Power List 2017, Vijay Thacker, Director, Horwath India
Vijay Thacker’s pet peeve is a badly prepared cup of tea. Another thing that he is quite uncomfortable with is owners who are impractical about their business expectations. In fact, if there is piece of advice that he could give them it would be, to be bold, but realistic. “Create a longterm product and insist on long-term operating value from your selected operator. Don’t shun the first class and premium hotel sector, only because that has lost the flavour recently,” he recommended.
For operators, his advice is that they address the people issue urgently, while demanding more from their sales force. While rate discounting to gain business is an easy attitude, it is not a value-creating one. He also advocated that the industry get together meaningfully to get more recognition and respect from the government; in his opinion the sector’s potential is grossly under-recognised.
Thacker’s opinion is sought and taken earnestly in the hospitality because in a career spanning 36 years, of which over three decades was spent in the hotel sector, he has done professional work in over 120 markets (100+ for the hotel sector) and with international clients and projects from 34 countries.
In the last 18 months, Crowe Horwath worked and continued to work on supporting some potential asset transactions, including a very interesting assignment to support a listing by a hotel company. “Valuation and financing issues are the key challenges in closing transactions, with major expectation gaps with valuation aggressiveness (to support respective positions) on both sides,” he stated.
2017 saw a key acquisition when Paris-based Louvre Hotel Group acquired a majority stake in Sarovar Hotels and Resorts. Does this mean that more M&As are likely to continue in the country?
According to Thacker, acquisitions will happen – strategic and otherwise. “Asset transactions will be pushed by more aggressive lender positions, besides the occasional need for owners to exit a non-core area. What is interesting is that occupancies are moving up pointing to potentially better cash flows – however, the cash flow hole is often so large that the improved operation is inadequate to fill the gap,” he opined.
According to him, though, strategic acquisitions will be fewer and likely outside the main-tier chains; on the other hand, some portfolio exits are more likely over the next several months. Acquisitions should also be looked at in terms of acquiring master licenses as happened in the change for Best Western Hotels.
Talking about opportunities that exist in the hospitality industry, especially from the owner-operator perspective, Thacker said that the sector continues to be fundamentally under-supplied in relation to the potential. At present, the potential seems to be more theoretical than real but let a few quarters of healthy occupancy pass and the potential will seem more real. In any case, the leisure segment has clear potential even at this point.
“Operators will have opportunities as new development occurs, and there is a narrower field of suitable operators (not brands). The growth of secondary and tertiary markets will create opportunities for those flexible enough to harness these,” he pointed out.
By Vinita Bhatia