With over 60 hotels under its belt in a short span of 20 years, the homegrown Sarovar Hotels & Resorts continues to expand. In fact, in this calendar year, it plans to complete new properties in Thekkady, Bhiwadi, Jaipur, Jaisalmer, Tirupati and Gandhidham. It has recently opened a new Park Plaza hotel at Zirakpur, which takes its tally of hotels to five in Punjab, while a further four properties are under various stages of construction in the state.
“The hospitality business, like any other sector, is cyclic. When the going is good, even guest houses get to charge exorbitant rates in excess of US$300, and all investors tend to develop hotels. But, when cycle is adverse, the same set of investors redirect their investments from hotel projects to other real estate commitments,” Anil Madhok, Managing Director, Sarovar Hotels & Resorts, opined.
According to him, India saw a boom prior to entering the adverse cycle that started post the Mumbai Attacks. “The adverse business cycle has led to cleansing in the system, as most of the non serious players have exited their hospitality ventures. On the other hand serious players in the hospitality sector, like us, have used this opportunity to reduce our energy costs, streamline operations, right size manpower and manage to repose the trust of owners who, at the end of the day, demand profits,” he added.
Amid the drop in room rate across the country, Madhok is positive on the demand side. India with 100,000 rooms is nowhere near the saturation stage, he opined. The demand has not fallen, although the occupancies had seen a drop. It has essentially happened because of the continuous increase in room inventory supply. The prices have softened in different cities depending on the kind of increase in supply, he stated.
“For instance, several new hotels have come up in the vicinity of the Mumbai airport. As a result, hotels that would earlier charge Rs. 12,000-14,000 are now seen to be charging below Rs. 10,000. Similarly, in Gurgaon, hotels that were earlier priced close to Rs. 10,000 are now charging on average Rs. 7,000-8,000. Fortunately, it seems that we have bottomed out. In fact, with stability in Europe and positive signs in the United States economy, our sector is poised to enter the growth phase,” said Madhok.
The Sarovar group has excelled so fast since its inception in 1994 that it’s not even worried about the inroads large international chains had made in the India hospitality space. As per Madhok, the worry is for international chains that can’t fight the local players in the mid-market space.
“The big international chains admire the expertise the homegrown hospitality chain like ours has in the mid segment domain. We definitely have the cost advantage and excel in service delivery in the mid market. The big international players rather are at disadvantage, as their regional or global head can’t be deputed for long, when it comes to mid segment hotels. Also, their costs are much higher, as they look into the Indian market with global standards lenses, while we are more flexible and know the ground realities far better,” said Madhok.