The Show Must Go On In India

The attacks of Thanksgiving week in Mumbai raise a lot of questions about investment and hotel development in India. This strikes home to me, as one of my clients is a private equity/development firm that has property holdings throughout (and only in) India. It strikes even closer when I realize that I stayed at the Taj Palace in Mumbai in January and used the Taj as a meeting place, as many foreign and local business people do.  I also visited the Oberoi. To think of those places as battle zones turns my stomach.

My wife asked me whether the attacks affect my outlook about traveling to India. Though my initial reaction is to say “no,” I cannot say that I am not thinking of this. The randomness – regardless of planning and coordination – suggests that one should not fear a particular place (see London, Madrid, Bali). More critical than my travels to India, however, is the question of ongoing business in India.

The Indian hotel development environment, white hot about 12 to 18 months ago, has cooled.  Several of the larger firms that announced plans (e.g., DLF and Hilton Garden) have pared back in recent months. New “slow down” announcements have been made weekly for about six or eight weeks now.  My client has moved forward, quietly.

I do not purport to speak for my client, and I have not discussed this with the client since the attacks. However, it may be true that, if plans do not move forward, the terrorists win. I would like to think that all developers, investors and, indeed, lenders would decide that “the show must go on.”

Perhaps there will be a continued softening in the hotel development market. India is a major economy, it is growing and it is badly underserved and under populated in the number of hotels (about the same as are in the Orlando market). New hotels are necessary in all facets of the market.

I hope that the terrorist attacks in Mumbai are only a blip to the development process. More important, thoughts and prayers are extended to those who were directly affected by the attacks – our friends at the Taj and the Oberoi, their families, their guests – and the innocent bystanders.  And, of course, all caring hearts go out to the families of those murdered by this atrocity.