landscape in India, says Navjit Ahluwalia, Senior Vice President, Hotel Development, Marriott International. Ahluwalia is responsible for the development of Marriott’s established and emerging brands in the Indian Sub-Continent. He believes that post-global financial crisis, young entrepreneurs have emerged to challenge some of India’s biggest and wealthiest companies and family investor groups, the people who were scalded by the financial meltdown. “These previously unknown investors are high worth individuals who have made their money in sectors like cement or IT and are now looking for a single hotel asset as an investment,” says Ahluwalia. Finding suitable land and unraveling
the country’s bureaucracy are two of the biggest challenges facing hotel developers, but the new investors are not shirking these challenges. “Within their (Indian) states these
hotels by 2015. “Secondary and tertiary cities that have had nothing but unbranded, poor quality hotels are seeing hotel developments going ahead with exceptional internal designs, architecture and service quality,” says Ahluwalia. In India Fairfield Inns will differ from the
US product by providing full F&B – “because you often can’t walk out of a hotel in India to eat”; multiple uses for public spaces (a meeting room by day and a bar at night); 20m2
rooms, smaller than the US prototype
plus lifted levels of service (“Indians have very high expectations of service, starting in their daily life when someone brings them a cup of tea in the morning,” Ahluwalia says.) Few hotels in India can survive without meeting spaces and Fairfield is looking at a160m2
meeting space in all hotels where
local companies can conduct interviews, hold training sessions etc. Rates at Fairfield Inns are expected to be in the region of
has signed a management agreement with Eros Resorts & Hotels to manage two new properties in New Delhi’s Mayur Vihar district. The latest signings will allow Hilton to more than triple its presence in India in the next two years – from four trading hotels to a total of 14. The Accor group is covering all bases. It will operate six brands throughout India by year’s end. Sofitel, Pullman and Formule1 brands will debut in India this year. Local hero Indian Hotels Ltd plans to
introduce a new hotel brand in the mid-scale segment. The company currently operates the Taj brand in the luxury five-star segment, the Vivanta brand in the four-star segment, Gateway Hotels in the three-star segment and Ginger in the budget space. “We are not in the mid-scale segment so that is one brand we will look at in the coming years,” comments Managing Director Raymond Bickson.
The mid-market hotel space in India offers a compelling investment proposition given favourable demand-supply dynamics and an attractive
build cost to operating returns equation. Anuj Gupta, Managing Partner and CEO India, Duet Group
people know how to handle the red tape, they know how to get things done, and they are coming to us with good locations for hotels,” says Ahluwalia. After a comprehensive study of the needs of local customers, Marriott is redesigning its Fairfield Inns brand especially for the Indian market, the first time it has done this in a foreign destination. In the past, international hotel groups tended, often unsuccessfully, to take a cookie cutter approach but quickly discovered a hotel design that works in Delaware may not work in New Delhi. International chains expanding in India
prefer not to own properties and limit themselves to management contracts, partnering with realty firms and wealthy individuals, but Marriott is forming a joint venture with New Delhi-based Samhi Hotels Pvt. Ltd., a hotel-investment fund, and intends to invest its own money in taking a 30% stake in Fairfield Inns in India. The target for the venture is around 15 mid-tier
US$70-US$90 per night. Other international chains are moving
into the mid-tier hotel space. IHG has signed a joint venture partnership with Duet India Hotels Group to develop 19 new Holiday Inn Express hotels across India. IHG is taking a 24% equity stake, and making a multi- year investment of US$30 million into the partnership. Says Anuj Gupta, Managing Partner and CEO India, Duet Group: “The mid-market hotel space in India offers a compelling investment proposition given favourable demand-supply dynamics and an attractive build cost to operating returns equation.” In 2007 IHG introduced a new strategy in
India, phasing out franchise agreements and reintroducing Holiday Inn with an on-the- ground management and development team after concerns that the hotel operating standards of local franchisees were damaging the brand. Not to be left behind, Hilton Worldwide
Finally, a Swedish hotel brand believes
that niche is the way to go and has set out to attract the Bollywood set. Svenska Hotels plans to develop 30- to 100-room, highly serviced hotels and has so far opened in Mumbai and Bangalore. Svenska is targeting “the top-end of the market with focus on celebrities from the fields of fashion, movies, television and senior executives of top MNCs and Indian corporates”. The investment flow isn’t all one way,
however. The Delhi-based Bird group made its first overseas acquisition by buying the Royal Park Hotel in Hyde Park, London, and plans to expand its hotel business in the UK and India. And last year Sahara India acquired London’s Grosvenor House from the Royal Bank of Scotland.
Ian Jarrett is Editor of Hotel Analyst Asia Pacific, the news analysis service for the hotel investment community. For more information please see
www.ha-asiapac.com
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