India’s travel industry is currently the world’s seventh largest, and it is predicted to move into third place over the next decade. What opportunities and challenges does the industry face? Three hotel group leaders voice their views in an exclusive round-table discussion.
Low inflation and a growing middle class are driving a domestic tourism boom in India. Airlines are adding routes to new travel destinations, and hotel groups are opening new properties one after another.
But an increasing number of foreign tourists are visiting the country, as well. Tourist arrivals grew by 15.6% in 2017, and receipts rose by an even more impressive 20.2%.
“Our targets are very high, and we want to double the tourist inflow and receipts in three years,” said Union Tourism Minister K J Alphons, when speaking at the Great Indian Travel Bazaar, which was held in Jaipur, India.
According to Equitymaster, tourism has become an important source of foreign exchange in India, accounting for fully one-third of the country’s foreign exchange earnings.
And things in the travel and tourism industries are only likely to get better.
According to the World Travel and Tourism Council (WTTC), India – which is currently the world’s seventh largest travel and tourism economy – will become the world’s third largest travel and tourism economy over the next 10 years.
“The biggest single area of improvement for travel and tourism in India is infrastructure,” Gloria Guevara, President and Chief Executive, WTTC, told the Times of India.
“Tourism is a competitive business in a global context, and India’s near neighbours to the east and west have built world-class tourism infrastructure in the form of airports, sea ports, high-speed rail, and roads.
“WTTC has long welcomed the opportunity of the Regional Connectivity Scheme to open up 350 un-served and under-served airports and airstrips.”
The Indian government has taken a number of steps to promote India’s tourism industry. An e-tourist visa scheme, for example, was launched in 2017 to encourage inbound tourism. Another move is to develop a cruise ship terminal in Mumbai.
All of this is good news for India’s hotel industry, which is thriving because of an increase in demand from both domestic and foreign tourists.
As a result, multinational hotel chains are increasingly looking at India, with an eye to entering the market. According to some estimates, as many as 40 international hotel brands could enter the market over the next five years.
Round Table Discussion
I interviewed top executives at three international hotel groups – AccorHotels, Brand Alila, and Preferred Hotels and Resorts – about the opportunities and challenges facing the travel and tourism industries in India, paying particular attention to the hospitality sector.
AccorHotels
Jean-Michel Cassé – Chief Operating Officer, India, and South Asia, AccorHotels, Jean-Michel Cassé spoke with the Accidental Travel Writer about the opportunities and challenges facing the Indian travel and tourism industry.
Excerpts of the interview follow:
When did AccorHotels enter the Indian market, and how many properties does it have there now?
Our legacy in India dates back to 2006 with the opening of the 287-room Novotel Hyderabad Convention Centre in the City of Nizams.
Since then, AccorHotels has built a strong network of 52 hotels across 10 brands in 22 cities in India by tying up with a strong group of partners, building a robust distribution network, and ensuring consistency in delivery of services across the hotels and resorts.
What are your target markets?
We see that 80% of our guest portfolio comes from the domestic market and the remaining 20% of guests hail from Europe, Asia, America, Oceania, and other parts of the world.
We have some of the most iconic brands in our luxury portfolio, namely: Fairmont Jaipur, Sofitel Mumbai BKC, Swissotel Kolkata, and Pullman New Delhi.
A significant portion of our expansion in India is also driven by our internationally renowned upper midscale brands such as Novotel, which is renowned for its modern, easy living, and flexible concept, and the economy brand, ibis.
As we expand our portfolio of hotels in India, our focus is on densifying the network and establishing a leading presence in key cities, with the positioning of our hotels to cater to demand across segments and micro markets.
Where do you see the most potential for growth?
Our recent openings in Kochi, Lucknow, Vadodara, and Dwarka along with upcoming openings in Chennai, Sriperumbudur, and Goa are reflective of our plans to cater to the needs of a diversified growing base of business and leisure travelers.
Does your hotel group have any new hotels under development in India? If so, how many?
In line with our global approach to development based on luxury hotels, private residences, lifestyle concepts, and resorts, we are increasingly focused on similar segments in India, where we see selective but interesting opportunities particularly in key commercial hotel markets: both tapped and untapped leisure locations.
AccorHotels’ luxury and upscale portfolio of hotels include some of the world’s most celebrated and iconic hotels enriched with distinctive heritage such as Raffles Singapore, Sofitel Legend Metropole Hanoi, and The Savoy in London, a Fairmont managed hotel.
Banyan Tree Phuket and Bangkok are two excellent examples of what our partners brought to the network. Our luxury portfolio in India includes Fairmont, Sofitel, Swissotel, and Pullman.
While we seek opportunities to introduce the entire gamut of brands at the appropriate time, we are looking to introduce the Raffles and Banyan Tree brands to Rajasthan and Kerala in the near future.
