Samhi Hotels is a prominent branded hotel ownership and asset management platform in India, with the third largest inventory of operational keys (owned and leased) in India as of March, 2023. Within 12 years of starting business operations, they have built a portfolio of 3,839 keys across 25 operating hotels in 12 of India’s key urban consumption centers including Bengaluru, Hyderabad, NCR, Pune, Chennai and Ahmedabad. After the completion of the ACIC acquisition in August 2023, their portfolio has further increased to 4,801 keys across 31 operating hotels. These cities are expected to demonstrate strong growth in airline passenger traffic and premium office space absorption, which is expected to benefit the overall demand base for its hotels. Their dominant position among the Upper Mid-scale and Mid-scale brands in India also offers significant growth opportunities due to their relevant price positioning and limited dependence on international travelers.
As of March 2023, India has over 360,000 keys including branded hotels, independently run hotels and aggregators. Of this, the current branded inventory market size as of March 2023 stands at approximately 180,000.Over the last decade, the branded segment in India has recorded maximum growth in comparison to the other segments and accounts for 40% of the total inventory. Given a well-established supply base, low new supply across key markets and continued demand growth, further improvement in average room rates is expected in the hospitality industry in India
Strengths And Risks
+ Hotel Acquisition: : Company has demonstrated ability to acquire and turnaround dislocated hotels and renovate and rebrand them. With this asset ownership business model they have achieved scale and earnings growth by incurring lower capital expenditures.
+ Scale & Diversification: : They have selected target cities based on macro themes such as proximity to airports and premium office space growth to ensure long term and sustainable growth. Our hotels are strategically located in high-density micro-markets, with high barriers-to-entry due to land acquisition complexities, long development time frames, and fragmented ownership.
+ Past Track Record:: They augment scale and quality of portfolio with their track record to operate hotels efficiently. Their operating efficiency enables them to maximize the impact of favorable revenue growth on profitability and limit the impact of low revenue cycles.
+ Data Intelligence: : They have developed and implemented an active analytics system, SAMHIIntel, to manage, analyze and use operating data received from hotels. The analysis of such data helps them to continuously improve performance, identify opportunities for future growth and monitor risks.
- Seasonality: : Demand for hotel rooms, occupancy levels and room rates realized by owners increases and decreases through macroeconomic cycles. Changes in economic conditions and in the supply of hotel rooms can result in significant volatility in revenues of hotel properties.
- Stiff Competition: : The hospitality industry in India is intensely competitive and Samhi hotels compete with large multinational and Indian companies, in the regions in which we operate. This can impact pricing and overall business.
- FInancial Losses:: Even though the revenue has grown in the last three fiscals, Samhi has posted losses in recent past 3 fiscals.
- Government Regulations: : Their business is subject to significant governmental regulation, particularly in relation to safety, health, environment, real estate, excise and labor laws.
- Service Agreements: : They have entered into hotel operator services agreements with Marriott, Hyatt and IHG (and affiliates) to receive operating and marketing services for their hotels. If these agreements are terminated or not renewed, the business, may be adversely affected
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