Indian hospitality sector expects an upsurge in 2015

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Updated: December 29, 2014 5:21 PM

Putting their bets on the new government's promise to boost tourism, hospitality sector is hoping for a full-house show in the new year

Putting their bets on the new government’s promise to boost tourism, hospitality sector is hoping for a full-house show in the new year as a large number of big hotel chains from India and abroad line up plans to expand presence in the country. The renewed sense of optimism follows a volatile economic environment for most part of 2014 and the sector hopes that initiatives announced by the new government, including those related to e-visas and specific funds for developing tourist circuits, would bring in good business.

Global, as well as domestic hotel chains, including Hilton, Carlson Rezidor, Starwood, Kempinski, Bharat Hotels and InterGlobe, are betting big on India’s long term potential as a tourist destination and have announced their plans to add more properties and rooms despite the short-term hurdles. Reflecting on 2014, Dilip Puri, managing director (India) and regional vice president (South Asia), Starwood Hotels & Resorts said, “With the volatile economic environment and the depreciating rupee in the first half of the year the ride for the Indian hospitality sector was indeed a bumpy one”. Echoing sentiments of the industry, Puri said, “We are seeing great momentum in India and continue to believe in the opportunities that lie for us.”

The optimism is derived from the steps that the new government led by Prime Minister Narendra Modi stepped a much needed boost to the sector. In the Budget for 2014-15, finance minister Arun Jaitley acknowledged the importance of tourism as a major job creator and announced the government’s intention to facilitate visa on arrival facility. He announced that a facility of Electronic Travel Authorisation (e-Visa) would be introduced in a phased manner at nine airports in India where necessary infrastructure would be put in place within six months. Besides, Jaitley also proposed to create five tourist circuits around specific themes and set aside a sum of INR500 crore for this purpose.

Seeking to tap the opportunity, global hospitality major Carlson Rezidor Hotel Group announced it would have over 50 operational Park Inn by Radisson properties in India by 2024. The chain, which currently runs 73 operational hotels and has 37 hotels in various stages of development under brands Radisson Blu, Radisson, Park Plaza, Park Inn by Radisson and Country Inns & Suites By Carlson in India.

Likewise, Starwood Hotels & Resorts has announced plans to have up to 65 operational properties by end of 2015 in India. It currently operates 39 hotels in India under six brands, including Luxury Collection, Westin, Sheraton, Le Meridien, Four Points by Sheraton and Aloft. It is looking to have a total of 100 hotels in its Indian portfolio by 2015. Starwood will also relocate its global headquarters from the US to India in March 2015 for a month as the company seeks to enhance operations here. Today, India is Starwood’s fourth largest market and will soon become the third biggest after the US, China and Canada.

Luxury hotels chain Kempinski has also announced plans to operate three new hotels in India by 2020 in Kolkata, Mumbai and Kerala if the ongoing negotiations were successful. Australia-based StayWell Hospitality Group also said it planned to add 18 hotels in India by 2017 targeting mid and up-scale segments as part of expansion plans entailing an investment of around US$ 20 million.

Another player, InterGlobe Hotels announced opening of ibis brand hotel in Delhi with plans to have 19 ibis hotels operational in India by 2016. During the year, domestic firm Bharat Hotels which runs the Lalit chain opened Great Eastern Hotel in Kolkata, while international player Hilton opened its upscale, full-service hotel Hilton Bangalore Residences in the city and a hotel in Jaipur.

Lemon Tree Hotel Company also announced plans to invest around INR4,500 crore to add 5,200 rooms across India in the next four years. While others were busy charting expansion plans, Tata group firm Indian Hotels Company sought to raise INR1,000 crore through issue of debentures on rights basis to fund expansion, clear debt and capital expenditure. The year also saw stepping down of it’s managing director and chief executive officer Raymond Bickson who quit after serving for over a decade to be replaced by Rakesh K Sarna, ex-executive vice president, group president – Americas, of Hyatt Hotels Corporation. During the year the Tata group firm also sold Blue Sydney, a Taj Hotel, to Australia Hotels & Properties for AU$ 32 million (nearly INR179 crore).

For the Leela Group, another domestic hospitality major, 2014 marked the end of an era with the passing away of its founder CP Krishnan Nair, the grand old man of Indian hospitality industry after a brief illness at the age of 92. The Leela Group also announced foray to outside India with plans to open hotels in Nepal. As 2014 draws to a close, hospitality players in India are hoping that the government would take further steps to boost the sector in the year ahead.

Tejinder Singh Walia, president, Federation of Hotel & Restaurant Associations of India (FHRAI) said, “The coming year is especially crucial, because many of the key policy and regulatory issues, which FHRAI has been diligently pursuing for long, are currently poised at an important juncture.”

FHRAI has been pressing for removal of multiple taxation on the sector and implementation of goods and services tax, among others. The hospitality players hope that in 2015 they would be able to build on the momentum gained in the later part of the year going by.

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