There are reasons for optimism, but challenges remain, Michael Taylor reports.
India‘s hospitality industry appears to be coming out of a period of sluggishness. The question on everyone’s mind is if that trend will continue into the new year.
“The industry’s performance for the first half of 2017 has recorded growth in occupancy, ADR and Rev Par indexes,” says Arpit Pant, Regional Director for South Asia & Middle East, Preferred Hotels & Resorts. “The overall occupancy rate was at 65.8 per cent compared to 63.6 per cent the same time last year; and the ADR has also seen some increase.”
Pant is optimist that the upward trend will continue in 2018.
“We hope to continue our success from 2017 into the new year as well, supporting our hotels in enhancing their growth,” Pant says. “Year to date, we have seen a 20 per cent growth from Preferred Hotels & Resorts’ booking channels for our India hotel partners.”
An Electronic Travel Authorisation (ETA) scheme went into effect in late 2014, allowing citizens of more than 40 countries to apply for visas on line. It has since been extended to 161 countries arriving by way of 24 airport. Renamed e-Visa on 1 April 2017, it now has three categories: tourist, business and medical.
“The e-visa scheme has been a huge step in facilitating international tourist arrivals into India,” Pant says.
According to government data, a total of almost 950,000 tourists arrived by way of an e-Tourist Visa from January to August of this year, up 56.5 per cent from the same period last year.
“This clearly demonstrates the positive impact of the scheme,” Pant says.
But not all government policies have yielded such positive results. An example is the implementation of a Goods and Services tax, which went into effect on 29 March 2017. It was supposed to “revolutionise” the Indian taxation system.
According to Vijay Wanchoo, Senior Executive Vice President & General Manager of The Imperial New Delhi, a PHR property, the goods and services tax is gravely affecting hotels in the five-star category.
“Most luxury hotels are and will continue to face several challenges in 2018 with stiff competition and the GST settling in,” he says.
AccorHotels entered the Indian market in 2006 with one hotel, the 287-room Novotel Hyderabad Convention Centre in the City of Nizams.
Since then, the French-based group’s Indian hotel collection has grown to 52 properties across 10 brands in 22 cities. The group intends on increasing that number to 80 hotels by 2020. Upcoming hotel openings will include properties in Chennai, Sriperumbudur and Goa
“We see good potential for growth; hence, the potential for hotel development opportunities across India’s key cities, micro-markets and emerging cities, which we view as growth engines of the future,” says Jean-Michel Cassé, Chief Operating Officer, India & South Asia, AccorHotels. “These cities represent largely untapped markets due to lack branded hotel availability and consistent experience.”
The hotel group’s global growth model is “asset-light”, with the focus being on long term management agreements across its portfolio of luxury and upscale brands and a mix of management and franchise agreements for its midscale and economy brands.
“Presently, 70 per cent of our global portfolio is under long term management contracts with the other 30 per cent under franchise agreements,” Cassé says. “The larger growth model for the future is via management contracts in particular as luxury and upscale hotels continue to be the larger part of our development pipeline globally.”
230 year old fort turned into five star resort
It took fully 10 years to convert the 230-year-old Fort Bishangarh into one of India’s most unique heritage hotels. The Alila Fort Bishangarh had its soft opening in February 2017 and finally opened with its full inventory on 1 July.
“The first two years were the most challenging, particularly transporting the construction material to the top of the hillock without a road,” says Doris Goh, Chief Marketing Officer, Two Roads Hospitality Asia. “Installing the electrical and plumbing facilities also proved challenging due to the 3m thick walls, which were made of granite rock.”
In terms of the design, drawing up the floor plans was in itself a lengthily process.
“It took about two years in total for all the drawing plans to be completed,” Goh says “This is because we wanted to maintain its organic structure with no 90-degree angles in it. In addition, each floor has a different structure.”
So how were the obstacles overcome?
“Through grit, hard work, innovation, talent, heaps of faith and love,” Goh says. “The whole restoration process took us around 10 years because we were committed to not taking short cuts that would compromise the aesthetics of the fort.”
When asked if the group has plans to convert other heritage properties into hotels or if it would build new properties from scratch, Goh says it depends.
“Our focus is destination and experience. So we’ll focus on each property regardless if it’s a converted heritage property or a new build property,” Goh says.