'The Boom Will Come'

Lalit Suri, chairman and managing director of Bharat Hotels Ltd, opened two major hotels in consecutive weeks last month, at a time when the industry is still attempting to reestablish its foothold. He speaks to Alan D'Mello on why he is so bullish his new hotels will do well

EH&C: You have opened at a time when demand is not always keeping up with supply. The Mumbai and Goa properties have increased the load on room supply in these tough markets. What is your expectation for their first operating year?

LALIT SURI: We hope to break even within the first year itself. The two hotels have excellent locations with good traffic flow; the Mumbai hotel is near the international airport, the Goa property too is well placed in the south of the state. The hotels have superior facilities which we are confident not many other properties have. Also, with the overall tourism and business environment situation definitely improving, the coming season is looking very good.

To supplement fluctuating room revenues, the Mumbai hotel will trade heavily on its ancillary services such as banqueting, a 12,000 square foot area with separate parking and other services, and 21 service apartments amongst others.

Breaking even within a year is very optimistic!

Not really when a majority of your funding is done through internal accruals. Our interest burden is at a minimum, which allows us to break even with as low as 40 to 45 per cent occupancy within the first year. The pricing for both the hotels are yet to be firmed up. Pricing for us is an issue, as our brands are targeted at the upper segments.

I know my hotels have a secure future because the boom will come. Infrastructure, one of the industry’s main grouses, is being put in place. The highways network is being built, airport operations are being streamlined, air prices are becoming more realistic and convention centres are being constructed.

What is the average occupancy you expect Mumbai to touch this year?

It would not be prudent to expect a 100 per cent occupancy status, around 62 per cent will be fine with me.

You have also been on an acquisition spree of small to mid-sized hotels. Is Bharat Hotels planning to operate properties in the lower segments?

No. We will only operate in the luxury segment. The plan is to acquire such properties and renovate them to our requirement. The Grand Ashok in Bangalore is being renovated and fitted with a new convention centre. The Khajuraho and the Udaipur properties too are to be upgraded.

We have won the Bekal (Kasargod, Kerala) tender and are in final discussions with the government. In addition, Bharat Hotels has also put in tenders for two Punjab hotels owned by the state government.

Does Bharat Hotels have international ambitions?

We do not plan to have a widespread international presence. Our presence abroad will be restricted to a property in London. I have held this ambition to have a hotel in London ever since my Delhi property opened. It will be anywhere between 100 to 200 rooms. There are two mid-level properties currently under consideration, the plan is to upgrade them to a four- or five-star.

Why London when it is reputed to be one of the world's toughest hospitality markets? There are other prestigious cities.

London is an important international city. By the strength of our presence there, the hotel will be able to service most of our Indian properties as it is an important gateway and one that allows great brand visibility.