We see growth of the Fairmont and Sofitel brands in markets such as Mumbai, Gurgaon, Delhi, Bangalore, and Goa, among others.
Do you have any goals (such as # of properties within # years)?
We plan to have around 80 hotels in India by the end of 2020. India is one of the biggest markets where we see good potential for growth and therefore hotel development opportunities across the country.
Some of the key cities represent largely untapped markets due to lack branded hotel availability and consistent service experience.
Upcoming hotel openings include Chennai, Sriperumbudur, and Goa, where we are catering to a larger segment.
Will you focus on converting heritage properties, acquiring existing properties, or building new properties from scratch?
Our global growth model is following an asset-light model, with the focus being long term management agreements across our portfolio of luxury and upscale brands and a mix of management and franchise agreements for our mid scale and economy brands.
I believe that 70% of the group’s current global portfolio is under long term management contracts, with the rest under franchise agreements. What is breakdown in India and what is your growth model for the future?
Our network in India and development pipeline are under long term management contracts at present, and while this will continue to be our preferred growth path, we are selectively reviewing opportunities for franchise agreements in the mid-scale space.
Where we have differed in India is through strategic JVs with our key partners such as InterGlobe Enterprises to develop the ibis platform in India and Pacifica Partners to develop a platform of upper upscale, midscale, and economy assets in three key markets across the country. These partnerships have been an important lever for our growth and development in India.
Can you say something about the potential of India’s tourism industry?
The Travel and Tourism industry is a major contributor to the economic growth of India. The industry in India has witnessed steady growth over the past few years, aided by the rising purchasing power of the expanding middle class and the shift from foreign to domestic tourism.
The Indian tourism and hospitality industry has also emerged as one of the key drivers of growth among the services sector. Tourism in India has significant potential considering the rich cultural and historical heritage, variety in ecology, terrains, and places of natural beauty spread across the country.
The industry is also a potentially large employment generator besides being a significant source of foreign exchange for the country.
India’s rising middle class and increasing disposable incomes have continued to support the growth of domestic and outbound tourism.
I understand you have launched a “Born in France, Made in India” promotion. When and how did this come about? Is this specific to India or are you doing similar promotions in other markets?
I would like to take the opportunity to clarify that “Born in France, Made in India” is not a promotion but rather a proposition that we offer our guests in India.
By this we mean that AccorHotels’ properties have an element of Indian-ness while still holding on to its French heritage. Through this we aim to provide guests with international standards in hospitality while giving them a “home-away-from-home” experience.
What kind of reception has the proposition received, and will it be on-going?
It is a proposition we offer our guests and will continue to be a part of our ethos across all existing brands in India. We take inspiration from our vicinity and try to create authentic experiences to suit the taste of our guests.
One of such initiatives is the introduction of Spice It – an innovative food concept which is tailor made for India at select ibis properties.
This concept features the best of authentic delicacies from all over India and a mélange of fusion food offerings for guest looking to savour a taste of the country.
- Jean-Michel Cassé is Chief Operating Officer, India, and South Asia, AccorHotels. He is responsible for leading teams in the region to ensure continued growth momentum in India and the rest of South Asia. A seasoned hotelier, Jean-Michel has had more than three decades of industry experience and a deep understanding of varied cultures, having worked across multiple international markets in Africa, Asia, Europe, and the Middle East.
Brand Alila
Doris Goh – Chief Marketing Officer of Two Roads Hospitality Asia, Doris Goh spoke with the Accidental Travel Writer about the hotel group and the opportunities and challenges facing the Indian travel and tourism industry.
Excerpts of the interview follow:
Where is your hotel group based, and what is your niche?
Brand Alila is the eco-luxury brand within Singapore-based Two Roads Hospitality Asia, a boutique lifestyle hospitality company with its US home office in Denver, Colorado.
Alila means “Surprise” in Sanskrit, which suitably describes the refreshing character of our properties and impressions of our guests when they stay with us.
The hallmark of Alila is the combination of innovative design and crafted luxury in unique locations, set apart by an unprecedented level of personalized hospitality, private spaces and bespoke journeys.
Where and when did the group makes its debut in India?
Alila made its debut in India with Alila Diwa Goa in 2010 and was named “Best New Hotel in 2010” by Conde Nast Traveller, USA.
Seven years on, Alila Fort Bishangarh opened in July 2017 to the same acclaim.
What are your target markets?
Key feeder markets for the Alila group as a whole are China, South Korea, India, Southeast Asia, Australia, Germany, the UK, and the US. The largest growing segment for us is that of the domestic traveler in the home destination.
What is the approximate domestic/international ratio, and what is the approximate breakdown of your most important overseas markets?
It is largely dependent on the destination as many of our properties are resorts which will have between 30% and 80% domestic travelers.
For our Bali resorts, we have a good mix of 70% international guests from the key feeder markets.
Do you have any goals (such as # of properties within # years)?
