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Published & Updated as on -
2010-03-23
Indian
hospitality industry has become an attractive investment destination for global
hospitality companies. Many global hotel chains
plan to enter India and some that are already present in the country are keen
on expansion. The companies are betting big on shortage of hotel rooms in the
country.
US-based MGM Mirage Hospitality, Amari from
Thailand, Fairmont Raffles Hotels, Golden Tulip Hotels, Movenpick Hotels and
Resorts, Corinthia Hotels group from Europe are among the chains that are set
to come to India.
According to industry estimates, there are
around 40 international hotels, which are expected to be operational in the
country in the next 3 years. These global chains are now entering the full
range—upper scale, mid-scale, economy and budget.“India is more profitable for
global hospitality firms then the international market. There is huge
demand-supply gap which offers huge opportunities for international firms,”
said Kaushik Vardharajan of HVS Hospitality Services.
According
to HVS, an EBIDTA margin of 40-50 % in India as compared to 20% back at home is
attracting global hospitality firm to set up presence in the indian
subcontinent.
Thailand-based Amari Hotels has entered into a
joint venture with Mandeep S Lamba, to launch Amari India. It will foray into
India with the signing of its first property in Delhi by April 2010, which will
be operational in 2011. Amari is scouting for expansion opportunities in the
Indian metro and tier-II cities and plans to operate seven hotels and resorts
within the next 5-7 years. For the same, locations and developers have been
identified in Delhi, Mumbai and Goa.
Focussed on Indian
market, it is working to develop a new room product for tier-II cities in
India. “India’s business buoyancy and burgeoning hospitality industry provides
us with a compelling business rationale to strategically move ahead in this
market,” said Mr Peter Henley, Amari’s Chief Executive Officer commented.
Similarly,
MGM Mirage Hospitality is looking at signing management contracts with real
estate developers as joint venture initiative with local companies to set up
hotel properties in the country. “We believe very strongly that India
represents an enormous opportunity for our business model,” said Rich Kapoor VP
Development MGM Mirage Hospitality.
MGM is also looking to
roll out multiple hotels in NCR,Mumbai, Hyderabad, Bangalore, Chennai, Kolkata,
Kerala, Goa and Rajasthan. The firm plans to bring in Bellagio, MGM Grand and
Skylofts brands out of its global portfolio.
According to
data from HVS, international and domestic hotel chains had announced in August
that they would build at least 94,00 rooms in India, while the actual
construction is underway for 3,840 rooms.
“During the boom
years, leading real estate firms had announced hotel projects but dropped them
as realty prices crashed and the cost of borrowings increased steeply last
year,” added Vardharajan.
Given that the gestation period
varies from three - five years, Fairmont Raffles Hotels International is in
advanced discussions for managed properties in Bangalore, Delhi, Gurgaon,
Mumbai, Hyderabad, Chennai and Goa. It is planning to add at least a dozen
hotels across in India between all three brands — Raffles, Fairmont and
Swissôtel . “We are looking at all the tier -I and II cities for expansion,”
said Feisal Jaffer, executive director—strategy and development , Fairmont
Raffles Hotels International.
Fairmont Raffles has already
signed up three properties in Kolkata, Jaipur and Hyderabad with the Swissôtel
Kolkata opening next month. “The growth prospects in India are quite strong and
the market is amongst the top two priorities for the company,” he explained.
However,
falling rates of up to 18% over last year has become a cause of concern for
these hospitality chains. In 2008-09, the average room rate was Rs 7,800 which
has now come down to Rs 6,396 per night. “The room rates in new hotels are
dropping. It is not a good sign but we expect this to stabilise going ahead,”
said Pankaj Kodesia, senior VP (business development) South Asia, Golden Tulip
Hotels.
Golden Tulip plans to add 10 properties totalling
800 keys across tier-II towns by the end of next financial year. “We are
looking for opportunities in the resort segment and plan to bring in some more
brands in India,” added Kodesia.
Existing hotels such as
Accor and Four Seasons are also ramping up presence in the Indian subcontinent.
Luxury
hotel brand, Four Seasons, is in various stages of discussions with developers
for rolling properties in Bangalore, Hyderabad , Delhi, Goa and Pune. “There is
enough room for several players to enter the market. India will became a major
market for our company,” said Sanjiv Shukla Director Marketing Four Seasons.
The firm opened first property in Mumbai in 2009.
Accor,
which has five hotels, is expanding its network to 50 with 10,000 rooms in 15
cities by 2012.
Source: The Economic Times 22/3/10
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