Mumbai-based Click Hotels, a part of Suba Group of Hotels, has acquired a controlling stake in Gurgaon-based 1589 Hotels for an undisclosed amount, said people privy to the deal. Mansur Mehta, MD, Suba Group, confirmed the development. With this acquisition, the total number of hotels at the hospitality firm goes up to 50 from the present 15 and the number of rooms goes up to 1800 from the current 400.
The transaction in the budget segment of the hotel comes at a time when quite a few hotels have shut down due to the Coronavirus (Covid-19) pandemic and many have been put up for sale. Close to 40 per cent of hotels and restaurants are estimated to have closed permanently, according to the Federation of Hotel & Restaurant Associations of India (FHRAI).
“We are in the business segment and don’t have a presence in the leisure markets. Going by the current trend, it seems, leisure segment will recover and grow much faster while business segment may take couple of more quarters to get back to normalcy. That is why we thought it makes sense to do this deal,” Mehta told Business Standard.
By 2023, Click Hotels envisions crossing 3,000 rooms and plans to have a pan-India presence. Mehta said he is on a look out for more acquisitions in the southern and western regions for the same. 1589 Hotel is a budget hotel that owns GenX, RNB, and RNB Select brands and has 1400 rooms with presence in majority of the leisure and wedding destinations in north India including Himachal, Rajasthan, and Uttar Pradesh.
“This gives us a very big jump in our portfolio,” said Mehta. As of now, Click, also a budget brand is largely confined to Maharashtra and Gujarat. The current deal gives it a foothold in Northern India where 1589 Hotel has a strong presence, he said. Noesis Capital Advisors acted as an exclusive transaction advisor for the deal. “The opportunity to acquire 1589 Hotels attracted the Suba group of Hotels due to their presence in the leisure destination,” said Nandivardhan Jain, CEO, Noesis. The acquisition of this portfolio enables Click Hotels by Suba to fast track its growth across South Asia, he said.
Following this transaction, Click Hotels will transition to an asset-light business model, said Mehta. Of the 15 properties owned by Suba, eight are owned by the company, while the remaining is on lease.