Carlson Rezidor has declared it is looking for a further strategic partner to help propel its growth in India, a market where it already claims to be the leading international player.
Currently the company has 65 hotels open in India, with a further 36 in various stages of development. It is running two joint ventures with local partners, to push the growth of its Park Inn and Country Inns & Suites brands.
The push comes despite reports that, certainly at the higher end of the market, the Indian hotel industry is suffering in the short term, particularly at the luxury end. S M Shervani, president of the Federation of Hotel and Restaurant Associations of India called 2013 “an average year”, when domestic demand helped offset weak incoming tourism numbers from Europe. In mid-2013, the organisation put average Indian hotel occupancy at 58.3%, the lowest in a decade, with room rates at a six year low. And at that time, around 75 hotels were reckoned to be up for sale, as investors were squeezed by lower revenues.
Longer term, however, the outlook is brighter, with the Indian hospitality sector expected to double in size from 2008 to 2018, to around USD36bn. Domestic demand is likely to be focused on the cheaper end of the market, while foreign source markets will bring in luxury guests, as and when those markets recover their economies.
Last year saw Carlson Rezidor open five hotels and add 16 into its development pipeline in the country, as its agreement with local partner Bestech started to deliver a pipeline of new Park Inn hotels. During 2013, six management agreements on new Park Inns were signed, while a further 40 or more are expected to be developed over the next decade, in the central and northern areas of India. The Bestech deal is for 49 hotels in total, and it is understood that negotiations with a new partner will look to add further Park Inns in the west, complementing the progress with Bestech.
"We have established our leadership in this market over the last 15 years,” said Carlson Rezidor’s regional president Simon Barlow. “By focusing on building strategic partnerships with hotel owners, we have accelerated our growth to deliver a record number of hotel signings in 2013. Our sustained growth in India will ensure our continued leadership in this important market."
Its Country Inns & Suites brand is being expanded in a joint venture between Carlson and local partner Chanakya Hotels Private. India is one of just four countries (the other three being the US, Canada and Mexico) the brand is focused on growing into.
Barlow told local journalists that the focus in India will be away from the higher end Radisson Blu brand – which is already present in the country – with resources expended growing the mid market Park Inn and Country Inns. He also said there was an internal aspiration to get the company’s portfolio to 200 hotels in India by 2020. A training institute is close to being finalised, on a site near Delhi, that will enable Carlson Rezidor to train local staff to meet its standards in running the two brands.
Alongside Rezidor, Starwood aims to have a 100 hotel presence in India by 2015, while Accor is on the lookout for conversions to its Mercure format, with a target of adding 10 a year. Also taking a gentle look at the lower end of the hotel market in India is UK market leader Premier Inn. So far, the group has just two hotels in the country, but has said they are delivering improving numbers and so more will follow.
HA Perspective: [by Katherine Doggrell] If countries could be thrown out of acronyms, India would have surely been chucked out of BRIC and all the promise that it held not too long ago. A country which is largely felt to have frittered away much of its opportunity in the short term, with difficult trading conditions, a wobbling economy and stifling regulation.
There were signs of hope in January as the UN World Economic Situation and Prospects 2014 report said a mild recovery in investment as well as stronger export growth would encourage a gradual GDP pick-up. The report said that external conditions continued to be challenging as the Indian economy experienced significant capital outflows, which led to a sharp depreciation of the rupee.
However, economic activity was forecast to expand by 5.3% in 2014 and 5.7% in 2015.
Issues remain – reforms proposed by the government are being opposed by the other political parties. But in the long term, developers still view India as the new China (maybe less so in view of China’s immediate future) and are eager to get involved. Key to that is a local partner, as Carlson Rezidor appreciates.