Serviced and furnished apartments for homestay in Bangalore

India's hotel industry has attracted worldwide attention on account of the country's sizzling economy fueled by a high-octane diet that includes BPO (Business process outsourcing), exports, FDI (foreign direct investment) with most economic observers predicting that the country is merely in the nascent stage of a takeoff.

The country's hotel industry is the subject of conferences, articles and investment attention from virtually all the big players. At tourism fora such as ITB Berlin (where India was the main sponsor) and WTM London, the country has begun to play an increasingly prominent role with a variety of hospitality providers showcasing their wares including the MICE market where India barely figures.

The challenges for both providers and customers are far too many to enumerate but a representative sample surely will include infrastructure issues such as airports, roads and the paucity of hotels. The good news about hotels is that the sector is almost entirely out of the hands of governments (local and national) and, therefore, responsive to the tremendous opportunities that are there to be had for the less than faint-hearted willing to navigate the development process.

The bad news is that opacity and corruption (apart from "black" money demanded by sellers, officials at the state and central level are known to ask for "fees" to expedite processes) in the land acquisition process combined with stratospheric prices even by Western standards make it virtually impossible for outsiders to be principal developers. A fast diminishing supply of trained labor makes operations forbidding as well.

The situation at the retail level is unfortunately not much better and arguably worse. Groups arriving with guaranteed contracts for hotels in major metropolitan areas are being denied rooms and find themselves stranded. Hotels quoting rates in US$ are known to then change it on account of the dollar's drop subsequent to the booking!

That from cities that already rank in the top ten for average rates worldwide (the 2006 average room rate for Bangalore was a whopping $330). Corporate travelers are reacting by embracing service apartments and guest houses. For the near term though, visitors, both corporate and tourists, have to put up with the renegade behavior of some of the hotels and hope that the infusion of investment in the industry will ease the uncertainty as more inventory comes into the market.


But with some predicting GDP growth of nearly 10% per year, it is going to require a lot of inventory to reduce prices and minimize the extortionate practices of some of the rogue operators.

Vijay is Chief Operating Officer and part-founder of Apple Core Hotels- a chain of 5 midtown Manhattan hotels offering value and comfort in the heart of the city.Member of the board of Directors - Hotel Association of New York.

4hoteliers.com

An accomplished entrepreneur

With ambitious development plans, coupled with the proven success record of Sanjay Sethi, CEO and managing director, Berggruen Hotels, one gets the impression that Berggruen Hotels is destined to become a force to reckon with in the hospitality sector. By Dinkar Farwaha

Astuteness of mammoth proportions, an unparalleled ability to concentrate, determination and hard work are the four main traits that radiate from the calculating, yet humble figure that is Sanjay Sethi. Behind the intelligent and bespectacled eyes, lies a brain that is steadily making Berggruen Hotels a formidable force in the corridors of the hotel industry. He can arguably be rated as one of the very few men who have the potential to help the group achieve the great things that Nicolas Berggruen dreamt of.

Initial years

After completing his schooling from St Thomas, Kolkata, Sethi attended the Institute of Hotel Management (IHM), Kolkata. Choosing a career in this sphere wasn't an obvious choice for Sethi. He explains, "Even though I was a good student, I did not perform that well in twelfth standard and it therefore dashed my ambition of pursuing engineering from one of the better colleges in the country." A pause and he continues, "My father had a strong reckoning that the hospitality industry had a great future ahead and that I should therefore consider making a career of it. Convinced by the suggestion, I decided to pursue hotel management."

He began his career with a self-run catering company in New Delhi. After successful stints in F&B and front office with Hotel Hindustan International (HHI), Varanasi, HHI, Kolkata, and Taj Savoy, Ooty, Sethi got his first break as an influential general manager with Taj Garden Retreat, Madurai, followed by his association with Bogmalo Beach Park Plaza Resort, Goa, and Jai Mahal Palace, Jaipur.

His consistent hardwork and proven track record led him to becoming the area general manager, Taj hotels, North Goa. Sethi, during his tenure, was responsible for the growth of all the Taj properties in the region, sorting out the union issues which existed at that time, and also building the company's strong relationship with the local authorities.

He then moved on to Taj Bengal, Kolkata, and during his tenure, the group maintained its leading position and reputation against the developing competition, with the opening up of two new luxury properties in the city (ITC Sonar Bangla and Hyatt Regency).

The next assignment as area director, Taj Hotels, Hyderabad was "the best in terms of professional achievement" for Sethi. In a short span of time, the group was "able to re-allign its efforts in a market which was developing at a rapid pace and tap the huge potential."

