Latest Property News on 'Hotel Industry in India'

Hotels Industries Push for Infrastructure Status Continues

The tourism industry continues to lobby hard with the finance ministry, seeking infrastructure status for hotels, tax sops for restaurants and a uniform road tax on tourist vehicles in the next budget. According to a blueprint prepared by the ministry of tourism, one of the top demands is the inclusion of hotels within infrastructure under the income tax laws at par with airports, sea ports and the railways. Sources in the ministry reportedly said if this concession is allowed, new projects would be able to get full tax deduction on profits for 10 years.

The industry has also sought a uniform road tax on tourist vehicles. Transporters say tourism is subjected to a great disparity in taxation. A 10-year tax holiday for new hotel projects in the country is another priority of the industry. The hospitality industry has been demanding infrastructure status. It says that de-linking the sector from real estate would help it to access easier credit. The industry has also sought a special package linking it to small and medium enterprises for priority lending. At present, the Reserve Bank of India classifies loans to the sector as a commercial real estate exposure, resulting in higher interest rates and non-priority status for financial assistance. Read More »

Hotel Industry Demands Infrastructure Status to Avail Easier credit

India’s hotel industry has asked the government to grant it infrastructure status and de-link it from the real estate sector to avail of easier credit, an industry body said, ahead of the federal budget in July. It has sought a special package for this sector delinking it from real estate business and linking it with small and medium enterprises sector for priority lending, Federation of Hotel & Restaurant Associations of India (FHRAI) said in a statement. “We also wish for grant of infrastructure status to the hotel industry,” FHRAI said, adding hotels should be bought on par with other infrastructure projecs like airports, highways and power projects.

The Reserve Bank of India at present classifies loans to the sector as a commercial real estate exposure resulting in higher interest rates and non-priority status for financial assistance. However, analysts say this alone will not be enough to ensure easier access to credit for the beleagured sector. “Ultimately, bankers would only take a call based on the strength of the borrower and all these things will not necessarily increase the flow of credit,” Crisil’s head of research Sridhar Chandrashekar told Reuters. “The concern for the hotel sector is larger in nature. More importantly, it has to do with the demand-supply scenario,” he said. Weak corporate spending in the wake of the global financial meltdown and the terror attacks in Mumbai last year have led to a fall in occupancy levels of most hotels. Read More »

Development in Hotel Industry

The worldwide effect of the recession seems not to have stayed the hands of developers around the world. Europe has endured steep revpar cuts akin to the US as a recent report in the Wall Street Journal details: “occupancies fell 8.9% in the first three months of the year compared to the same period last year, according to STR Global, an industry research group. Hardest hit were those in Eastern Europe, down 19%, and southern Europe, down 16%.” Yet as BusinessWeek reports “big chains such as Intercontinental, Marriott and Starwood were now launching niche luxury brands in Europe, in a bid to offer clients more glamour for the money they were prepared to spend on hotels. Last month, British-based Intercontinental opened its first boutique hotel in London, named Indigo.

Marriott International was also launching a boutique brand in 2010, with hotels set to open in Paris, Madrid, as well as Washington, Chicago and Los Angeles. Sheraton-owner, Starwood plans to open its first European luxury hotel in Barcelona this year and two in London next year.” One of the fastest growing hotel markets, India has seen the sharpest occupancy drops since the financial crisis and “major hotel chains have slashed room charges by up to 30 per cent because of falling occupancy rates on account of the recession.” But a (well-founded) belief in the country’s overall potential sees a continual spate of development deals. Le Meridien (Starwood) plans no less than five new hotels Local real estate major Emaar MGF launched yet another hotel in Jaipur and another regional player in the south of India, the Muthoot Pappachan group, plans a several hotels there. Read More »

Hotels Industry Witnesses Recovery Signals

Hotel investors are returning to the market but mega multi-use projects are no longer financially viable, say senior executives. “Early signs of investments coming into the market were seen in April, especially in India, the Middle East, North Africa and Asia,” James Kaplan, a Senior Vice-President at Fairmont Raffles Hotels International, told Emirates Business. “The US is still down because of over-supply [of hotel rooms].” Arnaud Andrieu, Vice-President of CBRE Hotels, said: “Growing interest from international and experienced hotel investors is clearly perceptible. “They are looking for distressed existing hotel properties that offer strong fundamentals. Investors will then seize the opportunity to reposition outdated or inefficient products while putting in place strong and innovative asset management strategies by mainly optimising operational processes with an accent on revenue management.”

