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Mumbai. — Hotel conversions are gaining momentum as large hotel chains seek to avoid long gestation periods and construction delays associated with building a new hotel.

Nearly two years ago, Palladium, a five-star hotel at Mumbai’s retail and commercial hotspot Lower Parel, underwent a transformation, re-emerging as St Regis, a global hospitality brand owned by Starwood Hotels and Resorts Worldwide Inc., now part of Marriott Inc.

The ownership of the 390-room property remains with Pallazzio Hotels & Leisure Ltd, a unit of Phoenix Mills Ltd, but under Marriott management.

Such hotel deals — “conversions” in industry parlance — apart from acquisitions of near-complete hotel projects, are gaining momentum in India, as large hotel chains seek to avoid long gestation periods and construction delays associated with building a new hotel from scratch.

Hospitality companies like Louvre Hotels Group, Wyndham Hotels Group and Samhi Hotel Ltd are looking for opportunities at conversions apart from scouting to buy existing properties, said executives from these firms.

According to an April report by global property consultant JLL, around 12-15 such hotel transactions are in the works.

AccorHotels, which has so far built its hotels on its own, is planning to add two hotels this year through the conversion route, said Lokesh Sabharwala, vice-president (development and special projects, India and South Asia), at AccorHotels. However, the company will continue to pursue greenfield projects, he added.

This year, Vadodara’s Surya Palace will become Grand Mercure Surya Palace, and Goa’s Donna Sylvia Beach Resort will be Novotel Goa Donna Sylvia Resort. Hotel operators such as Marriott Inc and Inter-Continental Hotels Group (IHG) too, have gone for conversions in the recent past.

“Greenfield hotel development is slowing down and what we are likely to see is a lot of conversions – which means standalone hotels that are independent today but finding the competition tough and are now wanting to become part of the branded inventory,” said Mandeep Lamba, managing director (hotels and hospitality group), JLL India.

According to Pavethra Ponniah, vice-president at ratings firm Icra Ltd, conversion is an easy entry strategy for a new operator into any market, through an established location and product.

“Weak performance and markets often lead to a strain between the operator and the owner, triggering conversions,” she added.

Among prominent conversions of last year were Pune’s Oakwood Premier becoming Marriott Suites, IHG’s Crowne Plaza changing to Courtyard by Marriott, and Chennai’s Fortune Select Palms changing to Park Plaza.

For US-based Wyndham Hotels, which operates brands like Ramada and Howard Johnson’s, one out of every five hotels in India is a conversion.

In the next few years, the company, which operates 28 hotels in India through franchise model, expects as much as half of its hotels in India to be converted ones. — Livemint.