Hospitality companies targeting Indias luxury segment

Fairmont in Jaipur

Hospitality companies targeting Indias luxury segment

Hospitality companies have been trying to tap Indias growing number of high net worth individuals and companies that are willing to pay for premium rooms after the mid-market expansion drive of the last two to three years.

Live Mint reported that the companies are targeting the so-called super luxury segment.

A report by credit rating company Icra Ltd stated that there has been a rise in activity in the ultra luxury segment, apart from the rise in supply of mid-market hotels.

“While over 50 per cent of the incremental supply (of about 60,000 rooms) is coming under midmarket brands such as Aloft, Holiday Inn, Quality Inn, Ramada, among others, another niche segment which is emerging is the super luxury property,” said a report by Icra.

According to analysts, hospitality companies are now focusing on Indias high net worth individuals HNIs), and HNIs on their way to overseas destinations besides inbound travelers.

“Over the last three to four years we have seen movement in the luxury space from several global companies,” said Pavethra Ponniah, a hospitality analyst at Icra. “There is a target market in India for the luxury properties both for local HNIs as well as higher-end tourists and business travellers to India. Also, the relatively high land cost tends to make luxury properties more viable.”

Kempinski in Delhi

Luxury properties which will come up this financial year include the Fairmont in Jaipur, the Kempinski in Delhi, and the Leela Chennai.

The Icra report also said that the properties that will come up in the next few years will provide highly customized services, with personalized butlers, chefs, luxury transportation, and individual food and consumable preferences.

Kempinski Hotels S.A., a European luxury hospitality brand that has a property in Gurgaon in partnership with Leela Palaces, Hotels and Resorts, is looking at five properties in India.

“The way India is progressing, the luxury segment is not going to go away,” said Vella Ramaswamy, general manager of the Kempinski hotel that’s being set up in East Delhi. “India has already reached that level.”

Luxury brands are exploring more opportunities in India than ever before and with rapid urbanization, there is demand for super luxury properties.

“Not only is there more movement in the luxury segment in India, luxury properties are now spread across India,” said Atul Lall, general manager, Fairmont Jaipur. “Earlier there were luxury hotels in metro cities only but now many such properties are coming up in places like Kerala, Jodhpur, Jaipur and Goa.”

According to the Icra report, industry analysts said the companies are still positive about the long-term outlook and are thus betting on luxury properties, which have a long gestation period and carry more weight than four-five mid-market segment properties in terms of mileage and marketing.

Fairmont in Jaipur

Fairmont in Jaipur

“Over a longer time frame, the Indian market, being relatively under penetrated, remains attractive. The slowdown in investments in China has also contributed to this trend,” said Ponniah.

James A. Kaplan, senior vice president for development, Asia-Pacific and India, Fairmont Raffles Hotels Internaitonal said Indias luxury hospitality segment is still evolving.

“As the economy grows, and tourism infrastructure improves, an increasing number of domestic travellers will move to upper, upscale and luxury, which will augment the projected new international leisure and business travellers,” said Kaplan. “Relaxation of visa rules and process will further stimulate international arrivals, as to a great extent, compared with other countries, this market (luxury hospitality) remains largely untapped.”