Kaplan, who is responsible for his group’s development in Europe, the Middle East and Africa, said interest in Europe was focused on smaller projects. And he said the day of mega multi-use projects was clearly over because it was difficult to obtain financing for them. “This is specially so for projects that have a residential component,” he said. “We are now back to more conservative financing models.” Andrieu said: “Regarding hospitality development projects, investors are more than ever sensitive to realistic and tangible investment criteria, and are, therefore, focused on the supply-demand balance and following a ‘top down’ market analysis approach. Read More »

Peninsula Delays Hotel Project

Peninsula Land Ltd, a unit of the Ashok Piramal group, is deferring its plans to build business hotels by at least six months to preserve cash, a company official has said. In May last year, Peninsula forayed into the hospitality sector with a joint venture with textile maker and real estate developer, Arrow Webtex. The JV planned to build hotels in Mumbai, Pune, Nagpur, Nasik and Kolhapur in Maharashtra. There were also plans to develop hotels in Ahmedabad, Surat, Jamnagar, Mundra port, Goa and Kerala. “Currently, all outside initiatives are on hold. We do not think it is prudent to diversify rather than executing our current projects. We will look into new projects in the second half of this year when we expect markets to go up. It is more important to preserve cash in the downturn,” said Rajeev Piramal, executive vice-chairman, Peninsula Land.

Real estate developers such as DLF, Parsvnath and Unitech are also going slow on their hotel plans due to tough credit environment and fall in occupancy rates. DLF, the country’s largest property developer, is said to be pushing back its hotel plans by 12-18 months, another Delhi-based realtor Unitech, has sold its Gurgaon hotel to reduce its debt burden. “Land values are not attractive and still there is more scope for correction to launch these projects,” said Piramal. Peninsula and Arrow Webtex were to create a special purpose vehicle (SPV), where they would hold 50 per cent stake each. In the first stage, the JV was to invest Rs 100 crore and build 10 hotels of 100 rooms each, aggregating 1,000 rooms. Read More »

Infrastructure Status to Tourism Sector will Benefit Hotel Industry

According to PTI report, Government of India (GoI) will soon give infrastructure status to the tourism sector, enabling hotels to get cheaper loans for new projects. While speaking at the inaugural session of the three-day ‘The Great Indian Travel Bazaar 2009’ (April 19-21, 2009) in Jaipur, Sujit Banerjee, Secretary, Ministry of Tourism said that getting infrastructure status for the tourism industry is near conclusion. According to Banerjee, tourist arrivals will increase in the country soon after they declined in recent months, especially after the Mumbai attacks in November last year. However, he declined to indicate a time-line for the industry to regain growth.

Banerjee also informed that foreign tourist arrivals have gone down by ten-12 per cent since the attacks. The Ministry of Tourism (MoT) is also working on a proposal for ‘single window clearance’ for setting up new hotel projects. “We are working on single window clearance for hotel projects in the country,” stated Banerjee. Further Jyotsna Suri, Chairperson and Managing Director, The Lalit Suri Hospitality Group said, “India is a key (tourism) destination and is still unexplored.” She also informed that 178 exhibitors and buyers are participating in ‘The Great Indian Travel Bazaar’ this year, which is jointly organised by the Ministry of Tourism, Rajasthan Tourism and the Federation of Indian Chambers of Commerce and Industry (FICCI). Special guest to the event, film director Yash Chopra said that India has lot to offer to the film industry in terms of locations for film shooting. It also offers a lot to the foreign, as well as domestic tourists.

