Same security concerns exist in competing markets: Thorsten Kirschke

Interview with President, Asia-Pacific, Carlson Rezidor Hotel Group

Carlson Rezidor, one of the largest hotel companies in the world, is also one of the largest international chains in the segment in India. It has 75 operational and 50-odd hotels under construction, through brands such as Radisson and Park Plaza. , will look at expanding presence in spite of a low occupancy and over-supply in the market. Thorsten Kirschke, their Asia-Pacific president, tells Ajay Modi there is an excess supply and lower occupancy issue but the group will be expansing. Edited excerpts:

How is the Indian market different from others in the Asia-Pacific? What are the challenges?

I'm not sure if India is developing differently from other key Asian markets. We see there's an emerging middle class. Also, government efforts to improve infrastructure and promote tourism are starting to take off. That is a great opportunity, not only for us but for India as a country, to grow and increase its share in global tourism.

Where does India figure in Carlson’s global business?

It is a key strategic market for us, one of our top 10 global revenue contributors. For the past 15 years, we have enjoyed a leadership position due to an early-mover advantage. We want to build on the leadership position.

Is the low occupancy and high discounting in the segment a challenge?

I agree the occupancies could be better. But, we have to look at a market like India for the long term. You can’t enter a market of 1.2 billion and switch-flip overnight. It’s a very cyclical industry by nature. So, if at present we have markets with a softened demand-supply scenario, that is not going to discourage us from seeking long-term benefits.  For investors at large, the hotel sector has always offered an alternative investment. It’s a good hedge against volatilities in many (other) sectors. The sector has always performed in line with (growth in) GDP (gross domestic product) and we do not expect this to change.

How do you rate the government’s effort to boost tourism?

The government has started doing a number of things. These include aggressive building and modernisation of infrastructure, continued promotion of India abroad, coupled with flexible visa regulations. All of that will help the sector.   

Growth in foreign tourist arrivals has come down. Is safety a concern? Are there other challenges?

Safety and security is, unfortunately, becoming a growing global issue for all of us, in every market. Security concerns aren't specific to India; the same concern exists for other competing markets across the Asia-Pacific and elsewhere. I don’t think India is any more constrained by that than many other destinations on a global traveller’s map.

At the same time, if you travel today in secondary markets across (this) country, it is not free of obstacles. The road route is cumbersome and time-consuming. We need to do our bit with the government in promoting regional tourism.

With the low occupancy level and selective over-supply, will it make sense for you to look at expanding presence? What will be the focus?

Of course. We try to leverage the strong presence in over 14 state capitals, secondary and tertiary markets. We are doing it gradually. We have had a successful 2015, with 15 agreements coming to conclusion. We are expanding more in markets and destinations of religious significance, as well as resort hotels. We are encouraged about the next year.

What are your pain points in doing business in India?

The pain points are not more or less than anyone else has in aligning the interest between owners and operators, which is no easy task in any country. In India, with its own natural complexities and diversities, it is more pronounced. Both sides will see more efforts in overcoming these. It's not rocket science. We know what it takes to run a hotel through good times and not so good times. We are always in close dialogue with owners and partners and do not wait until things maybe not going so well. We assist them in a pro-active manner on revenue and costs, bringing them into our system.