No, it is not a numbers game for us in project acquisition.
Will you focus on converting other heritage properties or building new properties from scratch?
Our focus is destination and experience. So, we’ll focus on each property regardless if it’s a converted heritage property or a new build property.
Alila Fort Bishangarh is quite a stunning property. How long did the renovation take, and when did it open?
Alila Fort Bishangarh had a soft opening in February 2017 and finally opened with its full inventory on 1 July 2017.
The rough adaptive reuse and reconstruction took 10 years to turn the 230-year-old warrior fort into one of India’s most unique heritage properties.
- Doris Goh is Chief Marketing Officer of Two Roads Hospitality Asia.
Siddharth Savkur – General Manager of Alila Diwa Goa and Regional General Manager, India, of Two Roads Hospitality Asia, Siddharth Savkur spoke with the Accidental Travel Writer about the opportunities and challenges facing the hotel and the travel and tourism industries in India.
Excerpts of the interview follow:
What are your target markets?
For the group’s India properties, specifically, UK is a very key market. The US, France, and Russia are other major target markets for India.
What is the approximate domestic/international ratio?
For India, specifically, the domestic/international ratio is 70:30. The breakdown of the international market in Goa is UK – 45%, Russia – 35%, Other CIS Countries – 15%, Others – 5%.
Does your hotel group have any new hotels under development in India?
There are several projects in the pipeline for India, Indochina, Indonesia, Sri Lanka, and China. We will have 23 new properties by the end of 2020, which will bring our total properties to 36 properties.
Can you say something about the potential of India’s tourism industry?
The Indian tourism industry has been on a consistent upswing for the last few years. The easing of travel procedures by the introduction of the e-visa has opened potential for more international visitors.
Travelers are now looking beyond the more conventional destinations and seeking new experiences in the country.
- Siddharth Savkur is General Manager of Alila Diwa Goa and Regional General Manager, India, of Two Roads Hospitality Asia.
Preferred Hotels and Resorts
Arpit Pant – Regional Director for South Asia & Middle East, Preferred Hotels and Resorts, Arpit Pant with the Accidental Travel Writer about the opportunities and challenges facing the industry.
Excerpts of the interview follow:
When did your hotel group enter the Indian market, and how many properties are there?
Preferred Hotels & Resorts planted our flag in India with The Imperial New Delhi in 2002, and we have seen exponential growth in the region over the last 15 years.
We currently have 34 hotel members in the following collections: Legend: 7; LVX: 4; Lifestyle: 9; Connect: 14.
Does your hotel group have any new hotels under development in India? Do you have any goals for the group’s presence in the country?
Yes, we are currently engaging with multiple hotels in India and are excited about bringing on board some great independent hotels.
We have the largest collection of independent hotels in India and are committed to working with our hotel partners and contributing to their success.
How has the industry been performing this year in comparison to last year and previous years?
Recent industry reports have suggested that the hotel industry in India is coming out of sluggishness.
Can you say something about the potential of India’s tourism industry?
Tourism in India can look forward to an upward trend.
As better infrastructure through improved connectivity of transport, accommodation, and services continue, this will contribute to increasing international arrivals which have seen a constant growth through the years, culminating at 8.8 million international tourist arrivals in 2016.
Domestically, the improved earning patterns and strong domestic travel has shown a sustained growth.
Can you say something about challenges facing the hospitality industry in India?
The industry could benefit from some streamlining of government policies and processes that impact the hospitality industry.
Another challenge that is facing the hotels directly is to efficiently attract and retain quality manpower. Being a people and service focused industry, this is key to any hotel’s success.
Are there any parts of the country are attracting the most foreign investment – and why?
This is an interesting phase for investments in India. The government has launched “Smart Cities” a concept designed to attract investments into these nominated cities by providing infrastructure and suitable policies that help industries and business to be established. This has helped cities outside the major metropolis areas to grow.
Which sectors are international hotel operators focusing their attention on in India?
The international hotel operators have come into India with their multiple brand portfolios. As such, they now want to focus on increasing their share in the market.
The different brands allow them to target the metros as well as the smaller cities in India.
Preferred Hotel and Resorts has been championing the independent hotel space for almost 50 years, and we will continue to focus on and strengthen our company’s strategic growth throughout India with like-minded independent hotel partners.
- Arpit Pant is Regional Director for South Asia & Middle East, Preferred Hotels and Resorts. He is responsible for driving the development and expansion of the brand’s portfolio in the region as well as managing a portfolio of more than 45 hotels and resorts across the United Arab Emirates, Qatar, Oman, Kuwait, the Maldives, and India. Arpit has 15 years of expertise in hotel management.
Indian Hotel Industry Faces Opportunities and Challenges (a Round Table Discussion) is the latest in an occasional series of Round Table Discussions with industry leaders in the global travel, tourism, and hotel sectors.
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