Blackstone is considering acquiring two 5-star hotels in Chennai, Bangalore

Global asset manager Blackstone is believed to be looking for acquisitions in the Indian hotel sector. Among the few hotels it has identified are the Chennai Hilton and an unfinished Marriott hotel near Bengaluru airport, sources said.

The cost of each acquisition is expected to be in the range of ₹300-400 crore.

The US firm is bullish on the hotel sector. In September, hotel firm Ventive Hospitality, jointly promoted by Blackstone and Panchshil Group, filed a draft initial public offering prospectus to raise up to Rs 2,000 crore through a fresh issue.

The company has 11 operating assets managed by renowned brands such as Marriott, Hilton, Minor and AtmSphere. The two targeted acquisitions would fit nicely into their portfolio, but the deals could take some time to complete, the sources said.

However, in response to an email, a spokesperson for the private equity firm said, “Blackstone is not in any discussions to acquire hotels in southern India.”

The 204-room Hilton Hotel Chennai, owned by the Empee group, fully managed by the Hilton group and located near the airport, was built in 2011. In fiscal years 2020, 21 and 2021, it had problems with cash flow and meeting its debt obligations. According to CARE Ratings, for FY22. It also entered into a one-time settlement agreement with lender Edelweiss Asset Reconstruction to pay ₹205 crore, but was only able to pay a portion. The company has been taken to insolvency court and several options are being considered, including debt settlement and recovery.

Resolving the case is likely to take some time, and sources said a sale to a major private equity firm could be the salvation.

Hilton did not respond to an email seeking clarification on the possible sale, and the Empee group could not be reached.

The upcoming 217-room Marriott hotel near Bengaluru airport is being built by the Lulu group’s unit, Twenty Fourteen Hotels India. The work has not yet started as some pending works are yet to be completed.

The hotel is believed to have been put up for sale for ₹400 crore. The Lulu Group has a 20-year lease with Marriott, and a new owner is unlikely to break that agreement.

Marriott and the Lulu group did not respond to emails sent seeking clarification.