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| Hotels buck trend by investing more |
| Swaraj Baggonkar / Mumbai Jan 14, 2012, 00:33 IST |
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Notwithstanding a slowdown in the country’s economic activity, international and domestic hotel companies are going ahead with their planned expansion programme in India. About 15 companies — some new firms — plan to have about 600 new properties across 50 brands, ranging from budget brands to ultra luxurious hotels and resorts.
Some 50-60 per cent of these properties are under various stages of planning and development. All the announced properties will be coming up by the end of the decade, from metros to tourist hotspots.
Gaurav Bhushan, chief development and investment officer (Asia Pacific) of Accor Hotels, says there is no dearth of people looking to invest in this sector. “Many investors are too eager to enter the hospitality segment,” he notes.
Accor, with nine brands, is the largest hotel chain operator in the European region. The company has 60 confirmed properties in the pipeline for India across all its brands.
Several entities, which are venturing into this sector, are those who have had no experience in the hospitality sector before. While there are also real estate developers who have signed on for new properties. Companies such as Hilton, Dusit, Jumeirah, Intercontinental Hotels Group, Hyatt, Accor, Starwood, Marriott, Taj Hotels, EIH, ITC, Leela and Carlson Hotels, are forging partnerships for properties.
Hilton, a popular brand from the West, is setting up 50 hotels in India over the next four-five years. Marriott, on an average, would be opening one property every month for the next eight years. Says a hotel analyst: “The lure of expanding in India is huge, considering the potential this market has and despite all the difficulties in securing necessary clearances.’
According to estimates, Shanghai, the second biggest city in China, has more organised rooms to offer than the whole of Indian market, which is struggling at little over 100,000 rooms.
With an expected boom in tourist arrivals following continued investment in improving infrastructure, hotel companies are accelerating with their plans for India. However only those developers who are using cash to push their investment in the hospitality sector or those who have a strong brand name and credit history are preferred for partnerships, say some hoteliers.
“The cost of credit is really high at the moment with the RBI increasing rates several times in the recent past,” adds Bhushan. “Securing new credit is a challenge. This could put some brakes on new development projects.”
But that is not stopping even the relatively unknown brands to venture in the local market. For instance, Thailand-based Dusit International, a luxury 5-star hotel brand, has already signed contracts for five properties in India. The first hotel is due to come up in Delhi later this year.
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