Suba Group signs master franchise deal with NYSE-listed Hotels

Suba Group to oversee 58 existing and upcoming Choice properties in India; move follows closure by American hospitality chain of its Indian arm

Choice Hotels Asia Pacific, an NYSE-listed hospitality firm, has signed a 15-year master franchise agreement with Suba Group of Hotels in India. Under the arrangement, which came into effect on July 1, the Suba Group of Hotels will assume responsibility as master franchise holder for the 58 Choice Hotels properties open and under development in India. The development comes close on the heels of the American hospitality chain shutting down its Indian subsidiary.

This is the second major step for the Mumbai-based Suba Group, which hopes to become the largest hotel chain in the country. Last June, Suba-owned Click Hotels bought a controlling stake in Gurgaon-based 1589 Hotels for an undisclosed amount. It increased the total number of hotels at the firm which till then was confined to Maharashtra and Gujarat, to 50 from the then 15 and added 1800 keys to 400 keys.

“With the latest move, we become a one-stop-shop for an asset owner with franchisees adding to the bouquet of revenue sharing models,” said Mansur Mehta, managing director, Suba Group, adding, “Our target is to grow at a fast pace, adding 400 rooms every year.”

On how Suba will manage the interplay of different brands within its fold, Mehta said inclusion of Choice brands will open up several options for Suba. For instance, in cities where international brands are in demand, Suba will get in with Choice. In smaller towns that do not have any such preference, Suba’s brands will fill in.

According to Mehta, India’s growth story in the hospitality sector has just begun and one has only scratched the surface. The pandemic has brought in a lot of changes and unlike the pre-Covid years, smaller towns and cities are on everyone’s radar as people are travelling a lot more within the country in order to explore their own land.  

The master franchise agreement with Choice Hotels is in line with Suba’s vision of becoming the largest hotel chain in India, said Mehta. This will take the total number of keys being managed by the Mumbai-based chain to 5,100 from the current 2,900, with a presence in close to 57 destinations across India. Suba will be able to address customers looking for budget as well as star properties to meet business and leisure requirements.”

JLL was an advisor for the deal. Jaideep Dang, managing director JLL Hotels and Hospitality Group South Asia, added that the “deal flow looks much healthier in comparison to the previous financial year.”

Other investment advisory firms too have their deal pipeline running full. If the growth momentum seen in the first two months of the current fiscal sustains over the next four quarters, the hospitality sector is likely to see an investment worth two billion dollars (a billion dollar each in debt and equity) over the next three years, as per the estimates of Noesis Capital & Advisors. He added that the deal flow looks much healthier in comparison to the previous financial year.