An 'Indian' chain in the making

HOSPITALITY: A UK major kickstarts a homegrown hotel chain in India.

In a luxe building not unlike others in its Gurgaon neighbourhood, 15 people occupy an office that is overseeing the birth of a hotel chain that its promoters like to describe as Indian, fully-owned and aimed at the mid-range segment.

They aren't the first by any measure "" the domestic industry has its homegrown Trident (Oberoi group), Fortune Park (ITC), Sarovar Hotels and Lemon Tree hotels, and the international market has tie-ups for Courtyard (Marriott), Ibis (Accor), Holiday Inn (InterContinental), Country Inns and Suites (Carlson), Choice and Sol Melia brands "" but where Dawnay, Day hopes to score is in its clearly mapped out strategy.

There might be hiccups, true, but for now Mandeep S Lamba, managing director of the hotels segment of the group (financial services, real estate and hotels) says the 10-month old venture has already committed $125 million to the country, from a pool of $1.2 billion.

And, acquisitions aside, the group could roll out its first property in the last quarter of 2008 in Jaipur, following which it will launch a property on average every three months. "We wanted 30-40 hotels when we set up," explains Lamba, "but the target keeps changing. We will not chase numbers but do as many hotels as is possible."

Already, projects have been tied up in Pune, Ahmedabad, Bangalore, Lucknow and, of course, Jaipur, and this fiscal, the group will sign an agreement a month for prospective hotels. Research groups are sifting through two audio-visuals and the audience reactions to their names, and the name will in all likelihood be announced soon.

But what the management isn't loath to share is what it calls its uniform approach to each property "" 125-150 rooms on average with one speciality restaurant, one 24-hour diner, a 24-hour tuck shop, spa, swimming pool, in-room tea/coffee and ironing service, and adequate meeting spaces.

Tariffs are pegged at $100-125 per room irrespective of location and market shortages. "They will be contemporary hotels married to Asian warmth," stresses Lamba.

"Return on investment is pegged at year five," with the cost of rooms benchmarked at Rs 40 lakh minus cost of land (or Rs 80-90 crore per project).

India has approximately 1,00,000 hotel rooms, and analysts say at least half that number are required in the mid-segment alone, from a total of three-four times that number overall.

"The Dawnay, Day formula of 125-room hotels appears flawed," says a competitor, "because key metros need to absorb thousands of rooms in the mid-range."

"A lot of cities will take more than one Dawnay, Day hotel," says Lamba, "we are not averse to having more than one or even two hotels in such locations."

The UK-based group has shown an aversion to partner with local or global brands. "We will manage our own hotels and build our own brand," stresses Lamba. "If we want to be large players, we don't want to shy away from creating our own infrastructure."

As for the rush for projects, Lamba responds: Competition will improve hoteliering standards. And in 50 per cent locations, demand and supply of hotel rooms will match, while in the others there will be over-supply for a short period till demand again catches up." Either way, for long-term players it can only mean win-win.