DIH holds 76% stake in the JV, while IHG owns 24% equity stake
Foraying in India, Holiday Inn Express on Tuesday launched its first property in the country and the only second in South East Asia at Ahmedabad. A joint venture (JV) partnership between Duet India Hotels (DIH) and InterContinental Hotels Group (IHG) called Duet Smart Hotels India is planning to develop another 18 properties in the country under the same brand.
DIH holds 76% stake in the JV, while IHG owns 24% equity stake. The 173-room property in the central business district of Ahmedabad has been developed keeping in mind the growing demand for mid-market hotel rooms amongst business travellers. Two hotels in Chennai, one in Hyderabad and two in Navi Mumbai are also under development. Duet India hotels plans to develop 4000 hotel rooms in India over the next 3-5 years.
After Ahmedabad, the JV is also eyeing other cities in Gujarat wherein Vadodara is top on the list.
"By 2020, India would need around 360,000 hotel rooms and with a current inventory of 163,000 hotel rooms, there is a gap of around 180,000 rooms that offers huge business opportunity for mid-market hotels. Also, the business traveller segment has been clocking a compounded annual growth rate (CAGR) of around 13%, which is the segment we are eyeing to cater", said Naveen Jain, president, Duet India Hotels.
He added, "We are also looking at coming up with a property in Vadodara, but nothing is finalised yet."
While the Ahmedabad property has come up for $17 million (Rs 94 crore roughly), Jain refused to give out the net investment outlay for the upcoming 18 Holiday Inn Express hotels. He added that the company expects that Ahmedabad property to start with 45-50% occupancy and eventually stabilise at 75-80% occupancy. "Hotel occupancy rates have improved by around 10% this year over last year", Jain said without divulging further details on the current hotel occupancy rate in the city. Business travellers from automobile, chemical and pharmaceutical companies comprise the bulk of hotel occupants in the city, he added.
The hotel has also outsourced services apart from what they consider critical services like direct interaction with customers to shared services firms. "This has helped us bring down our operational costs by around 30-35%. However, this is a model that we follow only for Holiday Inn Express and not for our other brands" said Douglas Martell, vice president, operations, South West Asia, IHG.
IHG's brands include some of the most popular hotels in the world: Holiday Inn, Hotels & Resorts, Holiday Inn Express Hotels, InterContinental Hotels & Resorts, Crowne Plaza Hotels & Resorts, Hotel Indigo Hotels, Staybridge Suites Hotels and Candlewood Suites Hotels.
IHG is also all set to launch the 270-room Crowne Plaza Hotel in the coming months in the western part of the city.
There are around 2,170 Holiday Inn Express hotels around the globe, and around 37 Holiday Inn Express hotels across Asia Pacific.
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