Sources said AV Birla Retail and Accor are discussing a hospitality partnership under the latter’s Formule-1 brand, which operates in the economy segment.

It is believed that Accor and More have identified about 180 locations across the country where a budget hotel could tag along with the retail store over a period of time. The discussions have veered around the possibility of developing hotels with 50-100 keys.

AV Birla Retail, which has entered the second year of operations, is setting up supermarkets and hypermarkets with store size up to 10,000 sq ft and 75,000 sq ft respectively.

Incidentally, AV Birla is not the first domestic conglomerate that is seeking out an hospitality angle to its still evolving retail story. Reliance, which recently floated a separate JV with the US-based Vornado Realty Trust, appears to be looking at the possibility of tieups with hotel chains to take advantage of the excess floor space index (FSI) available in its proposed store rollout.

The expensive real estate along with the ramping down of the store size at several locations may have acted as a trigger for many retail chains to explore partnerships with the hotel industry, sectoral experts opined. In fact, Reliance is expected to park its retail real estate assets in the new JV with Vornado, in the process stripping a high cost base off the retail arm.

Meanwhile, there is no clarity on the deal structure that may emerge between AV Birla Retail and Accor, with one source suggesting that Accor may go beyond management contract route if the arrangement falls into place.

When contacted, an Accor official said: “We have had initial talks to understand each others needs, with no significant progress after that.” AV Birla spokesperson declined to comment.

It may be mentioned that there is no exclusivity to the current discussions between AV Birla Retail and Accor. In fact, Accor already has an agreement in place with Emaar-MGF to build Formula-1 hotels in India while AV Birla could be talking to other potential suitors for a hospitality partnership.

Sources said Tata Group’s budget hotel chain Ginger has also held exploratory talks with some of the retail chains, even though this could not be independently confirmed.

Sodexo did not respond to the specific queries raised by ET. It, however, added that it had a “cordial relationship” with each of its affiliated partners. Accor Services India said: “We have not heard from any individual merchants on this issue, hence, it is difficult to comment on their position or feeling.”

Many companies that do not have a canteen facility provide employees with meal vouchers, which can be redeemed at designated restaurants or food outlets. The eateries, accepting these coupons, are reimbursed by the meal pass services companies — Sodexo and Accor in this case — after deducting their commissions. Many companies pay a small component of employees’ salaries by way of meal vouchers — up to a maximum of Rs 24,000 per annum — as these are not taxable.

According to the AHAR president Narayana M Alva, both the companies are violating the previously agreed terms. “We have received complaints from our members that Sodexo and Accor have been overcharging commissions, which are way above the agreement, from restaurants,” he said. “They have started levying listing charges, courier charges, etc, and the total charges work out to around 6%. However, as per the agreement, the maximum charge should not exceed 1.5%,” he said, adding that the two firms have not yet responded to their written complaints. Mr Alva’s contention is that such high rates are further putting pressure on the margins of restaurants, which are already witnessing a drop in customers….