Heading overseas Leading Indian chains are on an aggressive expansion mode abroad, buying up – or developing – properties around the world. A report by Annamma Oommen.

he Indian hospitality industry range from entering overseas markets and existing expansion through internal has been on a roll for the last five through self-owned properties to buying accruals and bank loans,” says family patri- years, with revenues and profit- out existing hotels and taking equity stake arch and group chairman, C.P. Krishnan ability of top players witnessing in established chains to gaining manage- Nair. The Leela Group is currently identi- exponentialT growth. Much of the growth ment contracts for premium properties. fying greenfield sites in New York, Boston has come from their core business – the Take the Leela Group for instance. and other major US cities. domestic sector. The garment exporter-turned-hotel major “We are getting a lot of management But Indian hotel chains, especially has been making all-out efforts to grow contract proposals from hotel promoters leading players like Indian Hotels, East its operations abroad. With projected and investors abroad,” says Vivek Nair, India Hotels (EIH) and the Leela Group, are revenues of over US$120 million in the vice-chairman and managing director of leaving no stone unturned in their efforts current fiscal, the group has an invest- the group. It is keen on entering markets to expand their footprint. Flush with ment plan adding up to over US$500 in geographies such as West Asia, South- cash, the bigger hotel chains are striving million over the next two to three years. East Asia and China, in particular Dubai, to achieve global scale. Their strategies “We will finance the new projects Bahrain, Singapore, Sri Lanka, Thailand and

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China (Beijing and Shanghai). “There are important source markets for the group and we would like to have a presence in them,” adds Nair. Partnerships seem to be the way to go for the Indian group – its domestic manage- ment alliance with European hospitality major is a win-win situation for both. Even as Kempinski sets up local sales offices in India in an effort to tap outbound Indian travellers, the partners’ joint HR training programmes, along with special packages and loyalty schemes that are valid across both Leela and Kempinski properties in Europe ensure a mutually beneficial relationship. Another leading Indian hotel chain that has been in the news lately for its international forays is Indian Hotels of the Tata Group. The company has set aside more than US$360 million for expanding globally through the inorganic route over the next three years. It currently has over 70 hotels, including the Taj Mahal Palace

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& Tower in and St. James Court luxury segment. Our recent acquisitions Ambitious plans are also on track in London. International expansion is a key of The Pierre in New York, the Taj Boston for properties in Singapore, Hong Kong issue for Indian Hotels and it intends to in Boston and the Campton Place in San and Bali, although through management achieve its objective through a strategy Francisco make this very clear.” contracts. The company is developing of buying iconic standalone properties The Taj Boston, an 80-year-old classic luxury hotels in Cape Town and Johan- across the globe. Beaux Arts hotel facing the Boston public nesburg in South Africa, apart from a “The mature markets are extremely garden, was bought from Millennium high-end in Phuket, Thailand. “We important for us, as the UK and Europe Partners for US$170 million and renamed have also entered into management generate 25 per cent of our business, and Taj Boston, while The Pierre in New York contracts for a high-end resort on the the US about 15 per cent,” says Raymond is under an operate-and-manage lease Palm Island in Dubai and a golf resort Bickson, managing director, Indian Hotels. agreement. Other than the US, Indian in Doha, Qatar,” adds Bickson. All these “Our strategy in India is to consolidate and Hotels has also entered the South-East new hotels would start functioning over expand our presence through clear brand Asian market with an acquisition in the the next few years. differentiators in different segments, city of Ningbo (in the eastern mailand of Not to be left behind is EIH, the while in the international market we China) and by forging marketing alliances flagship company of , want to expand only in the high-end with hotels in Japan and Korea. which has plans to enter China. With over

GOING GLOBAL Indian hospitality majors are planning to acquire, manage, or develop properties all over the world. Destinations range from Dubai and Singapore nearer home to the UK, South Africa and the US. Here’s what the leading players are planning: GROUP GEOGRAPHIES Indian Hotels UK, USA, Japan, South Korea, China, Singapore, Hong Kong, Indonesia, Thailand, the UAE, Qatar East India Hotels China, Japan, the UAE, Morocco, Maldives, Cambodia The Leela Group Dubai, Bahrain, Singapore, Sri Lanka, Thailand, China Bharat Hotels Dubai Club Mahindra Austria and Europe, South Africa, the UAE Kamat Hotels South Africa, China, Mongolia, the UAE, Bahrain

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30 properties in India, Egypt, Mauritius, located close to the under-construction Indonesia and Saudi Arabia under owner- Most of the Burj Dubai. ship or management contracts, the EIH EIH is also exploring opportunities in strategy is slightly different from that of global markets are Siem Reap (Angkor Vat) in Cambodia and its competitors. the Maldives. It also plans to set up a “The US and Europe are developed being penetrated 100-room luxury hotel along with 40 villas, markets with very little growth, so we at Marrakesh in Morocco. don’t have any plans of expanding there,” through the The group has plans to re-launch its says P.R.S. Oberoi, chairman and ceo, EIH. management second brand - Trident Hilton – as just “We plan to have 12 new hotels in India the Trident and intends to expand locally and abroad soon. Our vision is to operate contract route, and globally. This initiative comes close properties from Dubai to Tokyo. We on the heels of the group’s exit from its believe it would not be a good strategy to which is a much association with the Hilton Group. Global ignore China.” locations targeted for the Trident brand The group is currently establishing faster way to include the UAE, Thailand and China. a US$100 million hotel in Dubai that is “We are exploring opportunities on expected to be operational by early 2009. expand. extending the Trident brand overseas,” It is being developed in partnership with a says Oberoi. The brand already exists Dubai-based real estate company and is in West Asia with tariffs typically 40 per

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Kamat Hotels – a mid-size domestic player with interests in luxury and budget hotels We invested nearly and restaurants – is also setting its sights on global horizons. The group is launching US$4.5 million for a a 5-star, environment-friendly 176-room hotel called Orchid International in Johan- 75 per cent stake in nesburg. A similar 5-star, eco-friendly, a 4-star property in 350-room hotel is also being planned by the group at Lijiang in China, a Unesco World Innsbruck, Austria, Heritage Site. The other potential desti- nations for the group include countries as we found it in West Asia and Mongolia. “Most of the global markets are being penetrated lends itself well through the management contract route,” says Vithal Kamat, chairman and managing as a family director of the group. “That’s a much faster way to expand, where we give our destination. expertise, but it does not involve invest- ment. At a later stage, we may look into investment in these properties.” These growth exercises were all initi- cent to 50 per cent lower than those in ated over the past few years and in today’s premium Oberoi properties. changed global economic outlook, the Even smaller players are trying to get industry does face a challenge in terms a slice of the global pie. Bharat Hotels of of a liquidity crunch. Consequently, most the Suri family is putting up a greenfield premium 5-star hotels increased domestic project, The Grand Fort Dubai, while Club room tariffs in the range of 10 per cent to Mahindra Holidays’ first overseas buy is 15 per cent in October in an attempt to the 97-room, 4-star Hotel Bon Alpina in cash in on the peak season in India. Innsbruck, Austria. The Indian hospitality industry is “We invested nearly US$4.5 million for expected to push ahead with many of a 75 per cent stake in the property as we its ambitious overseas projects as the found it lends itself well as a family desti- financing had already been tied up. Globe- nation,” says Ramesh Ramanathan, ceo, trotting Indians will then be able to savour Club Mahindra Holidays. The company is a tandoori chicken or a dal makhani during now looking to expand in South Africa, a harsh winter snow storm in Europe West Asia and Europe. or the US, or sip a glass of lassi in the The multi-brand hospitality company Arabian Desert.

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