Having excelled in the all the assignments that he had been a part of, 'the bug of the entrepreneur' finally caught Sethi. Nicolas Berggruen, founder and president of Berggruen Holdings, who was very keen on setting-up a global chain of budget and mid-market hotels, offered Sethi an opportunity to head Berggruen Hotels and thereby fulfill his desire. Says Sethi, "There was an immediate integration of ideas between us and I decided to be a part of his dreams."

It was essential to build a strong team of individuals, which Sethi did with a lot of thought. He then launched the 'Keys' brand of hotels, resorts and serviced apartments, which is in the process of development across tier 1, tier 2 and tier 3 cities.

Unlimited growth potential

"We have a pan-India outlook and are open to land acquisition opportunities in all promising cities," says Sethi. He aims to have 38 operational hotels by 2011-12. The group has already acquired hotel sites in cities like Bangalore, Trivandrum, Thiruvananthapuram Ludhiana, Goa, Cochin, Kovlam, Pune, Nasik, Pondicherry, Aurangabad, Vadodara, Jammu, Kolkata, Lucknow, Baroda, etc.

Meanwhile, the group has also finalised its plans for the international foray of its Keys brand of hotels, resorts and apartments outside India. It has shortlisted the Middle East, North Africa, South East Asia and neighbouring countries like China, Vietnam, Bangladesh, Pakistan and Maldives as possible destinations. This is part of its plans to open 30 hotels outside India by 2011-12. Says Sethi, "Primarily, we are looking at the ownership model, but are open to the management model also, in case there are any barriers regarding ownership in a particular country." It is also looking at the joint venture model to develop its brand further in the international market.

Moreover, the huge gap between demand and supply of upscale hotels in the country has led the group to foray into the upscale segment also. "We are on the verge of completing land acquisitions in Goa, Delhi and Hyderabad to build upscale properties," informs Sethi. The group plans to open eight to ten such properties in tier 1 and 2 cities in the next three to four years.

With such well-laid development plans, and given Sethi's previous success rate, the group is sure to become a force to reckon with in the hospitality sector.

Man behind the CEO

Sethi is driven by his father's values and his own conscience. Despite his busy schedule, he maintains a fine balance between his professional and personal life, spending his free time with his family or otherwise playing golf. As for future plans, he wants to keep working hard towards making Berggruen Hotels a noted hotel chain.

expresshospitality.com

7 November 2007

Bangalore: Vijay Mallya's UB Group has announced plans for a new venture in high-end retail.


The UB Group is the world's third-largest maker of alcoholic spirits, and will have a 55 per cent stake in UB City - the Collection, an exclusive destination in Bangalore that will retail luxury brands.

French fashion designer Louis Vuitton will be an anchor tenant of the mall, which will be located at 1, Vittal Mallya Road, due to open in early 2008.

Venetian-styled, the project will house a 250-room JW Marriot hotel, serviced apartments managed by Oakwood Premium, and office space already leased to Citigroup, Toyota, ABN Amro, Jones Lang LaSalle, 3M, Ernst and Young (E&Y) and Yahoo!. It will also house food and beverage outlets, and the Kingfisher Sports Bar.

The property group Prestige will hold the remaining 45-per cent stake in the venture. Irfan Razack, chairman and managing director of Prestige said the project has "been purely driven by the vision of Mallya, who calls it a value proposition", and an opportunity to tap high-net worth individuals. Razack said the mall will be an iconic landmark of Bangalore, "like what the Petronas Towers is to Kuala Lumpur." He estimated the project cost at around Rs300 crore.

Other brands to have signed up for space within the 1.5 million sq ft complex include Gucci, Fendi, Mont Blanc, Van Cleef and Arpels, Zegna, Rolex and Omega.

Latest research showed that the Chinese hotel sector is not the only fast-growing accommodation option in this burgeoning economy.

Serviced apartments in China, especially internationally branded ones in gateway cities Beijing and Shanghai are becoming well established. Beside Beijing and Shanghai, serviced residences operated by overseas operators are also emerging in major cities such as Dalian, Tianjin, Guangzhou and Shenzhen.

Although this lodging type made its way into China some 15-20 years ago, the supply of internationally branded serviced apartments has increased over the last five years. “Serviced apartments in China traditionally catered to expatriate residents seeking long-term leases, however, changing market dynamics and an increase in demand for short-term accommodation are nudging them closer to a hotel product,” said Mr Andreas Flaig, Executive Vice President of Jones Lang LaSalle Hotels in China.

Given the size of China’s economy and relatively consistent corporate relocation policies by foreign companies in China, Mr Flaig expects serviced apartment development to be reflected in other major cities throughout the country.

