• Passage to (and from) India

Last week's Hotel Investment Conference South-Asia in Mumbai naturally turned the sector's focus towards India, with owners and operators eager to outline their plans for the region.

The combination of socio-political issues in other developing markets around the world and rising wealth in the country meant that, not only were domestic players making moves outside India, but that operators were willing to commit their own cash to their plans.

Manav Thadani, chairman of hospitality consultancy HVS India, told the conference that

India was likely to see investments worth $10.3bn between 2010 to 2015 on construction of new hotels in the branded space.

Marriott International, no stranger to putting its money where its development goals are, has reached a preliminary agreement to form a joint venture with Samhi Hotels, to launch Fairfield by Marriott, a new hotel prototype designed specifically for the growing Indian business traveller. The venture was expected to bring 2,500 rooms and approximately 15 hotels to India by 2015 in markets such as Bangalore, Chennai and Hyderabad, supporting Marriott's goals of expanding in India from 12 to 100 hotels across seven brands by 2015.

Although the specifics of the deal were not known, it is believed that Marriott has agreed in principle to be a minority equity partner in Samhi, with the two having a non-exclusive agreement which will allow them to become involved with other groups and brands.

Marriott International will be familiar with many of those at Samhi. The group's co-founders are: Steve Rushmore, founder and president of HVS, Ashish Jakhanwala, who was part of start-up and core team at Accor India/InterGlobe Hotels, and Manav Thadani, chairman and founder of HVS India. The group has a focus on the high growth economy and mid-scale segment in Indian sub-continent and is sponsored by GTI Capital Group, an India-focused private investment and advisory firm.

Navjit Ahluwalia, senior vice president of development in India, Marriott International, said: "With a burgeoning middle class of more than 200 million people, yet very few branded moderate-tier hotels to serve them, India presents a powerful growth opportunity for Fairfield by Marriott."

As InterContinental Hotels Group prepared for a change at the helm, incoming CEO and current CFO Richard Solomons announced that the company had signed 20-year management contracts with Duet India Hotels Group to develop 19 Holiday Inn Express hotels by 2016.

The first hotel is due to open in mid-2012. IHG will invest through a 24% equity stake, making a multi-year investment of $30m into the partnership. Solomons said: "By investing a small amount of our own capital we have established a strategic relationship with a fantastic partner who knows the market, securing a future fee stream and opening up a huge opportunity for us to develop the Holiday Inn Express brand across India."

Also announcing expansion in India, but with less direct investment, were Starwood Hotels & Resorts, which was planning to open seven hotels by the end of this year and launch its W brand in the country by 2015, Wyndham, which has signed seven hotels and will debut its Days Inn brand, and Hyatt, which is to add nine hotels.

In addition to external brands coming into India – in the case of Marriott International, with country-specific modifications – the group's domestic operators were also looking to expand their estates, with Indian Hotels announcing its intention to launch a mid-scale hotel brand, where it has a gap in its brand stable. The group plans to increase its total portfolio in India to 20,000 by 2015 from the current 13,250.

As money comes into India, so the country's growing economy has meant that overseas investment was increasing. In December Sahara India Parivar acquired the Grosvenor House hotel from The Royal Bank of Scotland for £470m, reportedly the largest acquisition for an Indian company in the hospitality sector.

The end of March saw Bird Hospitality Group acquire the 48-key Royal Park Hotel in London, for an undisclosed fee. Interstate Hotels & Resorts will manage the hotel, with Bird planning to build its estate in the UK. "London is an evergreen and stable market. The returns are good and the property adjusted well with our brand," said Ankur Bhatia, executive director, Bird Group, which, in India, is opening luxury hotels in partnership with Thailand's Dusit International. The first hotel, Dusit Devrana is due to open in New Delhi by the middle of this year.

As the team behind Samhi indicates, executives in the sector are looking to get involved in India at all levels, with the investments from Marriott International and IHG a significant indication of how safe operators now believe the region to be.

 

HA Perspective: As North Africa continues to be unstable and the wider continent carries significant risk, despite rising popularity – Rezidor Hotel Group, a fan of uncharted territory, is to open in Sierra Leone – the sector is searching for a safe haven for development, which nonetheless carries the returns looked for in emerging economies. Despite the Mumbai terrorist attacks in 2008, the sector seems to view India as a safe bet.

Share →