Tag Archives: Starwood Hotels

Smart strategies to drive growth of luxury hotels

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By: Rami Kaushal, Sr Executive Director, Consulting & Valuation Services, CBRE South Asia

Starwood Hotels, Sheraton, Bangalore, Brigade Gateway, Bangalore Real estate news, realty news india, india real estate news, track2media, track2realty, ravi sinhaTrack2Realty: It is increasingly being observed that standalone luxury hotels are becoming unviable in the country, especially in the case of owned, built projects where the land is acquired, and typically comes at a high cost exceeding 40% of the total development cost.

Many hotel operators in the upper upscale and luxury categories are gradually shifting towards asset light models, with pure-play hotel management and franchise roles being preferred —The Leela Palaces, Hotels and Resorts being a case in point.

This is not to say that the market has struck the death knell for the luxury hospitality business in India—far from it! In fact, the business today has turned to other strategies to continue as profitable propositions.

One such survival strategy adopted in recent times by luxury hotels in India has been the creation of “smart” hotels—in terms of the use of smart technology and innovative techniques to create economically as well as ecologically sustainable properties.

Sustainable hotel design is increasingly becoming a necessity for most luxury projects, more than just a design option. Practices such as water and heat re-cycling methods, lighting retrofits using LED, solar lighting, wind energy for lower carbon footprints, vitrified tiles with wood finishes instead of wooden floorings, color-coded garbage bins for efficient solid waste management, etc., are all being progressively adopted by the premium hotels business.

Today’s luxury hotel guests too, are happy to do their bit for the environment by supporting and staying at such hotels which have a higher initiative for sustainability.

Some of the key drivers for sustainable practices in the hospitality business around the world in this regard include:

  • Cost savings
  • Hedge against utility rate increases
  • Emerging brand standards, and
  • Higher guest experience

As far as hospitality chains in India are concerned, nearly all of the luxury hotels run by the Indian hotels major, ITC Hotels, for instance, are LEED Platinum rated. While the ITC Gardenia in Bangalore has a non-air-conditioned lobby with a four-story-high ‘Green wall’, the ITC Windsor Hotel, also in Bangalore, utilizes energy created from its own wind farms; and the ITC Maratha in Mumbai uses nearly 80% of its energy consumption from renewable sources.

The Marriott Hotels, meanwhile, has launched a global initiative for reducing energy consumption by 20% by 2020. The Oberoi, Mumbai, has put in place highly efficient systems for water management, including using re-cycled water for flush systems and gardens. The hotel also uses low-voltage halogen reflector lamps in guest rooms for 40% energy saves.

The Leela Palaces concentrate on sustainable measures too, such as rainwater harvesting and native plants in landscaped areas for reducing water consumption and site disturbances.

The use of smart technology by such luxury properties for controlling costs and energy conservation includes cloud technology for operational efficiencies, thermal storage for air-conditioning systems, and the construction of rainwater harvesting pits, among many other sustainability approaches.

As for the right time for undertaking such initiatives, sustainable design and operation procedures are part of a larger global trend in the realty market at present, with major global corporations investing in robust sustainability programs.

In a bid to unburden their bottom lines, luxury hotels in the country are gradually realizing and integrating the use of smart technologies into their service offerings to guests. Apart from offering ‘green’ solutions, smart technology constantly offers cost-effective measures for tackling business challenges. Going forward, such smart strategies can only continue to drive innovations and growth of the luxury hospitality segment in the country.

Coimbatore market scaling up on hospitality

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Starwood Hotels, Sheraton, Bangalore, Brigade Gateway, Bangalore Real estate news, realty news india, india real estate news, track2media, track2realty, ravi sinhaTrack2Realty Exclusive: In 2010 when Le Meridien Coimbatore, a Rs. 300 crore project of Appu Hotels, announced to open a nine-storeyed hotel with a total built-up area of seven lakh sq ft, spread across a 6.75 acre plot, there were not many takers. The critics either termed it as an over ambitious project or a venture that was ahead of time.

