'The credit squeeze has affected new hotel projects'

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A postgraduate from Cornell University’s School of Hotel Administration in New York and with more than 13 years’ experience in hospitality, Vivek Nair wears two hats today. He is vice-chairman & managing director of Hotel LeelaVenture Ltd, which runs The Leela Palaces, Hotels & Resorts, and is honorary secretary, Federation of Hotel & Restaurant Association of India. At The Leela property in Mumbai, Nair spoke with FE’s Shweta Bhanot and MG Arun about the challenges faced by the industry and the The Leela Group’s plans for the future. Excerpts:

Inflation has crossed double digits, there is slowdown in important markets like the US and Europe, and the rupee continues to fluctuate. How have these factors impacted your business?

People had predicted that it would have a negative effect on arrivals. Luckily, in the first quarter of this fiscal, we have seen a 15% growth over the same period last year. Although that’s not like the 20-25% of previous years when things were really buoyant, 15% is good. Interestingly, the feedback that I have got from Dublin where CEOs of the global hotel alliance met is that even in the US, they had the best possible year last year. Hence, the so-called recession in the US has not translated into a real reduction in revenues compared to last year. They are expecting 8-9% growth in revenues in the US, which is good, considering that the economy is growing at only 2-3%.

Further, the perceived devaluation of the dollar against the Indian rupee has led to an industry shift to rupee pricing. Though at present, it is in our favour at Rs 43, in the long term, all hotels in India will start quoting in rupees. Like other hotels, we will also quote in rupees from the October season. From then on, we will quote in rupees and realise in rupees.

Do you think you will maintain this growth rate once the demand-supply mismatch is corrected with additional rooms?