3rd party management realm

While announcing its flagship property in Mumbai’s prime location of Lower Parel, Premier Inn – also revealed its plan to branch out to third-party management contracts.

Traditionally operating as an asset-heavy hotel chain based in UK, Premier Inn has revealed that it will now branch out to signing third party management contracts while continuing to invest its own equity in key locations. Its first management contract was signed in Dubai in mid-2014 and its second property under such an agreement will be in India in Chennai.

This will be followed by one in Mumbai, which will be its second property under management contract in India. Announcing this news, Aly Shariff, Senior VP (Operations) for Asia at Premier Inn, said, “This will be a 350-room hotel in partnership with the Kamala Group. It will be located in Lower Parel and will be ready for operations by 2018. This will be our flagship property in India catering to the mid-scale market segment.” The property ‘Premier Inn Mumbai Worli’ will be a mixeduse project and will be the “second-largest Premier Inn outside of UK,” Shariff said. The hotel chain already has two other Premier Inns in Anjuna (Goa) and in Chennai under construction.

David Vely, Senior VP (Development), for Premier Inn Middle East, Africa and Asia, was also present for the announcement. Elaborating on the change of strategy that now includes taking up management contracts, he said, “Our development model is to be ‘ asset right’. We will continue investing in India but we are now also open to thirdparty management contracts. It means that we will make selective investment of our own capital to establish brand presence while accelerating expansion through management agreements – not in UK but in international markets.”

He added that expansion in India will now be mainly through management contracts but not limited to it. Explaining why Premier Inn prefers owning its properties, Vely said, “Most brands are not investors; they only manage properties, even in their own country. But we own and lease all our properties. We felt that it was the right way to start international development. When we enter a new market it makes sense to invest first, show our commitment to the market as well as our existing and potential partners. But most of all, owning the property gives us freedom to adjust to the dynamics of the market.”