Who would have believed at that point of time when even in Chennai, five-star hotels were dependent mainly on multi-national companies, corporates and the affluent, the Coimbatore with the larger middle income segment would have a market for that. However, the city has indeed scaled up on the demand of quality hotels since then.

Within a short span of time the critics were forced to eat their own words and today many big ticket hotel projects like Choice Hotels India, the wholly owned subsidiary of Choice Hotels International, are coming up with the grand opening of their new property under their upscale brand Clarion namely Clarion Hotel Coimbatore. Most importantly, hospitality has emerged as a serious business in the city, even though the real estate developers have thus far not been looked at this segment as seriously as the residential or commercial establishments.

Analysts believe Coimbatore, which has a fast-growing industrial sector, strong educational infrastructure, location advantage with neighbouring towns that have extensive international business exposure, is all set for a leap in the hospitality sector. Many even maintain that contrary to the general perception people in the city have the spending potential, ability and desire to spend but the avenues have been pretty limited.

But with the success of a couple of ventures the entire ballgame has suddenly started changing and now more projects are likely to follow here in the hospitality sector. Nearly all the big hospitality brands have set their eyes on the Coimbatore market which promises to strengthen the market for hotels and, in turn, help the local economy grow even further.

The demographic pattern, social outlook and economic cycle are also changing fast in the city. Facts speak for themselves. Coimbatore has several engineering colleges and Universities, the Tidel Park, etc. The city has a good mix of consumers and creation of more quality hotel projects is the need of the hour. This is the time for second-tier development of hospitality sector in the city after a couple of big hotels have strengthened their presence.

Many analysts believe the growth of hospitality in this country now onwards is actually in the tier-two cities like Coimbatore. A number of international visitors come here and several major and even small scale companies in this region have overseas contacts. Many of the foreign visitors who come to Tirupur, Karur and Erode, stay in Bangalore and Chennai. Given the quality hotel stay, they would prefer to stay in the city while on business trip.

This raises a fundamental question as to why the developers have not forayed into hospitality sector in this market even though Coimbatore has shaped up well as a business destination. The developers cite their own reasons ranging from the policies of the state government, to opportunity cost and hurdles in the clearances as compared to the residential projects.

R.S. Krishnan, Head-Operations-Site, Rakindo Developers blames it on the logistical reasons. According to him, Coimbatore has major infrastructure shortcomings. Lack of power, proper roads and scarcity of water makes it unattractive for major developments. The fallout and decline of the textile and hosiery business (closure of dyeing units) have resulted in the negative growth of this city. Most of the existing hospitality start-ups have all failed. Hence, Coimbatore is a strict no-no destination for hospitality.

“Despite being the second largest city in Tamil Nadu, lack of political will and lack of political impetus on the part of successive governments has left Coimbatore lagging behind on several fronts making it almost impossible for any developer to foray into hospitality. Participation of national and international hotel chains is the only option that could prove beneficial to the hospitality sector as the industry itself has proven that stand-alone hotels are not successful business options,” says Krishnan.

A section of the developers suggest the government to make the hospitality foray more attractive from execution standpoint since the opportunity cost is high and the gestation period is too long. They suggest either single window clearance for the hospitality projects or fast tracking approvals and clearances, special status given to hospitality projects and development of supporting facilities like roads, infrastructure, power and water to make the project sustainable.

Beyond these teething issues lies the fact that Coimbatore is poised to grow on the hospitality map of India. The way the city is growing with its vibrant economy, it is quite natural that the big hospital chains would like to tap the potential of the Coimbatore economy. A few years back, hotels with facilities like a ball room, an exclusive spa and health club, multi cuisine restaurants, imported chandeliers from Italy etc were unheard of in this part of the world. Today, some of the upcoming hospitality groups are clubbing entertainment centres with the hotel itself.

Analysts maintain the very economy of Coimbatore is such that MICE (Meetings, Incentives, Conferences and Exhibition) segment can be catalysed with the policy incentives which will further ignite the economy of the city. They suggest it is time Coimbatore should be promoted as tourism destination, something that will attract developers from other big cities to invest in the city. After all, the land cost and overall opportunity cost is pretty low when compared with the other markets.

