Business services May, 02 2016

Serving to excel in hotel franchise biz

In a tête-à-tête with Raj Rana, Chief Executive Officer, South- Asia, Carlson Rezidor Hotel Group shares how franchising helps in growing big hotel chains in India.

By Yamini S Verma, TFW Bureau
Serving to excel in hotel franchise biz

How do you see the Indian hospitality market?

The India hospitality industry has made rapid strides in the last two decades; however, we have been facing headwinds in the last two years due to supply outpacing demand. Nevertheless, the country’s potential is huge as there are still many cities and towns that have no branded hotels. We are seeing a tightening of new supply which is helping to restore the equilibrium. Also, occupancy is on the rise with rate gains bound to follow. There are many positive factors that instill confidence in India’s growth story - growing Special Economic Zones, improved connectivity, push for urbanization and an emerging class of Millennial travelers. These create a strong platform for travel and hospitality. Indeed we at Carlson Rezidor believe in India and continue to further fortress our leadership position in this country.

What is your business model in India?

At its core, our business model is managing hotels but we seek to grow our portfolio also through selective franchising. Our current portfolio is a good mix of franchised and managed hotels. Investors new to the field, particularly if hospitality is not their core business, require more hand-holding; that’s where our management expertise comes into play, ensuring well management of an owner’s asset and an assurance of return on the investment. Yet over the years, many owners have garnered years of experience and have not only been good investors but also good stewards for our brands and with such owners, we are open to franchising opportunities. We are seeing a positive trend in conversion opportunities, as there is branded hotels coming to maturity of their initial agreements.

What opportunities do you offer to high net worth individuals and franchisees in India?

In the Indian hospitality market the investors are largely high net worth individuals [HNI] as institutional funding is not the norm. To the HNI segment, we offer a one stop shop as we can help from concept stage to correct brand fit, and from construction to ramp up and beyond. Our franchisees benefit from our top line driving capabilities driven by our sales forces across the globe, our revenue generating platforms, marketing and loyalty programs. On the operation side, our franchisees can benefit from our training programs and preferred vendor partners.

Other than metros and tier-I cities, what are your plans for tier-II and III cities in India?

Our strategy to concurrently strengthen our presence in state capitals, as well as emerging secondary and tertiary cities, is delivering the robust growth that we anticipated. For the hospitality industry in India, smaller towns and cities will be the apex of growth. Our upper mid-market brands, ‘Country Inns & Suites By Carlson’ and ‘Park Inn By Radisson’ are well positioned to capture the white space in tier-II and III cities in India-Pahgwara, Ajmer, Sonamarg, Aligarh and Nathdwara.

Total number of your hotels/resorts in India and expansion plans for the country? How many of them are franchise ones?

Our India footprint covers over 42 cities across the country. With initial inroads in the north, we are now focusing on Western and Southern parts of the country where we have a number of hotels in the pipeline in cities like Gandhinagar, Mumbai, Coimbatore and Bangalore. By 2020, we envision to have a total of 170 operating and under development hotels in our portfolio. At present, Carlson Rezidor’s current operational portfolio in India, includes 76 hotels in operation and 42 under development, spread across the country under our brands: Radisson Blu, Radisson, Radisson RED, Park Plaza, Park Inn by Radisson and Country Inns & Suites By Carlson.

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