we found that either the assets were exorbitantly priced or most of the time, there were operational issues,” said Nirupa Shankar, director (hospitality), Brigade Group.
However, Shankar said in the past one year, the hotel industry has seen a few deals going through because of growing demand for assets, primarily from international brands that are chalking out aggressive expansion plans in the country.
“Given the high growth mandate, international hotel brands in India do not have the patience to wait for three-four years to build a hotel. Hence, a lot of rebranding of existing hotel properties has taken place in the recent past. While they may not invest directly in acquiring the properties, it definitely drives demand for such properties,” Shankar said.
Boosted by business and domestic travels, hotel occupancies across the country crossed 60% for the first time in 2015 after a period of five years. During 2010-14, occupancies had ranged around 57-58%.
Driven by this growth, global private equity investors such as Blackstone Group and Goldman Sachs have also shown interest in investing in the Indian hotel industry.
On Tuesday, Goldman Sachs announced a plan to invest Rs.440 crore for a minority stake in Samhi Hotels.
On 9 December, Mint reported that Blackstone was scouting for hotels at reasonable valuations across the country. It is already planning to build two business hotels in Bengaluru along with city-based property developer Embassy Group.
<h4>This article was first published on <a href="http://www.livemint.com/Companies/kqufHzcuiNqqHSgPVbjt2O/IIFL-Edelweiss-to-invest-in-Mumbai-Bengaluru-projects.html" target="_blank">Livemint.com</a></h4>

India 2015: Hotel deals rebound as sellers climb down on valuations

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