Hospitality properties going into huge stress and even shutting down: Jaideep Dang

Jaideep Dang, Managing Director, hotels and hospitality group, south Asia, JLL in an interview said, “We are spending most of our time in refinancing or trying to get financing for properties and mergers and acquisitions. How many transactions have really happened since March of 2020 till now? Nothing that you know, only an Aloft got sold in Ahmedabad in December, which was bought by an HNI within Gujarat. That’s the only deal that you hear. Apart from that, there is no land or no hotel asset, converted or sold—which tells you that there continues to be a gap in the bid and the ask and we are still trying to get our head around the valuations because the gap is still wide.”

Anybody who purchased a hotel today knew that if the business didn’t get back on its feet in the next two years, there would be a carrying cost. Which meant it needed to be built into the buying price. Whereas the seller was still concerned that they had the debt, the best land parcel available—hotels were generally premier real estate in any town in any segment, which meant commercial pricing of the real estate was expensive and also needed to be built into the price from a seller’s perspective, Dang said about the challenges of coming to a price which both parties found acceptable.

This gap between asking price and what the buyer thinks is the actual value of the asset is one which exists in most emerging markets and Dang felt India continued to be one. In more mature markets there are more mature funds, players, buyers and sellers—there is less of an emotional connection.

“India is still a differently held market, you still have whimsical buyers and sellers, you still have a lot of high net worth individuals for whom hoteliering is not the core business. On the other hand, there are people who have other businesses which are also impacted equally and are under a lot of pressure and want to sell,” he said.

“The way we see it—whilst there is pain, there are debt pressures. So, there will be opportunities on the trading side because cash flows are not returning anytime soon,” he added.