By Bikramjit Ray
THE FRANCHISE business is a very different business and it is currently evolving in India, unlike countries like the US where it is an accepted norm, starts Vilas Pawar, CEO of Choice Hotels India in an exclusive interview with BW Hotelier. ’We are here and are waiting for the tide to change,’ asserted Pawar.
This year has been a good for Choice in India, which had undertaken the task of ’cleaning out the system, in terms of parting ways with properties which were not meeting the brand’s standards, and consolidating the brand name by adding a few new properties.
’We’ve got 20 hotels online, within the system and 14 under various stages in the pipeline, either under construction or in various stages of signing up. We are looking at adding at least another 2 to 3 hotels this calendar year. Then we should be looking at adding an average of 2 to 3 hotels a year’, said Pawar, elaborating on the group’s expansionist agenda. Choice is looking at opening their franchises in Mt. Abu, Jaipur, Vadodara, Silvassa and Chandigarh, and hopes to have three of these operational by the conclusion of this year.
Discussing the environment of the hotel industry in India and the challenges, Pawar told BW Hotelier, ’In India it’s very aspirational for people to make assets and hotels. Everybody wants to make a five star hotel.’ However he added that he believed, that in the past few years, people had started to gauge that it did not make financial sense because there were no visible returns on investment. ’-Given the land prices and, we see in various hotel industry meets that owners are complaining, saying that it doesn’t make sense for them to spend so much. The tide is changing now slowly, but it will take time.’
He claimed that the problem in the Indian market was that expectations were very high and that some organizations, under the pretence of putting up their brand, overpromised and under-delivered and that was why people were changing brands.
’Business is coming into India. The supply has been much more and the realistic costs as well as the cost of construction, all put together, does not make the hotel industry a very easy industry to be in. I think the fault lies on the part of the brands to not to spell out expectations correctly,’ said Pawar.
Currently, hotels affiliated with choice have 65 per cent occupancy across the county, Pawar tells BW Hotelier, a number which he considers ’respectable’.
On scouting for new ventures, Pawar says, ’We do go out and actively speak to people at the same time people approach us. It’s about a 50 per cent division.’
In his point of view, franchising is a mature concept and will take time to get traction in a country like India. ’When you are managing a property and have got the owners to spend money on it to make it to suit your brand specifications, they would naturally demand a good return. You can’t tell them then that the market dynamics are not there. He will say that he is not interested in the market, but in what was promised. Therein lies the problem of the mismatch of expectations,’ he comments on the challenges faced by groups that solely franchise, like his own.
’We don’t overpromise. Our business is franchising and we offer a platform for distribution and we expect the hotel to take advantage of it,’ says the Choice India CEO.
’We are looking at the next two years to really consolidate and start to grow. We have integrated our central reservation system for India a couple of months ago and are going to introduce our loyalty program next. We are investing into India with the perspective that we will grow slowly and steadily,’ Pawar tells BW Hotelier, optimistic about the hotel giant’s future in the country.
THE FRANCHISE business is a very different business and it is currently evolving in India, unlike countries like the US where it is an accepted norm, starts Vilas Pawar, CEO of Choice Hotels India in an exclusive interview with BW Hotelier. ’We are here and are waiting for the tide to change,’ asserted Pawar.
This year has been a good for Choice in India, which had undertaken the task of ’cleaning out the system, in terms of parting ways with properties which were not meeting the brand’s standards, and consolidating the brand name by adding a few new properties.
’We’ve got 20 hotels online, within the system and 14 under various stages in the pipeline, either under construction or in various stages of signing up. We are looking at adding at least another 2 to 3 hotels this calendar year. Then we should be looking at adding an average of 2 to 3 hotels a year’, said Pawar, elaborating on the group’s expansionist agenda. Choice is looking at opening their franchises in Mt. Abu, Jaipur, Vadodara, Silvassa and Chandigarh, and hopes to have three of these operational by the conclusion of this year.
Discussing the environment of the hotel industry in India and the challenges, Pawar told BW Hotelier, ’In India it’s very aspirational for people to make assets and hotels. Everybody wants to make a five star hotel.’ However he added that he believed, that in the past few years, people had started to gauge that it did not make financial sense because there were no visible returns on investment. ’-Given the land prices and, we see in various hotel industry meets that owners are complaining, saying that it doesn’t make sense for them to spend so much. The tide is changing now slowly, but it will take time.’
He claimed that the problem in the Indian market was that expectations were very high and that some organizations, under the pretence of putting up their brand, overpromised and under-delivered and that was why people were changing brands.
’Business is coming into India. The supply has been much more and the realistic costs as well as the cost of construction, all put together, does not make the hotel industry a very easy industry to be in. I think the fault lies on the part of the brands to not to spell out expectations correctly,’ said Pawar.
Currently, hotels affiliated with choice have 65 per cent occupancy across the county, Pawar tells BW Hotelier, a number which he considers ’respectable’.
On scouting for new ventures, Pawar says, ’We do go out and actively speak to people at the same time people approach us. It’s about a 50 per cent division.’
In his point of view, franchising is a mature concept and will take time to get traction in a country like India. ’When you are managing a property and have got the owners to spend money on it to make it to suit your brand specifications, they would naturally demand a good return. You can’t tell them then that the market dynamics are not there. He will say that he is not interested in the market, but in what was promised. Therein lies the problem of the mismatch of expectations,’ he comments on the challenges faced by groups that solely franchise, like his own.
’We don’t overpromise. Our business is franchising and we offer a platform for distribution and we expect the hotel to take advantage of it,’ says the Choice India CEO.
’We are looking at the next two years to really consolidate and start to grow. We have integrated our central reservation system for India a couple of months ago and are going to introduce our loyalty program next. We are investing into India with the perspective that we will grow slowly and steadily,’ Pawar tells BW Hotelier, optimistic about the hotel giant’s future in the country.
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