With at least 12 mega-projects, Hilton eyes the big box in India

After two failed partnerships, the 102-year-old international hospitality chain hopes to expand its presence in the country

Hilton Worldwide Hot­els, the storied international hospitality chain that was founded over a century ago, is on the lookout to set up a “big-box” hotel to augment and bolster its presence here, its leadership in India said.
 
Navjit Ahluwalia, who is country head of Hilton India, runs 21 hotels with around 3,500 keys, and has hotel brands such as the Hilton, Hilton Garden Inn, Doubletree and Conrad, admits that the Hilton journey in India had been slow but it is on track to now focus on setting up a flagship hotel either in Mumbai or in New Delhi. And that they are scouting for the right partners.
 
A big-box hotel can be loosely defined as a large complex with several hundred rooms, banquet halls, conference rooms and multiple service offerings that can include servi­ce apartments, shopping arcad­es and more. They are also more complex projects to fin­a­n­ce, execute and develop as opp­osed to smaller boutique assets.
 
Hilton had announced a joint venture partnership in 2006 with realty player DLF in a bid to expand the company’s footprint in India but that never panned out.
 
Earlier still, the company attempted another tie-up with luxury player Oberoi Hotels between 2004 and 2007, which was a brand and marketing alliance between the Hilton and the Oberoi’s Trident hotels, but that also came to an end because of differences between the two chains.
 
In the meantime, other foreign chains set up big-box properties that have cemented their reputations and established presence in the local markets. Examples are Accor’s Sofitel at the Bandra Kurla Complex in Mumbai, the JW Marriott in Juhu and, to an extent, even the Leela Hotel in Chanakyapuri, Delhi, despite its cost overruns.

“If you look at the MGM Grand in Las Vegas, it has thousands of rooms and the point is, how much is the demand in that market to drive that sort of capacity,” said Patu Keswani, founder of Lemon Tree Hotels. “India only has two deep markets — Delhi NCR (National Capital Region) and Mumbai — which will have the capacity to absorb demand, and the high cost of land makes barriers high as well.” Keswani is building a 670-key, million-square foot, Rs 1,000-crore hotel close to the airport in Mumbai and is hopeful of getting it up and ready in around two years.
 
Ahluwalia said despite the absence of such large flagship hotels he sees glimpses of success in key locations such as the Hilton Shillim in Lonavala, which has been running high on occupancy and charging rates as high as Rs 20,000 even during the downturn over the last couple years.
 
“We missed out on dramatic growth because of failed partnerships but are looking to get past that now given that India will be the third largest market for hospitality in the world,” he said, adding that they have at least 12 hotel projects in the pipeline. Other large markets include the US and China.
 
Currently, he pointed out, there is “extreme pressure” on the industry with occupancies across the board having crashed from around 80 per cent to bet­ween 30 and 40 per cent. “Ob­viously we are turning to focus on how to regenerate business, and one initiative has been the Hilton Honours points prog­ra­mme, which is a loyalty scheme that earlier was only for lodging but now also includes F&B.”
 
Key challenges for the Hilton Group in India include bringing back occupancies to earlier levels, increasing their share of inbound foreign business travel guests, creating an F&B culture and footprint, and pushing rates back to pre-pandemic levels, something which most hotels are grappling with, said analysts who track the sector but dec­lined to be named.
 
The broader question that remains is this: Do hotel chains really need big-box hotels and is the mythology of the flagship or the hotel with character just that or does it just need a prime property to project its values? Ahluwalia said Hilton’s international brands such as Curio and Tapestry do have a personality and every chain needs a brand recognition icon.
 
Industry-wise, the landscape is different now. Big-box hotels were largely developed by real estate developers as they were making money on residential sales and using the profits to build hotels that are really commercial properties and very cash intensive, so they needed those profits to do so. “Now this industry will go through some consolidation because real estate developers are also seeing consolidation. The sector has seen a triple whammy with rentals, residential sales and hotels all slowing down but big business hotels will return and the big-box hotel will be here in the long term,” Anuj Puri, chairman and founder, Anarock Pro­perty Consultants predicted.
 
The bottom-line is that all it takes is one big-ticket hotel to change the perception of a ch­a­in and put it back on the map, Ahluwalia said, adding, “We remain committed to India.”