Mumbai-based Litolier opens Five-Star Hotel in Delhi

Mumbai-based Litolier Group, which opened a boutique hotel ‘Ramada Plaza’ here Friday, said it would enhance its presence in the hospitality sector by building two more five-star properties in next few years. The group will develop two hotels in Mumbai and Goa under a joint venture with a foreign hospitality major. “The Mumbai hotel will be on the Andheri-Kurla road near the airport,” Litolier Group director Ashok Mittal told reporters.

“We are in talks with several foreign five-star chains, but nothing is finalised yet. The land for the Goa property has already been acquired,” he added. The group plans to build both properties under an equal-partnership agreement. The 419-room Ramada plaza, built at a cost of over Rs.100 crore, stands where the erstwhile Ashok Yatri Niwas stood-once owned by India Tourism Development Corp (ITDC). The property was divested by the government in May 2002 and purchased by promoters of Litolier group for Rs.45 crore. The Ramada brand belongs to Wyndham Hotels, one of the world’s largest lodging franchiser.

DLF to raise money from sale of eight Hotel Plots

The country’s largest real estate developer DLF expects to raise around Rs 900 crore in the next three months by selling at least eight hotel plots across the country, a senior company executive said.

The real estate major is talking to several hotel companies, including ITC, Accor, Hyatt, Park Hotels, and buyout fund Duet Group for sale of these plots, he added, refusing to be identified. Plots on the block are located in Mumbai, Kolkata, Bangalore, Gurgaon, Baroda, Lucknow, Kasauli (Himachal Pradesh) and Sikkim. Read More »

Hotel Biggies See Recovery By 2011

A recessionary business environment has not deterred hotel chains such as Marriott, Accor, Hyatt and Royal Orchid from going ahead with their expansion plans. Hoteliers view the downturn as a cyclical phenomenon and expect a revival by 2010-11. Accor is expanding its network in India with 48 hotels (9,980 rooms) that would be a mix of its Sofitel, Pullman, Novotel, Ibis, Mercure and Formule 1 brands. “Almost five years ago, we made a commitment to launch and grow our business in India to include Accor’s core brands and have 50 hotels by 2012. We are well on our way to achieving this ambition,” said Accor Asia-Pacific chairman and COO Michael Issenberg.

Global Hyatt Corporation, operating in India since 1982 and having full-service hotels like Hyatt Regency, Grand Hyatt and Park Hyatt brands, is planning 20 new properties. These would include six Hyatt Place hotels. Around 6,000 rooms will be added as part of the expansion. The growth plans are not only confined to leading markets in India. The company will also target tier II and III cities with its new upper mid-segment brand, Hyatt Place. “We have completed more hotel transactions in India in the past year than any other time in our 25-year history,” said Steve Haggerty, global head of real estate and development at the Chicago-based Global Hyatt Corporation. Marriott is also setting up 24 new properties in the next few years, with room inventories exceeding 10,000 rooms. Royal Orchid, which currently has 12 hotels and 1,000 rooms, is adding 1,000 rooms in the 4-5 star categories in 2-3 years. Read More »

Hotel Majors from all Over the World Look to Open Properties in India

Global hotel chains are lining up to open properties in India at a time the sector is grappling with falling occupancy levels and declining average room rents, forcing local developers and hoteliers to defer projects. Companies, including MGM Mirage Hospitality, Wyndham Hotel Group, Langham Hotels International and Corinthia Hotels and Resorts, are finalising plans to launch their brands in the country in the next two-three years. Hotel chains such as Dubai-based Jumeirah Group, Movenpick Hotels and Resorts and Swissotel Hotels and Resorts are also close to finalising their plans for India.

Industry experts say as many as 37 international hotels brands are knocking at India’s doors. “India is one of the biggest growth markets in the world. We will build 15 new hotels in the country in five destinations,” Jean Gabriel Peres, president and chief executive officer, Movenpick Hotels and Resorts, said on the sidelines of the Hotel Investment Conference – South Asia (HICSA). The world’s largest gaming company, MGM Grand, which forayed into the hospitality sector with three premium luxury brands, is finalising its India plans. The company has held discussions with Indian real estate players for this. Read More »