2009 was a bumpy, roller coaster ride for the industry as a collective whole. Projects were scaled back, occupancies and ARR’s took a beating. However, paradoxically, the year also saw quite a few international players show confidence in the Indian hospitality sector, by announcing their forthcoming investments.
2010 promises to be a year of optimism and realism and, with the Commonwealth Games looming on the horizon, some new hotel openings says Punam Mohandas.
Although the recession isn’t over yet, its impact in this year will be considerably minimised, thanks to the foresight and business acumen industry leaders will show. Punam Mohandas speaks to a few leading players, for their views on what lies ahead.
Staying on top of trends
In spite of the economic slowdown, Starwood undoubtedly made great strides in 2009 in making its presence felt across India; as of now there are 23 properties spread across five brands in the country. According to Nikhil Manchharam, vice president, acquisitions and development, Starwood Asia Pacific Hotels and Resorts: “The partnerships we select is one of the most important parts of the intelligence that we do, because when partners respect the brand, the growth potential is relatively high.”
A gung-ho Manchharam said his vision for the group in 2010 is to focus on customers and associates, and continue to grow the brands.
“The Indian hotel industry has some unique attributes that will allow it to make the most of the new year such as a growing demand base and affluence in the marketplace, and an under-supplied hotel market. Challenges will include finding and growing talent, and dealing with the competition,” added Manchharam.
He further said that the Indian hotel industry will keep pace with its Asian counterparts, and find that occupancy is likely to improve, with pressure on rates continuing.
“In my opinion, hospitality trends for 2010 will include continuous innovation in a highly competitive environment, branded opportunities being offered for urban and leisure living, and staying on top of trends by focussing on guest experiences and offering memorable experiences,” concluded Manchharam.
An optimistic outlook
Carlson Hotels Worldwide swept a hat trick at the Hospitality India Awards, being recognised as the ‘Fastest Growing Chain in South Asia’, while its Country Inns & Suites By Carlson brand was awarded ‘Best Mid-market Hotel Brand in India’ and Radisson Hotel Noida earned the ‘Best Business Hotel in the National Capital Region’ title.
The group has four out of its five brands present in India; Gaurav Kant , director of Sales, India, Carlson Hotels Worldwide, said: “We have the vision of being the most admired hotel company in the region.”
Kant sees the outlook for 2010 as optimistic. “A lot of domestic and international players have announced a number of hotel projects scheduled for opening in both Tier I and Tier II cities.
Travel in the corporate market has started to open up as has the inbound leisure business; the nature of the latter however still remains uncertain with the booking windows shortening.
Overall, presuming and hoping that there are no major incidents deterring travel and the forthcoming Commonwealth Games in the latter part of the year, 2010 augurs a recovery period for the Indian tourism industry as a whole,” he said.
Kant said that while India beats all the other countries in terms of the richness of its diversity, infrastructure has been a bane for the Indian tourism industry for a long time.
“While other Asian economies such as Singapore, Malaysia, and Thailand, boast of top class infrastructure suitable for high-end tourism experiences, we in India still lag behind in the same. Also, the recent bout of recession has been a blessing in disguise for the country in terms of forcing a rationalisation of rates, which was another reason for potential tourists fleeing to neighbouring countries including China,” he said.
Kant further said that 2010 will bring forth challenges such as lack of skilled manpower, and shortage of rooms. However, resilience, consistent efforts, and the Indian economy registering a positive growth while all the other countries were either stagnant or entering into a negative growth phase, will allow the industry to make the most of the new year, he added.
Rising to the occasion
India Tourism Development Corporation (ITDC) is out of its disinvestment phase, and on an aggressive roll to add to its hotel kitty. In the latter half of 2009, the company announced its ‘Ashok Alliance’ scheme, through which it will make private hotel companies and real estate players its franchisee partners under three-year contracts.
ITDC also launched the Ashok Inlead School of Hospitality (AISH) in alliance with the Indian Institute of Learning and Advanced Development (INLEAD). Kuldip Verma, senior vice president HRD, ITDC, said: “Hospitality is like courtesy, it never goes out of fashion.
