The twin celebrations of the Hotel Investment Conference – South Asia (HICSA) , and its long time host The Grand Hyatt Mumbai completing 10 years, made for the perfect platform for hoteliers to gather, network and exchange ideas. Delivering on its annual promise of an opportunity to meet and greet the industry’s who’s who, and providing attendees with a fill of food for thought, HICSA wrapped up its 10th edition successfully in the first week of April.
The conference for the hotel industry was first held in the Trident Mumbai and welcomed 200 attendees. The show has now grown to 500 attendees in 2014, comprising brands, owners, consultants and developers of hotels. To commemorate its 10th year, HICSA added a ‘Hotel of the Decade’ award category.
Among the important announcements for the year, Manav Thadani, MRICS, Chairman, Asia Pacific, HVS revealed that HVS is working on a management contract database this year, and hopes to publish a White Paper on the topic in a few months.
The two-day event saw a series of informative business sessions that touched upon various trends and challenges in the hospitality sector. 10 Years Later – Then and Now; Global leaders – CEO Panel; The Story Behind the Numbers; and Brands and Owners: Managing Expectations were the topics discussed on day one.
Day two opened to discussions on the topics of Global Leaders Check-In and How to Solve Development Woes! What followed were impacting concurrent sessions that addressed the topics of Management Contracts – The Eternal Debate; Asian Spice; Is This the Best Time to Buy?; Debt: Equity – Where is the Money; Business of Leisure, Wellness and Luxury and More Than a One Night Stand (Extended Stay); Budget/Economy – Formula for Success; Hotel Owners 2.0 and Introducing New Brands in the Region. The conference came to a close with a panel discussion on Conversions – The Next Wave, followed by the much anticipated Hot Seat for Owners.
Keynote Address
Sharing her sentiments on expanding and running a business in the Indian market, Diana L Nelson, Chairman, Carlson opined that a global hospitality company in the current scenario cannot ignore India and must compete in this market. Delivering the key note speech on day one of the conference, Nelson said, “The hospitality sector is estimated to be a US$ 32 billion industry in India, which is a clear indication of the potential the market holds. We are very positive about the market and believe in investing more.”
Manav Thadani Uncensored
As unapologetic as ever, Thadani opened the Conference with a 10-point presentation on what the industry’s focus should be: Sustainability – to focus on optimising bottomline and increase value; professional skill development – especially among international hotel chains hiring Indian staff; food & beverage – 70 per cent of the sector remains unorganised; social media – it is not just for the young anymore; domestic tourism – 1036 million domestic tourists in India, a number that would put India among the top tourism markets if highlighted more; Visa on Arrival – expected to be a game changer; build v/s buy – development of new hotels; new opportunities to invest – huge opportunities in sectors such as Indian railways and the Buddhist circuit etc.; and how to bring down Under Performing Assets – banks need prudence in lending decisions.
The Wonder that is India
Nakul Anand, Executive Director, ITC and Chairman, FAITH, made a hard hitting presentation highlighting all that India has to offer, and what can be done to improve tourism in the country. He listed the Incredible India campaign, Clean India campaign, competitive hotel rates, the formation of FAITH, State Tourism Board’s increased efforts, opening up of FDI in aviation and the construction of world class airport terminals, as some of the key achievements in India.
“Today’s Indian traveller is well connected, knowledgeable, wants to be alone together and has moved from the desk to the couch. The industry needs to understand this. We should boost wellness tourism, grow culinary tourism and improve our Buddhist circuit to attract foreign tourist arrivals,” he suggested.
The story behind the numbers
Since its inception, HVS has produced hundreds of market studies, economic feasibility analyses, and large scale portfolio valuations, varying from limited-service properties to upscale and luxury hotels. In his presentation, Achin Khanna, Director, Consulting & Valuation – SA, HVS explained the nitty-gritties and the back story of how these numbers come into existence.
According to HVS, the basic nature of the hospitality business revolves around cycles. These cycles are a direct result of the environmental, economical and social conditions of the country. Since the 90’s, the Indian hospitality industry has survived three major cycles. Shedding light on this theory, Khanna explained that the period from the late 90’s to 2000’s experienced a rough patch. “Though the branded inventory rose from 18,000 to 27,000 rooms, the occupancy rate plummeted significantly.” Soon after, the industry saw a new era (2002/03 to 2007/08) wherein the Indian domestic market witnessed a boom, shared Khanna. During this cycle, the room inventory grew by CAGR 12 per cent, demand grew by CAGR 16 per cent and occupancy grew by CAGR 11 per cent.
Brands became optimistic and confident about the Indian market and started buying hotels or started greenfield projects. But what was to come soon after was not anticipated by anyone. The industry experienced a big hit with the sudden economic meltdown, “In 2014 so far, the average room rate has declined to CAGR 6 per cent and we expect occupancy rates this year to close at 58 per cent,” revealed Khanna.
On the positive side, Khanna believes that the industry is moving towards slow recovery, “In the next 12-18 months, with a stable government and improved sentiments, the industry is expected to pick up pace. For a buyer, this is the correct time to invest and a lender should lend wisely, but lend.”
Big Data
Educating the attendees on the pressing need for Big Data: The Next Frontier for Innovation, Competition and Productivity, Stephen Rushmore Jr., President and CEO, HVS addressed the issues of structured and unstructured data, revealing that using big data can help hotels factor in profitability margins. He suggested that hotels could use big data on their loyalty programme members to record where the customer spends more money during his stay. If it is on F&B, for instance, he can be offered better room rates on his next visit, assured that he would spend on F&B anyway. He further recommended that a system like Zillow, which predicts real estate rates and trends, can be used by the hospitality industry through big data to help plan developments. Making strategic predictions, he said, is the direction the industry is headed in.
Role of Technology and Social media
Highlighting the importance of the ‘Role of Social Media and Technology-Based Innovative’, Rohit Verma, Professor Service Operations Management, School of Hotel Administration, Cornell University shared that social media and technology sets an unprecedented opportunity for brands to raise the bar in providing unique, personal experiences for customers past, present and future.
The hospitality industry in particular has an enormous opportunity to market in innovative ways via tools like Twitter, Facebook, YouTube, blogging, mobile-based applications and initiatives and more. Verma further opined, “While social media has emerged as a marketing tool that needs to be integrated into the marketing plan, hospitality businesses need to keep abreast of the emerging trends, evaluate the ones that are best suited to their marketing efforts and implement them before they are outmaneuvered by the competition and lose out on market share.”
