Real Estate Companies

Its all about prestige

Beginning with a retail store and growing to become one of the most trusted names in real estate- the Prestige Group has come a long way. And now, it plans to bring its winning formula to the hospitality business as well as. Nawabzada Omer Bin Jung, managing director, Prestige Leisure Resorts - the hospitality arm of the group - speaks on what's in store for the future

It was one man's dream, his grit and foresight that laid the firm foundations of Prestige, way back in 1956, when Razack Sattar, founded what is today known as the Prestige Group of companies. Having started with custom tailoring and retailing ready-to-wear garments, the company today scores skylines with innumerable impressive constructions. Taking the road travelled by most real estate companies in today's day and age, the group decided to foray into the hospitality segment owing to the immense potential of the Indian tourism and hospitality industry, starting with the Angsana Oasis Spa & Resort located on the outskirts of Bangalore.

Commenting on reasons behind the group's foray into resorts as its first hospitality project, Nawabzada Omer Bin Jung, managing director, Prestige Leisure Resorts - the hospitality arm of the group, says, "Resorts have always been a niche market when compared to city hotels. With the increase in business travel the city hotels can function even without depending on the Central Reservation System (CRS) but resorts function on an entirely different business concept.

He adds, “The trend is definitely convenience rather than experience. This is a big factor as the entire premise of resorts is to offer an experience apart from the general product. Another factor is that resorts command a higher price, as the cost of maintaining and running a resort is especially higher. At the moment Bangalore leads in occupancy levels, and resorts have their fair share although they are not on par with the ARR as city hotels."

But with city hotels ruling the roost, do resorts in today's fast paced environment make a profitable business sense? Jung opines that occupancy levels at resorts are definitely driven by the MICE market although essentially targetted at the leisure market. For that matter, Jung reckons that the MICE market will play an important role in the future growth of the tourism and hospitality industry. More importantly, the MICE market will not only be concentrated in the metro cities, but will also move to non-metro cities and resort destinations. This phenomenon will be spurred on by the growing interest in setting up of convention centers in which the Centre too has been taking active interest.

The game plan

Staying true to its core competency, that is being developer of properties, the group has decided to stay away from hotel operations and look towards leaving that job to experts - hoteliers. "We are keen to forge alliances with leading domestic and international hotel companies. More importantly, we will not like to necessarily restrict ourselves to a particular hotel company for alliances for variety of hospitality related projects and plan to work with different hotel companies that are experts in particular hotel related projects. Like Oakwood for service apartments," expresses Jung.

Taking the resort route for its hospitality foray, the group, as part of its business strategy, plans to make its presence felt in different segments of the hospitality business like luxury hotels, business hotels, service apartments, mall 'o' tels in mixed-use development projects and may be even budget hotels. The last, though, is still at the drawing boards.

"While the government and various travel and hospitality players have been crying hoarse about the increase in foreign tourist arrivals into the country, in my estimate it is the domestic tourist who is the future of the Indian tourism and hospitality business. But that doesn't mean that the foreign tourist market will not grow, of course it will, as it is clearly noticeable. However, for us at Prestige, while foreign markets certainly interest us, we will try to focus on the burgeoning domestic tourist market," feels Jung.

On the horizon

After the Angsana project, the luxury hotel with Hilton and the service apartment with Oakwood, the group is looking at strengthening its base in the hospitality industry. Within the next two years Prestige sees its portfolio of properties grow to five hotels and service apartments. One of them is a joint venture with the Taj group to build a property near the proposed Bangalore International Airport. Prestige will have an equity stake in the 100-room project with Taj running and managing the property. In its real estate growth plans in the current year, the group is expected to invest close to Rs 2000 crore. The group also plans to come out with an IPO shortly to fund its expansion in the realty sector and is in talks with leading international and Indian fund houses to raise the greenbacks. By 2010 the group plans to set up close to 20 malls in metro and non-metro cities and though mooted but not finalised each mall is to play host to mall 'o' tel.

"We are looking at making our presence felt in other cities also like Kochi, Hyderabad and Chennai," Jung reveals.

Jung believes...

'Sky is the limit' is what Jung would like to describe the future potential of the Indian tourism and hospitality market. It will not be a closed door of opportunities only restricted to certain segment or certain players but it will see the emergence of new concepts such as mall 'o' tels, homestays, service apartments, unique theme-based hotels and resorts. "More importantly, the industry will also witness considerable interest from foreign hotel brands, investment companies and governments also looking at forging alliances with their Indian counterparts in order to be a part of what will undoubtedly be the tourism market of the future," says Jung.