Staying ahead of the curve

Considered as a reservoir of knowledge in the hospitality sector, HVS India has made the hoteliers and investors look at the sector as a strong cash-rich investment zone. Manav Thadani, MD of HVS India, speaks about the issues that his company has identified and brought to the fore. By Sanjeev Bhar

Manav Thadani Managing director HVS Hospitality Services

According to Manav Thadani, India is a destination to look out for. "The Indian hotel sector is going to be even stronger. The good thing about the industry is that the room rate rationalisatio `n has been taking place of late. Considering that the current hotel market is too expensive and there was a need for a rate correction, this is a welcome change that is going to benefit the sector in the long run," he says.

He was not surprised when the annual budget did not deliver for the sector, as he considers the hotel sector to be robust enough to chart out its own development path. Yet, he is forthcoming about the sector. He says, "As a consultant, I feel that some amount of rate correction that has been noticed would actually go a long way in extending the honeymoon period the hotel sector is enjoying right now."

He adds that even in segments that have seen a correction due to the economic downturn with US as the epicenter, there is nothing to fear. "Overall, most markets in India in the next five years are expected to remain bullish on hotel development. There would be odd pockets here and there, but generally speaking, it would remain very bullish," he asserts.

Going by this, HVS has seen market correction in Bengaluru and in Hyderabad where there has been rate as well as occupancy correction. This has happened for the first time in the last four to five years. More importantly, it is not a sign of stagnation, emphasises Thadani. It is true that many hotels are under development. Like in Bengaluru, 400 to 500 rooms have come up in the last 12 months leading to a definite price check. He feels, "Even then, as more hotels open, the process of moving room nights to guest houses will go down and hopefully at some point the price correction will lead to a better understanding of the market."

Budget boom

The formidable scenario of Indian hospitality will also be evident in the next five years. "Indian hospitality will come of age in the next two years. Traditionally, we never had budget hotels but now there are number of brands coming in from Ginger, Lemon Tree, Hometel and Premier Travel Inn," Thadani says. The investment roadmap of the sector is also looking good. Investments will start coming into India, which is evident from the fact that so many people are showing interest in the market right now. But the sub-prime prices and the slowdown of the stock market is giving jitters to a lot of investors because of land valuation, which will remain flat for a while. He even feels that the mid-market to budget segment should always be the preferred area for investments.

Growth in hospitality has inevitably given a much-needed push for organisations that assess ground reality. HVS Hospitality Services has successfully held four Hotel Investment Conference for South Asia (HICSA), bringing more international participation to talk about future trends and give a platform for decision makers to exchange knowledge that was seldom experienced before.

HVS Hospitality Services is also set to launch its asset management and operational advisory services for the hotel sector this July. The company will strictly look at hotel companies for its services. "We are not going to tap the travel industry but only concentrate upon hotels. We want to be able to do owner representation, internal audit, all kinds of operational audit for hotels and couple of other things as well," he explains.

Evidently, the scope of 'intellectual' organisations is growing and so is the competition. "Personally, I think competition for us is certainly coming into India. We are taking steps to stay ahead of the curve. Investments have been made to strengthen our resources and also created an internal cell within the company, which is going to integrate all the different services that we offer. By the time other companies catch up with us, we would have moved to the next level," assures Thadani.