Royal Orchid Hotels in expansion mode

Rajeev Jayaswal

New Delhi, Dec 9: Notwithstanding recession in the hospitality sector, Bangalore-based Royal Orchid Hotels has decided to open a new five-star hotel in Hyderabad and add 60 rooms to its existing property, Royal Orchid Park Plaza in Bangalore.

“We have opened 90-room Royal Orchid Park Plaza in June and all set to break-even by January this year,” Royal Orchid Hotels’ managing director Chander K Baljee said adding that the company is in the process of identifying a location for another 150-room five-star hotel in Hyderabad. The company has been able to maintain a profitable proposition even during the worst market situation due to very low overhead costs and flexible pricing, he said adding that the Royal Park Plaza in Bangalore will be completed with an investment of Rs 32 crore, which will include even the 60-room expansion plan.

Mr Baljee claims to develop a property at a price which is five times lower than the cost involved to complete a five-star deluxe hotel in the same town. “I can afford to sell a single room night at a cost of Rs 2,200, whereas, a property which is spending five time more than the cost incurred by us in the project can never get a price of Rs 10,000 for a single room-night at the time of global recession,” he said. Speaking about the marketing strategy of the company, Mr Baljee said, “We have focused on the Indian corporate clientele and has been able to keep the occupancy level between 65-70 per cent even in this bad phase,” he said hinting at the post-September 11 crisis and massive downturn in the hotel sector. “Our introductory price at around Rs 2,000 per room-night has also generated volume, as it brought many clients from the mid segment hotels. We do not intend to increase our tariff as maintaining a high occupancy level is a must to break-even by January this year,” he added.

The land for Royal Orchid Park Plaza, at the 18-hole golf course of Bangalore, is leased to the company for 60 years by Karnataka State Tourism Corporation. The company has signed a franchise and management agreement with the Sarovar Park Plaza group.