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Delhi Wine Club

Posted: Saturday, 10 April 2010 13:50

Hotel Expansion Flavour of Season Again

After lying low for almost a year, the Indian hotel industry seems to be on the verge of massive expansion plans again, with existing and new entrants jostling to announce their dream schemes that may or may not come to fruition but seem to be a healthy PR exercise of brand building. 

Till the recession and terrorist attack hit Mumbai, the industry seemed to be thriving and the opening of '100 hotels in 3 years' due to the Commonwealth Games in 2010 was not uncommon, with a few new entrants, especially the property developers, repeatedly  announcing the same schemes frequently-perhaps to indicate to the industry that they were on the growth path. Then suddenly, they all disappeared overnight along with the FIs and there was gloom and quiet.

That has changed in the last couple of months with practically every hotel chain announcing its intentions to share the dividends of the growing economy and the resulting boom for the hotel industry. How much of the promised growth will actually be attained would be an interesting proposition for the industry experts to evaluate and report  but right now, the PR agencies do not have time to worry about execution-it is the announcement of grandiose plans that is of immediate concern, perhaps reflecting the strength and brand image of the companies.

The newest kid on the hotel block is the Swissôtel Kolkata - Neotia Vista which opened in Kolkata on Thursday. The first 5-Star Deluxe hotel in the city after around 8 years, it is 3 kms from the airport and will be operated by Swissôtel Hotels and Resorts, a subsidiary of Fairmont Raffles Hotels International Inc.

Another Swiss hospitality major Movenpick Hotels & Resorts has announced plans to open around a dozen premium hotels in India by 2015 and is also looking for domestic partners to launch its restaurant brand Marche. Like most international hotel chains, it shares its brands with property developers and operates hotels through management contracts. The company has signed an agreement with M S Ramiah Group to open its first five- star hotel in Bangalore later this year.

The company could also pick equity stake in some cases where the property developer is looking to build hotels at key locations. Out of the properties planned, it plans to operate resorts at Goa and Cochin and open 4-5 hotels by 2013 in other key cities.

Starwood Hotels & Resorts  

The hotel chain is accelerating pace to boost the number of hotels in India by 60 percent by 2013. It already has 26 properties having Starwood's brands, including Sheraton, Westin and St. Regis.

Starwood said Tuesday that the significant increase in India is mostly tied to the fact that the country does not have enough hotels. "Consider that India with a population of one billion people has just 100,000 hotel rooms, while New York City alone has roughly 80,000 hotel rooms," CEO Frits van Paasschen said in a statement.

Starwood has had a presence in India since 1973, when it opened a Sheraton in Mumbai. The company and its partners have three Aloft hotels scheduled to open in India this year.

Van Paasschen’s statement was echoed in a statement made by the tourism secretary Sujith Banerjee in Mumbai on Thursday that India needs 150,000 more hotel rooms in 3 years to cope up with the demand out of which two thirds will be in the budget category.

JW Marriott

The international luxury hotel chain with brands like the Ritz -Carlton, JW Marriott Hotels & Resorts, Marriott Hotels & Resorts, Renaissance Hotels & Resorts and Courtyard by Marriott has ambitious plans to expand during the next 3 years and will reportedly open 40 hotels by 2013.

With five JW Marriott hotels already planned by this year-end in Chennai, Bangalore, Chandigarh and two in Pune, the company is on the expansion trajectory with two properties with the Marriott Courtyard brand planned in Ahamedabad and Mumbai. Currently, six Courtyard properties are operational in India.

The company, however, has not disclosed the investment strategy for the project.

Currently, with 2,800 rooms, the company plans to add 10,000 rooms in the next three-years out of which 4,500 rooms will be ready by this year-end.

Four Seasons

The Four Seasons Resorts, already in Mumbai,  has announced plans to develop four new properties across India by 2015. The new hotels are likely to comprise two hotels in Bangalore and Gurgaon, and two resorts in Kerala and Jaipur. These hotels are expected to add 1,000 rooms in the market and target the Business and Leisure segments.

The developments are part of efforts by Four Seasons to leverage on the resurgent hospitality industry in India.

East India Hotels

With buoyancy back in the economy, hospitality major East India Hotels is getting aggressive with its expansion plans for both Trident and Oberoi brands.It plans to have 25-30 Oberoi hotels by 2015 with 6,000 hotel rooms.

