At a time Hotel Leelaventure is building a pan-India presence by targeting a portfolio of upto 15 hotels by 2015, the company?s chairman CP Krishnan Nair is getting ready to pass on the leadership baton to his sons, Vivek and Dinesh, by January. Nair tells FE?s Shweta Bhanot and MG Arun about the succession plans, revival in the hospitality industry and an expansion that may also take the brand overseas.

How do you see the revival in the hospitality industry, as you prepare to step down?

Vivek and Dinesh will be taking over from me as chairman and vice-chairman, respectively, by the beginning of next year. This will be after our New Delhi property is officially inaugurated in December this year. We need foreign tourist arrivals in the country for the survival of the five star hotels and steps are needed to improve infrastructure to promote tourism. It was impacted by the slowdown and the industry has now seen some improvement in the average room rates (ARRs) as well as occupancy rates (ORs). We are seeing an upsurge of 20-25% in the industry with 10% growth in ARRs and 75%-80% in ORs. The industry needs a boost in terms of long-term tax waivers and funds offered at affordable rates like 4-5% interest rate. We need a long term gestation period of 15-20 years for the industry with 10 year moratorium.

Has there been a change in your business model, considering that globally hotel chains are looking at shifting to asset-light model?

We follow a mixed business model, that means a hotel, a business park and a convention centre, everywhere possible. We will look at owned, leased as well as management properties. Management model is a new thinking at the Leela and we have significant plans under it. This will help us unlock our land price. I am not seeking out for management contracts but I am approached by people and if we find it interesting, we can look at it. We have land in Agra, Jaipur, Hyderabad, Pune and Kerala. We have been offered land in Ahmedabad, Gujarat as well. One can participate in construction and we will manage it. This will be in addition to the owned properties we are looking at in the country. We see business park as a source of income and help us in financing our capex plan, if ever needed.

How do you see RIL?s move of entering into the hotels segment through a stake buy in EIH and ITC’s keen interest in EIH and the Leela? Does this concern you in any way?

The promoters have 55% at the moment and we will continue to inch it up to 60-65% at end of next year. The Oberois had to worry as the promoters’ stake was 40% in that case. In our case, we are not worried. ITC is buying shares through market sale and we do not have a control on it. They may be targeting hotels, but we fail to understand their strategy.

Are there any plans to take the Leela brand overseas?

Yes, we will be taking the Leela luxury brand overseas in the next five years. Some of the markets that look ideal include New York, London and Abu Dhabi. At the moment, this is not on my horizon. We will examine it after we have established our pan-India presence with 12-15 hotels by 2015.