India a warming market for Hyatt

HOSPITALITY

Hyatt International picks up the pace to meet demand for luxury rooms in India.

Hyatt International Corporation, which operates five hotels in India, has just posted a 20-per cent growth in revenue from 2005 to 2006. This is not the only reason Rakesh Verma, director, South Asia is beaming.

The Park Hyatt resort and spa in Goa just got voted the "Number One Spa in the World" at the Annual Readers Spa Awards, organised by Conde Nast Traveller magazine.

"The award has been fabulous for the Hyatt brand in India," says Verma. The three-year-old resort is the first ever Park Hyatt Spa resort in the world, and witnessed 95 per cent occupancy through 2005.

Vella Ramaswamy, general manager, Park Hyatt Goa, says there will be further expansion of room capacity from the current 250 rooms and even upgrading of spa facilities. "We're looking at a capital expenditure of about Rs 3 crore over the next two years," states Ramaswamy.

Currently Hyatt International manages 2,200 rooms in India through its five hotels in Delhi, Mumbai, Calcutta and Goa. "We're looking to double the existing room capacity in three to five years," says Verma. "India, along with China and eastern Europe today fuel

Hyatt's growth, and will continue to do so for the next two years," declares Verma. He continues, "There is tremendous growth opportunity for us here; we're going to focus on emerging destinations like Gurgaon, Jaipur, Chandigarh and Ahmedabad, besides meeting the demand in Bangalore and Hyderabad."

The next Hyatt property to be unveiled will be in Pune in end 2008; development of the property is currently underway with Hyatt International Corporation teaming up with Magus Hotels. Hyatt's business model worldwide is based on hotel management and not hotel ownership.

"Business in India will continue to grow exponentially for the next four to five years until the demand plateaus," expects Verma, convinced that the underlying economic drivers of the boom this time round are far stronger than in the early to mid 1990s, when it was more euphoria driven.

He brushes off questions about saturation in markets like Mumbai. "There are currently 3,000 rooms in Mumbai in the luxury segment, and demand is still underserved by 12 per cent. So even if a 400-room luxury hotel sprung up every year we would have no reason to worry," he claims.

Infrastructure in India, according to Verma, is still the crucial bottleneck to expansion. He says, "From the developer's point of view, operating cost efficiency in India is still far greater than the rest of the world, and construction costs still cheaper, so the cost of funding infrastructure today is still justifiable."

Construction costs in India, according to him are cheaper than South-east Asia by about 10 per cent and more than 30 per cent cheaper than Europe and America. But he warns, "This cost-benefit ratio won't last forever, so investment in four to five years is bound to slow down."

Earlier in 2005, Hyatt in India became the first luxury hotel brand to bridge the discrepancy between the Indian rupee and dollar room rate, by adopting the single currency Indian rupee rate across its hotels. "Hyatt International endeavours to follow a single pricing strategy worldwide," says Verma.

A formal directive that came from the Prime Minister's Office (PMO) on February 8 directed the services sector in India to end all discrimination in pricing for domestic and foreign travellers.