It is true that the developers have thus far resisted investing into high capital intensive hotel projects. But many of the big ticket developers are also realising that there lies a big market in the segment of urban resort. They are hence in talks with the big chain of hospitality brands for a possible tie-up. Of course, there is a cost-benefit analysis that prohibits the developers to jump into a new segment, yet the potential is so huge that sooner or later many of them will weigh their options in favour of a foray into the hospitality sector.

Hospitality to add wings to Noida as corporate city

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Starwood Hotels, Sheraton, Bangalore, Brigade Gateway, Bangalore Real estate news, realty news india, india real estate news, track2media, track2realty, ravi sinhaTrack2Realty Exclusive: Critics who had till very recently criticised the projection of Noida as a corporate city on the grounds that the city lacks commercial activity and an international airport may soon have reasons enough to eat their own words. Scaling up from just being an affordable destination the seemingly poor cousin of Delhi-NCR is today giving its superior peer markets a tough competition in its march to emerge as a landmark corporate hub.

Noida can now boast of luxury and ultra luxury projects, quality office spaces, high end retail spaces in the making and, hold your breath, some of the best hospitality chains redefining the market to a new identity.

Noida is finally getting the attention that it deserves and corporate, leisure and lifestyle option are increasingly making inroads in the city. The city is witness to an interesting phase of corporate evolution where the best of international hotel chains are looking up to this market with renewed interest and most of the developers are either offering their services to these hotel chains or are themselves foraying into full-fledged hospitality business.

While there are already few established operators in midscale and upscale hotel business in the market, a lot of new development that is coming in this segment seems to change the market dynamics altogether. Analysts are hence curious whether Noida is on its way to emerge as India’s Las Vegas in the time to come.

Facts speak for themselves. Hospitality giants like Marriot Hotels, Accor, Renision Courtyard, Sheraton, Four Seasons, Westin Resort, The Lalit Grand, Grand Hyatt all have entered into this market with grand plans. Among the developers right from Brys Group to Supertech and 3C Company to Jaypee Group, it seems all the established developers in the market today endeavour to scale up their market presence and brand positioning with foray into hospitality. As a result, Noida and Greater Noida will have additional more than 4000 rooms by the year 2015, as per a Cushman & Wakefield report.

This raises a fundamental question as to whether Noida will give a tough competition to the established hospitality locations of Delhi-NCR. Analysts tracking the local economy suggest that Noida will not eat into Delhi or Gurgaon market; rather it is going to be accommodation of enhanced demand than stealing from the other. This market is poised to attract some of the new streams of business for the regional economy.

For example, the upcoming hotels in Noida that are getting developed on the expressway are expected to get accommodation or occupancy by tapping into the Agra market as well. Agra will cater and remain a large incentives and meeting markets and this has the potential to gradually shift the tourism market to Noida and Greater Noida. The larger chunk will nevertheless remain to be the commercial market.

Navneet Gaur, Director, Brys Group does not find it surprising that hospitality is the in-thing in Noida, citing reasons from quest for luxury in the city to investors’ interest level and the emerging corporate expansion in the city. According to her, hospitality and real estate have historically shared a symbiotic relation where the real estate players are the ones to create infrastructure and the hospitality chains do manage it at the operational level. However, in Noida the rules of the game are changing and the developers nowadays want to themselves create a sub-brand in hospitality with a business serious plan in mind.

“I would say just two factors, luxury and commerce, has changed the outlook of the city and it is time Noida finally emerges out of the shadow of a low cost market. Emergence of luxury residential property is a great traction point. Moreover, the way multinational companies are increasingly setting up their bases in the city the MICE segment (Meetings, Incentives, Conferences, Exhibitions) is all set to grow. Once this happens, both inbound and outbound leisure trips will also be in demand. It is precisely this market reality that we as developers want to establish our hospitality vertical as a serious business here,” says Gaur.

Nikhil Hawelia, Managing Director of Hawelia Group also believes that the way Noida is growing the demand may exceed supply even with the projected figure of fresh supply by the next year. He, however, is not sure about the feasibility of developers running the hospitality chains themselves. According to him, the developers in the city must provide the best of infrastructure for the hotels and then hire the best of hospitality chains to catalyst the emergence of Noida as a professional city altogether.