Investors are increasingly cognizant of the appeal of serviced apartments. Their flexible positioning between hotels and residential apartments allows investors to reap return opportunities in either sector depending on the market environment. “Serviced apartments offer owners and operators the flexibility to meet an evolving demand profile. With their ability to also cater to short-stay guests, branded serviced apartments are able to leverage their brand and distribution in times of high transient demand, ” said Mr Hans Galland, Vice President, Jones Lang LaSalle Hotels in Shanghai.

Increased demand, better quality supply and an increasingly transparent property market are driving the development of serviced apartments in China. Serviced apartment transactions in 2005 and 2006 demonstrated that there is an active and liquid market for serviced apartments in China’s major cities. International investors, particularly US opportunity funds, and experienced owner-operators make up the bulk of the buyers which appreciate the various exit options available to them.

4hoteliers.com

New Delhi: The emerging serviced apartments sector is lapping up the business that hotels aren't able to cater to and they are doing so in style.

It's meant to have the comforts of home with all the services of a hotel. Serviced apartments are fast emerging as the economical alternative to a hotel, especially for business travelers on longer trips.

Serviced apartments are normally priced 20 per cent lower than hotels in the same star category and the price becomes even more attractive if you stay longer.

The only thing holding the sector back is the lack of credibility that national hotels chains currently have.

The ministry of tourism began rating and classifying serviced apartments only a year ago based on the quality of the property and the services offered. The property has been rated four star, investors in the sector hope the classification will give the sector the credibility it desperately needs.

The ministry has so far classified 14 serviced apartments across the country, with only 2547 keys in total. Its no wonder then, that serviced apartments in the NCR region currently enjoy occupancy rates of 97 per cent all year round. But industry experts argue this does not necessarily mean the option is popular.

Cushman Weikfield South Asia EMD, Sanjay Verma says, “Service apartments in Bangalore are popular because there aren't enough hotel rooms in the city to meet the demand right now. That might not mean the idea of serviced apartments in necessarily popular.”

Never the less India will soon have properties from international brands like Oak Wood, Fraser, Home Stead, Halcyon, Qutab and Savoy suites. Its not just demand, its also the lower operational costs that make sense to investors.

Ascot MD and CEO Prakash Wadia says, “Because of the style of delivery at the service apartments catering only to residents the staff required are much lower we don't to extensive banqueting and we don't have restraints so staffing levels are lower and profitability is high compared to hotels."

Serviced apartments operators are also zeroing in on mixed-use developments to keep their real estate costs down. Retail outlets take up the prime space and the serviced apartments are based in the cheaper areas, like the top floors.

Industry experts expect new serviced apartments to break even at least three years before hotels in the same star category.

CNN-IBN

Mumbai: American hotel major Marriott International Inc is to set up service apartments in India in view of the potential for growth in this segment and will set up their second Marriott Executive Apartments at Gurgaon by 2009, said Geoff Garside, Executive Vice-President-Asia Pacific at the sidelines of a press conference.

“The supply of service apartments in India in comparison to the demand is very limited. Apart from Marriott apartments at Powai, Mumbai, there is only one more service apartment provider in the country,” said Navjit Ahluwalia, Vice-President, Hotel Development, India & Subcontinent.

AT YOUR SERVICE: Serviced apartments are normally priced 20 per cent lower than hotels.

Targeted at the foreign businessmen in India working on projects of more than three weeks, the apartments are sometimes priced higher than the hotel rooms, according to Brad Edman, Director of Marketing, Malaysia, India, Pakistan & Maldives.

“Foreign businessmen and their families form 96 per cent of the occupants and we try to locate these apartments in and around our existing hotels to enable them to use the facilities,” he added.

Service apartment is a popular concept in the US and though it is fairly new in India, it is catching up. “We have 117 apartments at Powai and it is the maximum revenue-generating venture from across the world,” he said. The company is in talks for setting up more such apartments at Chennai, Hyderabad and Bangalore among other cities, said Ahluwalia.

Expansion plans

With six operational hotels in India, Marriott has announced 17 more hotels in the next few years. A global sales office has been set up in Mumbai to handle the outbound travel. “Bangkok and Thailand are the most favoured destinations by Indians followed by Switzerland,” said Anant Joshi, Regional Director, Global Sales, India & subcontinent.

The group operates more than 2,900 hotels worldwide and plans to add 85,000 to 1,00,000 rooms by 2010 taking the total to 6,00,000 rooms. The company reported a turnover of $12.2 billion of which $200 million came from India.

Sify.com