Recession is gradually fading away and is sure to revive tourism for long haul destinations like India, especially with the Commonwealth Games 2010 (CWG) scheduled to be held in New Delhi.
Although the hospitality industry suffered heavily because of a chain of unforeseen events in the past three years, however, due to the resilience of the Indian economy, the impact of the global recession was greater on our Asian counterparts.”
Asked as to what he thinks challenges for 2010 will be, Verma said firstly that, in his opinion, the Indian industry shall perform exceedingly well.
However, in terms of challenges: “First and foremost is the completion of the hotels which are under construction especially for the CWG, as also the DDA flats, as multiple agencies are involved in the execution of these projects. The other challenge is availability of trained executive strength and manpower,” he said.
Nonetheless, Verma added, the Indian industry has time and again risen to the occasion and this year will be no different. He said his vision is that he would like to see the industry reclaim its position as ‘India’s Host to the World’.
“As far as we are concerned, ITDC has a major role to play in the successful hosting of the CWG. We are also adding another 20-25 Ashok Alliance Hotels in addition to the eight already signed,” he concluded.
Growing occupancies in 2010
Marriott is on a fast-track roll not only in the Middle East but also in India – the country will see a confirmed pipeline of 5,602 rooms in 23 hotels till 2013. December 2009 saw three Courtyard by Marriott properties opening, in Hyderabad, Gurgaon, and Ahmedabad respectively.
Rajeev Menon, area vice president, India, Malaysia, Maldives & Pakistan, Marriott International, said: “We expect to triple the size of our portfolio in the next three years, with over 30 operating hotels across India. Courtyard by Marriott is our fastest growing brand followed by JW Marriott.
In 2010 we will open seven hotels across the country. My vision is to deliver this phenomenal growth through consistent brand positioning of our new hotels, while ensuring that we keep our lead on market share and service excellence in our operating hotels.”
Menon said that the group’s focus would be more on growing occupancies, rather than rate. As for trends in 2010, he foresees a bounce-back in revenue generation, with F&B remaining an important element for the success of every hotel.
“I think the year’s strong focus though – which will continue through to next year – will be the domestic consumer. Also, when I talk about the marginal bounce-back, it would be relatively healthy as compared to our Asian counterparts, with their different demand-supply and political situations. It’s difficult to compare on a broad scale, but India overall is a decades-long growth story,” he said.
The industry’s inherent strength, he further stated, is the relatively smaller room supply as as compared to other major destinations around the world, which allows hotels to drive room rates especially when demand bounces back.
The primary challenge Menon foresees for 2010 is infrastructure.
“By that, I mean shortage of power, poor roads, or airport conditions. It’s a big issue across the country that hampers GDP growth, affects productivity, and, in turn, dramatically increases costs. Other areas of concern are the number of licenses, and the tax regime across the country. These are the broader challenges that the industry will continue to face for the next couple of years,” he concluded.
Inspiring confidence
The Trident brand went through a rebranding exercise last year, following the end of its deal with the Hilton chain. It is now on a fast track, having announced new Trident projects in Hyderabad, Bangalore, Dehradun, and Chandigarh respectively, scheduled to open by 2013.
However, it’s the Trident Bandra Kurla, that’s the centre of everyone’s attention currently; the hotel, which was formally inaugurated on the 20th December, is said to be extremely contemporary, equipped with the latest technology. According to Rattan Keswani, president, Trident Hotels, the Indian hospitality industry as a whole offers good hotels and service.
It inspires business confidence in terms of investment, and resilience both among the local as well as international markets.
Asked as to what he thinks trends for the year will be Keswani said: “The industry will start improving in the third quarter of 2010, with the domestic market including both leisure and corporate sectors, also showing an improvement. In Asia overall, we should do better than all others, except China.”
Keswani said that the year will see planning for the long-term, with value propositions and dependable service being offered, rather than hotels getting into price wars, as has been the wont. “My vision is to consistently deliver high quality and personalised, warm service, it always brings dividends in the long-term,” he said.
