Sarovar Shines In India
Growing management company uses its local experience to drive business, development platforms.
By Jeff Weinstein, Editor In Chief -- Hotels, 8/31/2009 11:00:00 PM
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| Ajay Bakaya |
India has been a great country for hotel entrepreneurs and not everyone is a carpetbagger. Just look at home-grown Sarovar Hotels & Resorts, a growing management company with 35 hotels and resorts open across 29 cities in India and more than 30 scheduled to open under its various brands between now and 2012.
While there may be some delays of six to 18 months in opening 30-plus hotels over the next three years and a slowing of its pipeline going forward, Sarovar has had a big advantage over some of its global would-be competitors—local experience. Executive Director Ajay Bakaya can brag about having 13 sales offices around the country that deliver business to all of his hotels. “Because India has opened up, everyone who wasn't here wants to come in,” says Bakaya, who has been with the company since its inception in 1996. “The key to success here is to have a long-term philosophy and to understand the culture rather than coming in while things are buoyant to harvest in the short term.”
While the short term is somewhat treacherous almost everywhere in the hotel world, Bakaya is bullish on India, believing business is stabilizing and starting to grow again. While he says business has been off between 15% and 30% this year, he has an overwhelming feeling that the worst is behind Sarovar. “I expect a 5% to 10% increase in performance in 2010,” he says. “I don't see a dramatic upturn, but steady and better than 2009.”
Branching Out
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| Sarovar Premiere represents the company’s upscale presence in India. |
The Sarovar portfolio started aggressively in the late 1990s as the master franchise for the Park Inn International brands. Once Carlson acquired the brand, Sarovar lost its exclusivity and a little over a year ago launched its own portfolio of brands that includes Sarovar Premiere for luxury, Sarovar Portico for the mid-market and Hometel for the economy sector.
Sarovar has also developed a small management business in Africa and has been operating in Dar El Salaam for 10 years. Sarovar is about to open a hotel in Nairobi and Bakaya finds both East and South Africa as very promising regions to grow the management business.
For the long-term, Bakaya also likes the prospects in Bangladesh, Sri Lanka and Nepal. “We are not looking beyond areas that would happily accept a management company based in India,” he says.
For now, however, Sarovar is focusing most of its growth in India, where many small- to medium-size businesses have taken a shine to hospitality, yet don't have hotel industry experience. After getting financing from the likes of the Tourism Finance Corporation of India or traditional local lending institutions, they turn to Sarovar for management and sales expertise.
Bakaya points to a strong five-year tax holiday for anyone opening hotels by next March in the National Capital Region (a 50-km radius around New Delhi)—in preparation for the Commonwealth Games in Delhi starting next September—as the recent incentive for developers. As a result, Sarovar should open about eight hotels this year with a strong pipeline that will not be abandoned, according to Bakaya.
For those seeking advice about developing in India, Bakaya reiterates that developers have to look at things from a long-term perspective. “India is a difficult country to operate in with its own systems, and one must understand those,” he says. “To be successful here, you need to have a reasonable set of expectations, as well as the ability to generate business from within the country.”
| Brand | Existing No. of Rooms | Projected Rooms 2009 | Projected Rooms 2010 | Projected Rooms 2011 | Projected Rooms 2012 |
| Source: Sarovar Hotels & Resorts | |||||
| Sarovar Premiere | 431 | 715 | 1,015 | 1,015 | 1,215 |
| Sarovar Portico | 815 | 915 | 1,347 | 1,632 | 1,632 |
| Hometel | 286 | 609 | 709 | 929 | 929 |
| Park Plaza | 399 | 399 | 1,023 | 1,447 | 1,447 |
| Park Inn | 320 | 455 | 515 | 515 | 515 |
| Tanzania | 126 | – | – | – | – |
| Existing TOTALS | 2,377 | – | – | – | – |
| Future TOTALS | – | 3,093 | 4,609 | 5,538 | 5,738 |
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