The compnay not upbeat about investing its funds in India market
Luxury hotel chain Lebua has not been off to the best start in India.
Having exited its debut hotel in Delhi’s Dwarka area after the property could not match up to its brand standards, the company signed up three hotels in its India portfolio earlier this year, all in Rajasthan.
Also, faced with challenging market scenario due to falling occupancies and sluggish average room rates, the chain is planning to acquire private jets which can ferry high-end travellers from Bangkok to India to increase occupancy levels here.
“We did not want to compromise on the brand standards that Lebua holds. The owner was not willing to make the investments required in the Dwarka property. So it was best to move on,” said Deepak Ohri, chief executive officer, Lebua Hotels and Resorts.
Owned by Delhi-based real estate firm Tirupati Building and Offices, the 400-bed five star hotel had an investment of Rs 700 crore.
Lebua is not upbeat about investing its funds in the India market. The company has made investments of around $150 million in Myanmar, Vietnam and Cambodia put together, $350 million in Thailand and another $100 million in New Zealand. “We did think of investing in India, but the environment here is not very friendly,” Ohri said.
Commenting on the Indian hospitality sector, Ohri said, “the revenue per available room has declined by almost 19% in India. The growth here is very sluggish. But things should look up in a year with elections round the corner.”
Meanwhile, Lebua is in talks with developers and owners to open its hotels in Delhi, Mumbai, Bangalore and Goa in the next couple of years. The company is learnt to have turned down offers for management contracts by at least two hotel owners in Delhi so far.
On whether Lebua is interested in the Taj Mahal, Mansingh Road property in the capital, which is expected to be auctioned this year, Ohri said, “We are not interested in that property. I have a lot of respect for the Taj group and think they should retain the property.”
The hospitality company has signed up a joint venture with an European hotel chain, the name of which is not known, to bring its “second tier” brand to India is cities like Hrishikesh.
Lebua will also engage in a marketing alliance with the European company for its luxury brand. Currently, the company is managing three boutique properties in Udaipur and Jaipur. The tariff would range between $450 and $700 for a room per night.
The company currently has around 80 people on board and plans to hire another 200 for its existing properties. For overall expansion, the company would recruit over 3,000 employees in India.
“Getting trained manpower has become the biggest challenge. The payroll cost in India has also gone up by 8%,” Ohri said.
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