A little over a week after India’s Sahara Pariwar announced purchase of London’s legendary Grosvenor House hotel, there are indications the group is planing to play a bigger role in day-to-day operations of the property.
The Lucknow-based group paid £470-million (Rs 3,300 crore) for the hotel, which counts the royal family and numerous state heads as patrons.
On Wednesday, a source in the group’s interests in London said it would sink its teeth deeper into the day-to-day operations of Grosvenor House. A team from Sahara is soon expected to move to London to collaborate with the current management, led by JW Marriott, to ensure that decisions on important aspects such as finance, operations, human resources and strategy are taken jointly.
Even though Sahara owns Grosvenor House fully, the operations are with Maryland-based JW Marriott under a 50-year lease. Though the lease is in its eighth year, it is learnt that Sahara Pariwar may, if need be, exercise the right to terminate it, taking on itself the day-to-day operations.
Under the agreement, transferred from Royal Bank of Scotland (which sold the hotel to Sahara), JW Marriott has to share 80 per cent earnings before interest, depreciation, tax and amortisation with Sahara.
Sahara insiders say there is no immediate plan to change the arrangement but if there is a need, the company will be keen to change the contract, so that Marriott receives just 10 per cent fee for running the hotel. In such a case, Sahara can bear the cost of day-to-day operations, after taking on its rolls all 590 employees, they say.
Sahara also has big plans to expand the business. This includes opening a spa, an Indian restaurant, a casino, and even exhibiting the large library of Indian movies the group owns in India.
Without revealing the current revenues, Sahara said it hoped to take the top line to £35 million (Rs 245 crore) by adding new verticals.
The group believes 25,000 sq ft space is unused and can be developed to improve finances. The new owner is also taking a hard look at room rates, which it believes are lower than what other five-star hotels in the vicinity charge. The rates for the hotel’s 494 rooms, many of which overlook Hyde Park, are between £249 (Rs 17, 480) and £1,500 (Rs 1,05,300) a night, with summer occupancy touching a peak at 80 per cent. Source