It will re-start operations of its Mumbai property on April 24; it has been under renovation since the terrorist attacks in November 2008. Eventually it will roll out 5 international properties and 3 in India in the next three years.

Trident will open two new properties, one in Hyderabad and the other in Dehradun, with 445 rooms over the next few years. It also has ambitious plans to take the Trident brand into the global markets after two years.

The addition of new inventory of rooms is putting pressure on the room rates but occupancy levels are healthy. The room inventory has gone up by 19 per cent but the occupancy levels have dropped by 3-4 per cent only which shows that there is strength in the market with increasing demand, according to industry experts.

Zuri Hotels

Zuri Hotels & Resorts, the Bangalore-based hospitality chain, is embarking on an ambitious expansion plan with optimism returning to the hotel industry. The company is looking at a mix of greenfield hotels and management contracts to enhance its portfolio.

The company will invest over Rs 4 billion to set up hotels in India and South Africa. The promoters have started construction of a hotel project near the new airport at Bangalore, with the second project coming up at Nairobi.

DLF moving out of Aman Resorts

DLF, India’s largest real estate developer on the other hand, is attempting to get rid of Aman Resorts, the luxury hotel chain it had acquired in November 2007 for $400 million.

The company was hard hit by the downturn in the real estate market which started in the middle of 2008 and persisted well into 2009. It wants to exit non-core businesses and plans to bring down its overall debt to zero over a 3-year period. 

“DLF has decided to exit from the non-core businesses and focus on real estate development, including residential, commercial and retail. Since hotels are not a core business for DLF, it is looking at various options for Aman Resorts of which it holds 97% share,” says a senior executive of the company.

However, its JV with Hilton will continue if one were to believe the latter’s version as reported in DNA India. According to a senior source at Hilton Worldwide Management, the venture “is very much on” and they are “seriously exploring engagement to more hotels albeit at a slower pace than before". The venture’s first hotel is already operational in the National Capital Region near Delhi under the Hilton Garden Inn brand.


Singapore-based Rendezvous Hospitality Group, a subsidiary of The Straits Trading Co Ltd, has finalized plans for an India entry. The hotel company operates two brands — ‘Rendezvous Hotels & Resorts’ and ‘The Marque Collection of Hotels managed by Rendezvous’ — across 11 locations in Asia Pacific.

In India, it is understood to have already acquired two sites on lease in Bangalore and Hyderabad. The hotels will likely be launched under the Rendezvous Hotels & Resorts banner in about two years from now.

Hyatt Hotels

Hyatt Hotels plans to expand its India portfolio with the opening of three new properties this year and further expansion into 15 new Indian regions over the next five years. Openings this year will include the Hyatt Regency Pune, Hyatt Regency Chennai, and Grand Hyatt Goa.

Hyatt Hotels Corporation president and CEO Mark Hoplamazian said that around a quarter of Hyatt's global planned openings of more than 120 properties is earmarked for India.

He said: "We believe India represents one of the greatest hotel markets over the next decade - one that will play a key role in driving Hyatt's long-term growth. We're proud of the business relationships we've developed and look forward to leveraging our experiences to become the preferred brand for our associates, guests, and owners in this important region."

InterContinental Hotels Group (IHG) that currently has close to 60-65% of its business coming from the US and European markets, too believes that India and China are the future growth markets. The group has over 200 new properties under various stages of development with 41 planned for the Indian market for the next four years.

Other hotel groups are announcing the plans with a regular frequency with some hotel analysts already predicting a pressure on the long term tariffs-but that is assuming all the plans will see fruition

Good for Wine Industry

Despite the exorbitant margins of up to 600% on wines, a boom in the hotel industry would be welcomed by the wine industry as it is expected to increase the consumption-assuming the duty free-prerogatives are continued to be enjoyed by them. Though more of the imported wines are sold on-trade, the Indian wines would also benefit by the expansion. Of course, in the end, it would be the hotel occupancy rates and the increase in overall flow of traffic that would directly affect the wine sales.

But the wine industry is optimistic.




VP Rajesh Says:

great recap of the supply demand situation! keep it coming :) VP

Posted @ April 12, 2010 12:50


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