Four Seasons Hotels and Resort is setting up a 5 million sq. ft complex that will house a 300-room luxury hotel, residences and retail space in Noida on the outskirts of Delhi This will be one of the largest mixed-land use developments by Four Seasons modeled after similar properties in San Francisco, Moscow and Toronto, according to a report in Livemint. The project is in collaboration with the 3C Company - a real estate developer in the national capital region (NCR). It will be the new benchmark for luxury in the Indian hospitality market that will create healthy competition for major Indian hotel chains, according to the Indian partners. A new resort in Goa and a property in Mumbai have been also finalized. Both should start construction in the next few months. Besides this, the company plans to be in key cities such as Delhi and Bangalore.
Other international luxury hospitality brands such as W and St. Regis from Starwood Hotels and Resorts Worldwide Inc. are ready to make a big splash in the country although Starwood already operates Le Méridien, Sheraton, Four Points by Sheraton and Aloft brands in India. It has one St. Regis and four W hotels under development. India is Starwood’s fourth largest market and will soon become its third largest market after US and China.
Canada based Fairmont Hotels and Resorts is looking beyond the 255-room super luxury property it set up in Jaipur last year. It plans to open 12 hotels like the one in Jaipur, in the next five to 10 years. The project cost is estimated to be more than Rs.2 Billion. Fairmont is optimistic about the long-term growth story of India. It is deemed a high priority for international hospitality chains along with other developing countries in a stage of economic revival. The top-end property of Thailand-based Lebua Hotels and Resorts, is also expanding operations in the country.
There’s good reason why foreign brands are tapping the Indian luxury market. Indians, more than ever, are entering the ranks of the wealthy, developing a taste for luxury. India’s luxury hospitality sector is growing at a rapid pace, fuelled by hearty inflow of overseas tourists as well as increased tourist movement within the country. Kempinski, theEuropean luxury hospitality brand is now eyeing five luxury properties in India—one each in Udaipur, Mumbai, Hyderabad and a city in Kerala over the next few years. It recently opened a hotel in East Delhi.
Not all will find the going smooth as was seen during the last recession when the grandiose plans of several companies just collapsed. As the report points out, industry experts say that these companies may face roadblocks on account of slower short-term growth as well as competition from luxury chains based in the country - such as the Taj and Oberoi group of luxury hotels. Moreover, at present the premium segment has an oversupply and a sluggish demand. Any global chain entering India will find it difficult to settle down because of their limited flexibility to lower prices as they need to protect their brand image, according to a hospitality analyst. The general consensus is that if the luxury brands target only the high net worth individuals, the traffic won’t be high. They need corporates and leisure travellers who are now cutting down on travel.
The new entrants and the foreign chains expanding have a horizon of 0-15 years. “They sense increasing money with Indian consumers and in the entire system. Over the longer period of time, the market and the demand will pick up, which will then absorb the supply that is coming in,” says an expert.
The domestic luxury brands, which control more than 50% of the segment, are expanding their presence to safeguard their market share. Indian Hotels, the owners of Taj group, plans a total of 200 properties globally by 2018, the majority of them in the luxury segment. According to a spokesman of the group, 15% of their inventory pipeline over the next five years will be in the luxury segment.
ITC Hotels, which last year inaugurated the 600-room ITC Grand Chola luxury hotel built on more than 1.5 million sq. ft of land in Chennai involving an investment of Rs.1,200 crore (1.2 billion), plans to have a portfolio of 150 hotels in the years to come. It has three hotels under construction in the super premium luxury segment and another four are at the planning stage, the company said in a release.
However, representatives of foreign chains say Indian consumers have evolved and international hotel brands may have a better chance of success as the market has changed. “Indian luxury consumers are as good as the consumers in other parts of the world. They are educated, well-travelled and know the product. India is now used to a taste for luxury products like BMWs or Porsches,” said Vella Ramaswamy, general manager of the new Kempinski hotel in east Delhi.
Presence of the new hotels would be directly beneficial for the increase in wine consumption. The new outlets will bring in and encourage news clients to drink wine.
Resource: Live Mint