OUR ABILITY TO INCREASE REVPAR IN THE SHORT-TERM IS BEING RESTRICTED .
GLOBAL UPDATE
0.4 % 57.4 %
TO
39 % &
REVPAR
4.3 %
DROPPED
YEAR-TO-DATE INDIA ’ S
OCCUPANCY WAS DOWN
ADR DROPPED
TO ITS LOWEST LEVEL IN SEVEN YEARS .
Hotels in Goa — such as the 47-room Golden Tulip Goa Candolim , which opened in January 2013 — are benefitting from increased domestic leisure travel .
DUE TO AN
OVERSUPPLY OF
HOTEL ROOMS IN SOME OF THE
LARGER GATEWAY
CITIES ,
OUR ABILITY TO INCREASE REVPAR IN THE SHORT-TERM IS BEING RESTRICTED .
– SIMON BARLOW , CARLSON REZIDOR HOTEL GROUP
Louvre Hotels Group , Paris , says India remains a priority for expansion as a franchisor and operator . The company currently operates 13 hotels under management contracts and reports a pipeline of 12 hotels totaling 920 guestrooms , primarily under the Golden Tulip brand . “ There is no major change in our view — India still remains a large tank for growth and has undersupplied markets in many cities for the budget and mid-market segments ,” says Matthieu Evrard , chief development officer , Louvre Hotels Group . “ Our average occupancy in India year-to-date is 66.7 %, and our ADR is 4,200 rupees ( US $ 67.75 ).”
Carlson Rezidor Hotel Group , Minnetonka , Minnesota , says occupancy at its hotels in India increased during the first half of 2013 , but other factors present challenges . “ Due to an oversupply of hotel rooms in some of the larger gateway cities , our ability to increase RevPAR in the short term is being restricted ,” says Simon Barlow , president , Asia Pacific , Carlson Rezidor Hotel Group .
The company ’ s long-term outlook on the market remains unchanged , though , and deals such as its joint venture with Bestech Hospitalities , Gurgaon , India , to develop 49 Park Inn by Radisson-branded hotels in India has not been impacted by the economic slowdown or the volatile rupee , with the first set to open in December 2015 . “ We have a strong pipeline of 44 hotels in India , and most are in the advanced stages of development , so we are confident the short-term impact has been minimal so far this year ,” Barlow says . “ We remain optimistic about future growth .”
Pipeline slowing India ’ s pipeline is decreasing both in reaction to the new supply that has come online and the delay and suspension of hotel projects due to the downturn . India ’ s central bank has declined to roll back interest rates to spur the economy for fear of inflation . “ The availability of capital is constrained , and we believe investors ’ risk-adjusted return expectations have gone up ,” says Ashish Jakhanwala , managing director and CEO of hotel developer SAMHI Hotels Pvt . Ltd ., Gurgaon .
Meanwhile , India ’ s hotel transaction market is seeing more deals as companies without a core hospitality focus look to exit , and SAMHI says its current strategy reflects this . “ Our strategy at SAMHI has changed in the past two years , and we have moved away from greenfield projects to buyouts of existing operating assets and brownfield development deals that are struck for cash ,” says Manav Thadani , co-founder and director at SAMHI . “ It ’ s a good place to be if you have the money and the team to strike a few deals .”
Looking ahead , analysts say this business cycle may help India ’ s hotel market mature by making banks more selective with lending for development projects . “ The previous cycle saw a lot of hotels being built on the basis of a focus on return on ego instead of return on investment , which has led to those specific projects struggling to make returns and also impacted the overall market ’ s performance ,” says Kaushik Vardharajan , managing director , HVS Global Hospitality Services – South Asia , Gurgaon . “ Going forward , as banks become more selective about the quality of the projects they lend to and as more investment decisions are made on the basis of a feasibility study , the future supply coming in will be based more on demand conditions .”
www . hotelsmag . com November 2013 HOTELS 11