Cover Story

The world's their oyster

Indian hotel companies are being recognised as true professionals in the international realm and are finding takers everywhere - from Middle East to Africa and even Europe - for their management skills. By Dinkar Farwaha

In spite of the incredible boom in the domestic hospitality sector, Indian hotel chains are building a marked presence beyond Indian borders. There is a visible rise in the number of projects that these companies are latching on to with an apparent focus on managing foreign properties. What is driving these groups to venture into alien markets at a time when there is an enormous demand-supply gap in the country?

It is not only the Taj Hotels, Resorts & Palaces and Oberoi Hotels & Resorts that are credited with taking the Indian hotel brand out of the country. Even the new generation of hotels have found strong foothold in the global market over the last decade. They mean business and their message is clear. For starters, Taj Hotels, Resorts & Palaces, which already has a presence in Maldives, Mauritius, Malaysia, United Kingdom, United States of America, Sri Lanka, Africa and the Middle East, has recently marked its presence in Bhutan with Taj Tashi in Thimphu. What is common in all its latest ventures is that they have been bagged on the merit of its management skills. Another evidence of this is the group's recently signed contract with Saraya Islands, Emirate of Ras Al Khaimah to manage one of the six hotel properties that are being developed on the four islands off the coast of the main island.

No more barbed wires

The Oberoi Lombok

The Middle East is an attractive destination for Indian hotel chains

Evidently, the opportunity for such international partnerships is driving many Indian hotel companies to set up operations there. A point in case is Bharat Hotels, which has tied up with Nakheel Group, a large privately-held real estate developer, to manage an upcoming luxury property, The Grand Fort Dubai at Jebel Ali, New Dubai.

According to Ajay Bakaya, executive director of Sarovar Hotels & Resorts, there are countries that offer prospects for hotel development apart from the UAE. "Qatar, Saudi Arabia and Bahrain are bright spots where we would be interested to have our footing. To further strengthen these relationship with this region after Dubai, we are optimistic of forging similar alliances in other Middle East countries," he says.

The above-mentioned regions are also attracting attention for investments from India-based hotel chains. Berggruen Hotels is marking a presence in the international market by building its budget brand Keys and the soon to be launched upscale brand in this region. The group also plans to develop properties in Egypt, Turkey, Morocco and the UAE and aims to start construction of 1,000 rooms to have 3,000 rooms by 2012 in these markets alone. Sanjay Sethi, its CEO and managing director, says, "While our initial plan was to consolidate the position in India before stepping out, we witnessed opportunities in some of the emerging markets like the MENA region and Vietnam. We have therefore set up an international division and aim to have Keys hotels in these countries."

The group plans to build four business hotels in Egypt (Cairo, Alexandria, Upper Egypt and Red Sea), five properties in Turkey (two business hotels in Istanbul, a resort in Antalya, a resort and business hotel in Izmer and a business hotel in Ankara). It is also in talks with strategic partners in Morocco and plans to open five properties in the country (Casablanca, Tangiers, Rabat and Marrakesh) Berggruen Hotels also plans to open 600 rooms in Dubai (Ras Al Khaimah, Ajman) and Abu Dhabi. It is also eyeing presence in Bahrain and Qatar as well.

Royal Orchid Hotels, a Bangalore-based hotel group, has also announced plans to foray into the international market through ownership model. For this, it is developing a 150-room beach resort over a 30-acre property in Dar-e-Salaam, Tanzania. Says Chender Baljee, its chairman and managing director, "We will be interested in offshore projects and both owning and managing properties depending on the tie-up." It bought the land through acquiring the holding company Multi Hotels for US$ 2 million. These ventures indicate the strength of Indian brands in the international market.

Identifying the right image

The 126-room Highland Hotels located in Port Rashid, Bur Dubai

These numerous developments suggest that the Indian hospitality industry is going through a phase where the outside world is recognising Indian brands as strong management oriented organisations. Amidst all this, the Indian brands will need to face the dichotomy of either being perceived as a conventional Indian hotel company or a true international entity.

The Indian hotel companies venturing abroad, irrespective of the model they are targeting (management ventures or owned hotels), need to have a clear strategy and style. For example, the 244-room super luxury resort in Dubai by Nakheel group, proposed for opening in 2009 (as per Bharat Hotels), would reflect the essence of Rajasthan's forts.

However, any chain venturing beyond borders needs to establish itself in the international market instead of relying on domestic success. Recently, Sarovar Hotels & Resorts announced the signing of an MoU with a Dubai-based company that owns Highland Hotel in Port Rashid, Bur Dubai. This partnership was one of the steps to expand Sarovar Group's global footprints. According to Bakaya, a chain should be known for its strong management expertise. "When we go outside India, we go there as an international brand which wants to offer good management services. Dubai being one of the most vibrant regions of UAE has emerged as one of the most preferred tourist destinations and we want to look at this opportunity," he informs.

Demand for Indian projects

A delegation from Berggruen Hotels, including Sethi and COO of Berggruen Hotels, International Division, Atul Lall, recently visited the MENA region where they met with key government members, tourism boards and strategic partners in order to explore opportunities for expansion.

Further, Jersey - an island situated off the coast of Normandy, France - is in talks with premium hotel chains like Taj and Oberoi to develop properties on the island. Says Senaton Philip Ozouf, minister for economic development, Jersey, "Hospitality is a very significant sector for us. There is an enormous potential for the premium and first-class category of hotels and therefore we are in talks with Indian hotel chains like Taj and Oberoi to foray into the island." To attract investors from India, the government of Jersey, according to Ozouf, is willing to offer low tax benefits and various incentives.

The fact of the matter is that there is much more than incentives that is attracting the Indian players. Bakaya adds, "We are not looking at incentives. Anyway, being a management company we look at the prospect of tie-ups, with whom we do so and adapting to that geography."

There is no such special treatment for Indian hotel companies per se. Baljee confirms this and says, "It is the usual tax holiday for five years or so according to governmental policies. But the important issue is that the governments outside helps in facilitating such projects, which is impressive." Param Kannampilly, director of Concept Hospitality, says, "We are venturing into China and South Africa because there is a strong demand for environment-friendly hotels in these countries."

Indian hotel companies venturing into the international market will clearly change the way Indian hospitality is perceived, especially at a time when investment in that market is indicating signs of exhaustion. It brings to foreground what Raymond Bickson, MD and CEO of IHCL, had said once - that the company expects at least a third of its revenues to come from its international operations. Perhaps the time is not too far when this will become a refrain.

(With inputs from Sanjeev Bhar, Delhi)