Sarovar Hotels raises funds for expansion

Mumbai: Sarovar Hotels and Resorts, a multi-brand hotel management company, is going in for a Rs 400-crore expansion.

The company is working out the fund raising plans.Mr Anil Madhok, Managing Director of the hotel group, said, “A clear picture is likely to emerge in the next six months. We have kept all our options open which could be a mix of private equity investment, internal accruals and debt.”

He said it would be early to say how much would be raised as the company is in the process of reviewing its needs and mode of investment.

Owned properties:

Two years ago, Sarovar received $8.5 million from the US-based Bessemer Venture Partners and New Vernon Private Equities.

The Rs 400-crore would be invested over a period of three years in 33 properties across India, which would be a mix of management contracts and owned properties. Around 75 per cent of the amount would go towards owned properties under its budget segment brand Hometel.

Elaborating on the reason for the same, Mr Madhok said that the company sees a huge opportunity in this category, especially when it comes to entering small towns and cities.

“There is support for it in terms of business and budget hotels are a good proposition when it comes to investments and returns. Also land is available at cheaper rates,” he said.

Apart from Hometel, the hotel management company, is eyeing acquisitions too, in all categories of hotels that it operates in. Its portfolio consists of brands such as Premier, Portico, Hometel, Park Plaza and Park Inn, encompassing three, four and five-star categories.

He added that the company would acquire properties in Kerala and in the National Capital Region where it would benefit from the Government’s concession of five year tax holiday on two, three and four star categories.