Promising time for investments
While 2020 was a setback for the hospitality, travel and tourism industry, the following year showed the world that this resilient industry is still redefining itself to suit the needs of all the stakeholders. Though uncertainty and caution plagued hotel investors’ interest in 2020-21, the industry is eager to move forward. According to JLL Hotels & Hospitality’s Annual Hotel Investment Outlook survey, the industry’s resilience has shaped new experiences and demand from consumers. It has also introduced a wave of trends that has been accelerated as hotel leaders quickly shifted operations and formed strategies to navigate through one of the most transformational and economically challenging times in modern history.
As per an HVS estimate, 43,482 additional keys will be added to the supply in India by 2025 and supply growth will be subdued in 2021, with only 3,779 keys entering the branded space during the year as several projects have been delayed, deferred, or put on hold. Kush Kapoor, CEO, Roseate Hotels & Resorts, believes this is the golden period to invest in the hotel industry in India. “The world is looking now towards India and having the second largest MICE segment and second largest travellers in the world with the youngest population, we certainly are in the right frame to make great progress,” he says. Kapoor predicts the next couple of years in Indian hospitality will be the best for a long time.
Fern Hotels currently operates 84 properties in India and internationally and have another 22 hotels under development. Suhail Kannampilly, CEO, Concept Hospitality (The Fern Hotels & Resorts) tells us that the Covid19 cycle has helped organisations to rationalise costs and revenues are poised to reach all-time highs across the board. “We are already witnessing these highs in certain segments. Once the international traveller starts arriving to India, the number will go through the roof. So, in short, now is the best time to enter the industry,” he feels.
Neemrana Hotels continues to invest into its properties as they continue to generate profit for the company year-on-year. “We shall continue to expand our portfolio. Many players have invested enthusiastically in heritage but been less sensitive and less successful financially. The bottom line is not more important than the people,” shares Aman Nath, Founder and Chairman, Neemrana Hotels. Neemrana, which treaded confidently yet cautiously in 2021, and launched the new jungle location of The Glasshouse on the Ganges in 2021 which is now tucked privately in what was once Neemrana’s Himalayan Hideaway.
Sarbendra Sarkar, Founder and Managing Director, Cygnett Hotels and Resorts, highlights that pent-up travel urge of public may turn out to be a blessing for the hospitality industry which will generate better Return of Investment (ROI) for the investors.
With focus on an asset-light model for expansion or investment, Pride Group of Hotels has aggressively expanded its footprints to establish presence across the country. “In the last six months, we have signed many properties on management contracts. Most new hotels are on the verge of completion. We have recently launched and signed up properties in Udaipur, Dapoli, Mussoorie, Rajkot, Aatapi and Vadodara,” says SP Jain, Founder and Managing Director, Pride Group of Hotels, adding that they presently have a portfolio of 36 properties nationally and will soon expand to 50 hotels by 2022. “The strategy to shift from owned properties to leased assets, and drive revenue growth through income from managing hotels, will pay off,” he avers further.
Raoof Dhanani, Managing Director, Sayaji Hotels Ltd, opines hospitality is a good business to invest in because it will definitely get back to normal at some point soon and the travel numbers will go up which will give the sector a great scope of recovery. “Keeping in mind that since people have been behind closed doors due to the pandemic, they are now venturing out and looking for newness in their daily routine. This has given industries like us a new source of hope and revenue in the name of staycations,” he adds.
NEW SIGNINGS
During the first wave of the pandemic, many in the industry and outside had stated that an early recovery will be next to impossible. Some even said that it would take many years for the industry to bounce back. But today’s travel trends have made it abundantly clear that they were caught on the wrong foot. This only goes to show how resilient the hospitality industry is. Royal Orchid, as a group, is on a mission to set up 100 hotels by end-2022. The brand has signed multiple deals across the country with a healthy mix of leisure and business properties. “Our expansion strategy is rooted in the fact that we are an Indian hotel company which understands and caters to the needs of an ever-evolving consumer,” shares Chander Baljee, Managing Director, Royal Orchid.
Fern Hotels signed 10 new hotels in 2021 and have a few in advanced stages of discussion. As per reports, the brand has added the highest number of properties in 2019 and 2020. “Now with a renewed confidence on the industry, we have opened to taking up properties on revenue share as well,” says Kannampilly. The brand has signed 30 per cent of the new properties in leisure space and another 20 per cent in Tier III cities like Hubbali and Kakinada.
