PiPeline : China and india
One of SAMHI ’ s Fairfield by Marriott guestrooms
Limited-service : As is the case in China , the global brands are eschewing a franchise model in India . The bulk of the limitedservice pipeline in India is greenfield developments with a management-contract model that features a fixed managementcontract fee , gross operating profitlinked incentive fee and marketing fee . However , there has been an increase in the global brands taking on lease arrangements in which the owner develops the building ’ s shell and the brand then completes the rest of the asset and subsequently operates it under a long-term management agreement .
FuLL-service and Luxury : Similar deal structures are prevalent in these sectors in India , with owners paying 3 % of the sales and about 7.5 % of
Deal activity in inDia the operating profit to the management company . Transactions across all the segments are low given the size of the market due to tightening financing , fluctuation in the value of the rupee and the longterm optimism among owners about the appreciation of assets given the very low ratio of guestrooms to the population and the still-growing economy , albeit at a slower pace .
For transactions that are occurring , the composition of buyers has shifted . “ Private equity and structured funds are showing more interest in the hotel sector compared to highnet-worth investors or traditional hotel owners and developers ,” says Achin Khanna , managing director , consulting and valuation , HVS Global Hospitality Services South Asia .
IndIa ’ s pIpelIne
Through Q4 , 2013
●●India has the second-largest construction pipeline in Asia Pacific with 316 projects / 52,026 guestrooms .
●●71 % of projects and 67 % of guestrooms are in the upscale and upper-midscale chain scales .
●●The markets that lead India ’ s pipeline by projects are Mumbai with 27 projects / 6,009 guestrooms , Bangalore with 20 projects / 4,597 guestrooms and Gurgaon with 17 projects / 3,039 guestrooms .
●●The top franchise companies leading India ’ s pipeline are Marriott International with 42 projects / 7,516 guestrooms , Carlson with 33 projects / 4,271 guestrooms and Accor with 32 projects / 6,173 guestrooms .
●●The brands with the most projects in India ’ s pipeline include Courtyard by Marriott with 16 , Hyatt Place with 16 , Holiday Inn with 14 , Sarovar Portico with 14 and Fairfield Inn by Marriott with 12 .
Source : Lodging Econometrics
44 HOTELS April 2014 www . hotelsmag . com