The recently concluded 11th Hotel Investment Conference – South Asia (HICSA) 2015 brought together 500 delegates from across 21 countries with overwhelming participation from hotel owners, investors, operators, bankers and industry specialists who shared best practices, new ideas and latest market trends.
Manav Thadani, Chairman – Asia Pacific, HVS and Founder of HICSA, in his introductory speech, acknowledged the presence of the captains of the industry. HICSA 2015 witnessed the presence of a large number of hotel owners, global CEOs, investors and international delegates amongst others despite the change in venue. He said that the overall outlook for the industry is quite positive and it will continue to grow.
The conference began with the keynote speech from Amitabh Kant, Secretary, Department of Industrial Promotion & Publicity (DIPP). He emphasised how the government has initiated a slew of measures that would bring about an ease in doing business in the country as India embarks on her journey of becoming one of most coveted destinations for investment.
In his role as Secretary, DIPP, Kant has been instrumental in unfolding the ‘Make in India’ strategy. He said if India has to grow, the service sectors and manufacturing need to support each other. Over six decades of controls over the economy cannot be washed away overnight. However, the government of the day has been able to change the six-decade old ‘socialist mindset’ in the last ten months, he said.
The government has been working hard on integrating different departments and offering the investor a seamless experience through the creation of an e-biz platform. Almost 14 services have already come onto a single platform. He added that the Foreign Direct Investment (FDI) volume has increased over 40 per cent in the first 10 months of this government’s rule.
Speaking on travel and tourism, he said that, once connectivity and visa issues are addressed, the sector can attain higher growth. Every step of the way, as the economy grows, there would be a growth in travel and tourism, he opined. Terming the tourism sector as a major subset of the larger economy, Kant said there is no distancing the two from each other. He also focused on the urbanisation process underway in India, adding that every step showed opportunities for India’s travel and tourism story. Infrastructure building will henceforth entail an automatic inclusion of hotels and allied facilities. It is one industry that ensures the required development of job opportunities, and travel and tourism is also being recognised as critical to growth, he stated.
The CEO Panel
Moderated by Steve Rushmore, Founder, HVS, the session saw Arne Sorenson, President & CEO, Marriott International; Gerald Lawless, President & Group CEO, Jumeirah Group; Rakesh Sarna, Managing Director & CEO, Taj Group; and Thomas Heneghan, CEO, Equity International as the panelists.
Stating that India is a seriously under-served hospitality nation, Rushmore compared the Indian hospitality sector with developed markets. “In the US, there is one hotel room for every 65 people. In China, it is one for 542 people. But in India, this ratio is quite small in relative terms. There is one room for every 12,000 people. Why is the hotel volume is so low in India?” he asked.
In response, Sorenson expressed surprise, citing the figure from US where out of nearly five million hotel rooms, about two million units are owned and driven by Indian entrepreneurs. He cited India’s late integration with the global economy as the possible reason for the same kind of investment not happening in India. “The Indian economy has been smaller in comparison to the US and China and has somewhat been slower in interacting with the global economy. India still has the image of a country with infrastructural woes which needs to be changed fast,” he commented.
Sarna opined that a lot of disappointment on the lack of hotel rooms stems from the belief that India has an epic-scale middle class. “In all economic projections over the years, we have seen Indian middle class numbers pegged at 250 million. At best our middle class number would be around 150 million,” he said and added that spending power of the Indian middle class is much lower when compared to the middle class in developed markets. He also presented an optimistic perspective saying that in a changing India, aspirations follow hope and there are sufficient reasons to believe that, with the Make in India programme and a renewed focus on economic development, some positive effects will be seen in the hospitality sector as well.
Heneghan strongly emphasised that India must do away with the procedural hardship a foreign investor has to confront. He said that it took seven years for Equity International to find the “right partner” (SAMHI) in India. The government must clear the bureaucratic mess, he added.
Lawless opined that the future growth of the Indian hospitality sector would also be a function of India’s ability to draw more foreign tourists. “Indian hospitality will have to part of creating more demand for international tourism since it usually happens to be the high-value segment. Relaxed visa norm is a right initiative on this front and the list of entitled countries should be more rapidly expanded in the future,” he said.
Travel Trade: Engaging Governments
The panel discussion – Travel Trade: Engaging Governments was moderated by Shweta Punj, Sr Associate Editor, Business Today, and the panelists were Arjun Sharma, Managing Director, Select Group; Priya Paul, Chairperson, The Park Hotels; Vikram Madhok, Managing Director, Abercrombie & Kent and Suman Billa, Joint Secretary – Tourism, Government of India.
“Before Narendra Modi had become the Prime Minister, he was talking in a positive language. But now we are a trifle disappointed since we continue to notice the flattening of the tourism curve and investors do not seem to be too encouraged,” Sharma said. He strongly advocated ‘radical, out of the box’ thinking on the part of the government to take the India story in tourism forward. He opined that in the light of the biometrics issue, Electronic Visa announcements were meaningless. He stated the Tourism Ministry failed to put in place a PR effort to regain the lost image in the international market due to Nirbhaya case. He cited the example of Thailand, which manages to bounce back after every set back.
Madhok spoke no differently. “The mood is right but we need to see more momentum on the ground,” he said after questioning the infrastructural constrains to handle the large influx of tourists by giving e-visa to 150 countries. He advocated steps to enhance the seasonal nature of Indian tourism.
“Indian tourism has reached the stage wherein we should now be talking about the ease of travel in India. On the experiential front to the ultimate spenders, we have not been responding to their aspirations and there should be a mechanism to judge and improve it.” Paul lamented that the government was not able to meet the “expectations” of the industry, especially the longstanding demands like infrastructure status.
Putting forward the government’s perspective, Billa said that, while it is easy to complain, actual governance takes time. He said that the government is working on a forward looking Tourism Policy. “It is probably for the first time that a government has recognised tourism as a top priority area. We are currently working on a new policy which will be unveiled in May. Once released, it will pave the way for long-term growth of the sector,” he said. He concluded that the new Policy will take into account all concerns raised by the industry.
