The Lalit plans to go asset light; IPO on the cards

With 13 properties on board, the company is now keen to take its hospitality school to next level

At a time when most of the hotel companies are opting for an asset light model to reduce fixed costs, The Lalit Suri Hospitality Group has so long opted for an asset-heavy model. However, in league with its peers, it now sees the management contract model to drive its future business.

With 13 properties on board, the company is now keen to take its hospitality school — The Lalit Suri Hospitality School — in Faridabad, Haryana, to the next level to train personnel who can take the management contract agenda forward.

“We always wanted to have our own hospitality school where we wanted to get enough talent to be able to do management contracts. Once it is up and running in the next two years, we are very much open to doing management contracts and may be expanded via this mode and become asset-light”, Keshav Suri, executive director at The Lalit Suri Hospitality Group told Business Standard.

Started in 2013, the school has been setup by The Lalit Suri Educational & Charitable Trust under private-public partnership mode as per Lease Agreement with Haryana government’s department of Tourism. It currently has 200 students.

Asked why the company — which owns The LaLiT brand — is keen on owning the assets it operates, Suri said, “We really believe in the land value and asset value of what is priceless for us. It is something which I have learnt from my parents who wanted to manage what is owned”.

Post the opening of its hotel in London, the company may consider its foray into Paris and New York, which Suri terms, will complete the Golden Triangle.

On the other hand, it is about to exit its Dubai venture, which it planned back in 2007, as it considers to market to be overcrowded.

However, the company, which is under pressure to maintain and repair its owned 13 hotels, is contemplating an Initial Public Offering (IPO) in the market.

“We are trying to see the sustainability of the market and it will happen. There is no urgent need to raise funds”, he said.

Suri, the youngest in the company’s Board, who started his career with renovation of the 200-year old heritage property — The Great Eastern — in Kolkata, opined that the forthcoming Goods and Services Tax (GST) will be beneficial to the hospitality sector as it will not only solve “a lot of service issues” but will also help contain the brain-drain from India to Thailand and Dubai.

Involved in the company’s management to develop growth and expansion strategies, Suri is of the view that the average room rent in the industry has dropped in the last two years which needs to be addressed. He is in favour of forming a hotelier’s consortium which can agree unanimously on room rents for particular locations or zones in the cities.

“It is like they do in London where they agree that in certain parts of the city, the room rent won’t go below a certain price”, he opined.