The
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aggressive economic growth in other regions and cities make these markets even more important ,” says Costley , who describes Hilton ’ s strategy as asset-light and focused on management . “ The religious circuit presents tremendous opportunities for budget and mid-market hotels .”
CHALLENGES REMAIN But “ the current liquidity crunch accompanied by the high cost of debt is an obstacle , especially given the capital-intensive nature of hotel development ,” Costley says .
Thadani adds that politics can always derail opportunities , while Starwood ’ s Puri cites the slow pace of development , the even slower pace of infrastructure development in the hospitality sector , and a “ multi-layered regulatory regime .”
The problem of how to drive better business remains . HVS ’ Thadani says that while average RevPAR increased 12 % last year , 75 % came from occupancy rather than average rate . He believes that the country is ready for double-digit RevPAR growth – at least 11 % or 12 %, in each of the next three years . “ A large part of that is going to have to come from the rate side of things and not from occupancy ,” he says .
Oberoi “ started increasing rates three years back ,” Chopra says , when net operating margins were falling . “ So we started driving rates … As a result , profits have grown close to 60 % in the past three years .”
Others are still to follow Oberoi ' s lead . “ That is the biggest puzzle that these brands have to solve ,” he says . human
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“ If you were to ask me what is the biggest threat to Indian hotels improving their performance , I would say it ’ s actually the quality of operations being offered by hotel companies ,” says Manav Thadani , HVS ’ Asia Pacific chairman .
The same concern is echoed by other hotel companies in a country that could be tripped up by education , even as it is marshaling momentum in critical economic and infrastructure areas . “ Perhaps the single largest challenge for the hospitality industry is the scarcity of trained , experienced and motivated talent ,” concurs William Costley , vice president , operations – South East Asia and India , Hilton Worldwide . “ We see this primarily in emerging markets .”
Ashish Jakhanwala , CEO of SAMHI , a hotel investment and development firm , also cites employment as a challenge . “ There are enough people , but not enough good people ,” he says . “ The industry at large is struggling with training an adequate number of people to handle the growth .” Most hotel companies are struggling , he says . “ We don ’ t have a paucity of people , but we do sometimes feel that the industry needs to enhance the skill sets of people . It needs to do a lot more on that front .”
Thadani also points to a lack of training impacting managers '
“ PerhaPs the single largest challenge for the hosPitality industry is the scarcity of trained , exPerienced and motivated talent .”
- William Costley , Hilton WorldWide
ability to drive hotel rates despite an increase in occupancies over the past year and a half . Current GMs , he says , might not be accustomed to thinking about opportunities in front of them , or perhaps they lack the inhouse expertise .
“ All they have seen in the past seven or eight years is declines , and they are afraid to pull their rates up ," Thadani says . " There ’ s no yield management happening , no focus on creating a strategy to increase room rates . If the airlines can do a fantastic job of rate strategy , then why can ’ t the hotel industry ? It could be a lack of training or a lack of application .”
Thadani sees it elsewhere in Asia as well . “ Six months ago , I thought it was the aggregators coming into the market … But the more I look into it , it ’ s more the quality of the manpower that isn ’ t taking those decisions ," he says . " We ’ ve left too much to technology .”
Hilton Worldwide is taking its own steps . “ We have a robust strategy in place to attract talent , especially youth , and provide them with learning and development opportunities to excel in their work ,” Costley says . The company also has a partnership with Room to Read in India , a literacy group , and a job-shadowing program to educate girls on opportunities in the hospitality industry . – BB
36 hotelsmag . com May 2016