IHCL subsidiary Roots Corporation’s Ginger Hotels is in talks for sale and lease back arrangements for four hotels in markets such as Bengaluru, Goa, and Agartala as part of its asset monetisation strategy, people familiar with the matter said. Ginger, which announced a new lean and luxe rebranding in 2018 currently operates 50 hotels with around 4400 rooms.
”The strategy for Ginger Hotels entails upgradation of its existing portfolio of hotels to the new lean luxe look and feel, and growing its network of hotels,” said Deepika Rao, MD and CEO, Ginger Hotels in a response to ET’s queries. She didn’t comment specifically on the sale and lease back talks for four hotels but said sale-and-lease-back or sale-and-manage-back arrangements were identified as a key lever to unlock value from owned assets, which would provide the company with the necessary growth capital while continuing the operation of the ‘stable and profitable’ hotels under the Ginger brand.
“In line with this intent, Ginger Pondicherry was transacted in quarter four of financial year 2019-20 on a sale-and-manage back arrangement. Ginger will continue to follow an asset-right approach with a mix of owned, leased and managed hotels in its portfolio,” she added.
Ginger’s 20 in-the-pipeline hotels with around 2000 rooms will come up in markets like Kolkata, Mumbai, Chennai, Goa, Udaipur, Amritsar, Nagpur and Patna. The company is also looking at hotels in locations such as Agra, Chandigarh, and Aurangabad.
Rao said the company has converted 24% of its portfolio of hotels under the lean luxe brand restructuring and has seen a 21% increase in the average room rates for these upgraded hotels. She said the company is looking at fully fitted leases and management contracts. 12 of Ginger’s 50 hotels are currently under management contracts.
“We don’t want to lose flags in the markets where we may look at such arrangements. We are happy with the hotels. We are just unlocking capital to grow further. The lean luxe rebranding means moving the brand to a more vibrant, experiential, aspirational avatar. Our rebranding exercise has resonated with customers and investors,” she added.
She said in 2019, Ginger signed 12 hotels with around 1250 rooms. “That must have been the single largest signing under any brand. Earlier we partnered with F&B operators. We launched F&B under a new band called Café Et-Cetra. We started running our own F&B operations and the F&B revenues are getting reported on our PNL,” she said. In February, Ginger also announced the launch of a new hotel in Santa Cruz in Mumbai.
She expects the quarantining and medical staff accommodation business to continue this month. “It is difficult to say for how long we expect this business to continue. The situation is fluid. The hotspots keep shifting. Delhi, Mumbai are allowing home quarantine for now,” Rao added.
Source: Economic Times