“If only an international airport comes up in the vicinity of Noida (even Dadri) there is no reason why Noida cannot shape up not only as India’s best corporate city but can also be India’s answer to Las Vegas. With an inherent potential to emerge as the best corporate destination, added with the best of infrastructure, Noida has waited for long to have a trigger point that could change the outlook and collective consciousness about Noida. I feel the entry of big ticket hospitality chains have proved to be that catalytic force,” says Hawelia.

Karan Sahoo, Head of Marketing with ATS Group finds the growth of hospitality to have a result of corporate entry in the city. Terming it a conscious decision of the developers to make the city ideal for corporate culture, he points out that with the up-gradation of infrastructural facilities like roads, highways, uninterrupted power supply and business friendly policies Noida-Greater Noida is likely to emerge as commercial and manufacturing destination for leading national and multinational companies.

“Hospitality being a service industry in itself will further enhance the development of such business clusters. Even if Noida does not have an international airport, in the long-term perspective, Noida-Greater Noida business cluster will automatically attract attention to develop an efficient means of communication in Delhi NCR and decongest the existing hubs,” says Sahoo.

Even within the Noida city the pockets of hospitality growth is emerging fast and it seems the hospitality giants have already zeroed in on the locations that suit their hotel business. The area around Sectors 15 and 16 in Noida has emerged as the ideal choice for international hospitality giants such as Renision Courtyard, Sheraton and Four Seasons.

Analysts believe the way Noida has suddenly started attracting the interest level of the corporate sector and the multinational companies there are certain pockets that will establish their claim as the Central Business Districts (CBDs) of the city. Similarly, the Secondary Business Districts are also emerging out of the advent of corporate and hospitality, of late.

Industry estimates suggest that for quite some time there was only one claimant in Atta Market, that is Sector 18, to be called the CBD of Noida. But then Sector 32 also emerged well in due course of time and now Sector 62 is also shaping up well. Then, the sectors along the Noida-Greater Noida Expressway are an ideal haven for the commercial activities and the growth of hotel business.

Moreover, the Taj Expressway connectivity to Greater Noida is all set to boost the entire stretch and the region is poised to get all round developed fairly well. With the Taj Expressway connectivity and with some spurt of tourism, Noida will not be just the centre of commercial activity in terms of office space accommodation but hotels will be among the major gainer to flourish in the entire region.

Sheraton Bangalore launched

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Starwood Hotels, Sheraton, Bangalore, Brigade Gateway, Bangalore Real estate news, realty news india, india real estate news, track2media, track2realty, ravi sinhaStarwood Hotels and Resorts announced on Friday the launch of Sheraton Bangalore Hotel at Brigade Gateway, the first property managed by the group in India. The 230-room property, situated in Malleswaram, is the first greenfield Sheraton hotel in the “upscale” segment since the U.S.-based group entered into a new franchising agreement with ITC Hotels in 2007.

The property has been developed in association with the real estate developer, Brigade Group. Hoyt Harper, Senior Vice-President, Brand Management, Sheraton Hotels and Resorts, said the company was planning to invest $5 billion in India in the next four years. “India is one of the fastest growing markets in the world,” he said.

Dilip Puri, Managing Director, India, and Regional Vice-President, South Asia, said the company planned to have a portfolio of 50 hotels with the Sheraton brand by 2012 and 100 hotels by 2015. Puri said India was the fourth largest market for Starwood. He said the company proposed to introduce its St. Regis brand in India soon. The revenues from managing fees, franchising and royalties generated by the Sheraton brand are significant, he said.

He said bulk of the spending in the next few years would be on the “upscale” segment, although Starwood would also make forays into smaller Indian cities. “By 2015, about 25-30 per cent of our portfolio will be under the Sheraton brand,” he said.

Puri added the group was developing another property in association with the Brigade Group in Mysore. “The hotel in Mysore should be ready within two years,” he said.

The group is also developing hotels in Chandigarh, Visakhapatnam and Amritsar, he said.