With an upward spike in the RevPAR (revenue per available room), hotel chains and developers are announcing a flurry of new openings. Sayaji Group has partnered with Intellistay Hotels to expand the portfolio. Through this partnership, they will add 27 hotels in 15 cities. “We are making an attempt to tap destinations which are left out at this given time,” says Dhanani.
Likewise, Sarkar mentions that Cygnett Hotels and Resorts have inked more than 10 management contracts in the country in the last two months, and a similar number is under final stages of negotiations. “The trend will continue to be there next quarter as well. We believe 2022 will be even better, with a higher share of occupancies and RevPAR wherein the dominance has been towards the leisure sector,” he adds.
As an individual brand, Roseate is supported by its partners for promoting and marketing their hotels. The group has opened Roasted by Roseate Café (standalone), Iskate Rink (biggest ice skating ring in the country) and is under process of launching food trucks and segways. Kapoor informs that apart from accommodation, they will usher a whole range of engagement activities for its valued guests.
MACRO TRENDS
Trends are set by the consumers and with the changing scenario, the guests have evolved. They are now looking for more meaning experiences when stepping out of their homes. While we have noted many floating trends in the industry, hospitality professionals believe the tremendous growth in domestic tourism will hold fort till the time international travel gets going. “It is safe to say that revenge tourism is happening in India. Many people are exploring the lesser-known territories. Weekend tourism and staycations are getting a much-needed fillip with more travellers opting for shorter breaks within the periphery of the city. Another unique trend after the second wave is personalised celebrations in hotel rooms for small functions, get-togethers and birthday parties. With these unique sales schemes offering in-room celebrations, the guests can avail themselves more privacy and follow adequate safety,” says Jain.
Agreeing with Jain on experience-based travel, Chander Baljee lists solo, immersive, contactless, and sustainable travel as some notable changes in the way people are travelling and fuelling the growth of the industry. “Increased disposable income, rising middle-class, and experience-focussed millennials, often referred to as the YOLO generation, are also contributing factors to the surge we’ve seen in the past few years,” he avers.
Sarkar feels there are two aspects to the current demand. First, revenge travel and second, the confidence among people of having getting themselves vaccinated and taking care of the factors that people were not aware of before. Covid19 still remains a concern, but it is far more known. “There is a greater focus on well-being, curating personalised healthy meals, safe and hygienic accommodation, natural ventilation, hi-speed wi-fi connectivity and creating unique experiences outdoors that travellers cherish for a lifetime,” puts in Nath.
TAPPING INTO NEW SEGMENTS
One of major reasons that 2020 is accounted as a watershed year was the unavailability of vaccine. The fear had glued people to stay indoors was quite evident through the performance of the sector. But once the vaccination rolled out, the fear minimised and people started celebrating life once again with proper safety measures. Thus, the industry is now hopeful to invest into untapped leisure destinations as the demand for hospitality service is certainly increasing.
Neemrana Hotels is fiercely proud of its Indian clientele and continues to search for unique destinations where they are certain that the guests will be happy to escape the cities and get away with their families.
Likewise Sarkar observes that the guests today are extremely cautious, and hotels are scrutinised and judged minutely. Thus, as a management and franchise company, their role becomes prudent to ensure hotels who partner with them start getting recognised for quality. “Our focus will not only be on untapped locations but more so on standalone properties that have the potential to be unique and quintessential in their approach toward guests, which Cygnett can help them achieve,” he says.
Kapoor puts in that Roseate’s five-star luxury resort in Rishikesh has done amazingly well in the last two years since the time it was opened and he plans to expand it further by adding more villas from 2022 onwards. “We certainly believe that this market will always thrive provided you give an exclusive and personalised services to your guest. We plan to expand in Goa as well as we see it now an all-season destination. We are looking at two new and unique concepts as small boutique properties in India which will bring the Roseate brand to the international levels,” says Kapoor.
The CEO of Concept Hospitality, Kannampilly, further points out that the habit of multiple shorter breaks in a year has set in versus the earlier one long vacation a year concept suits well for the domestic leisure and releases a huge untapped potential. “This compounded with the improved road connectivity and the big uptake in mid-range SUV sales leave no inventory available and occupancy that weren’t thought off. As a management company, our growth is still reactive ie developers approach us with a land they want to develop or have already started developing,” he explains, adding they are now willing to look beyond management contracts by pitching in with investors on a revenue share model and looking to promote their new brands, Zinc Journeys and Zinc Living.
