US hotel chain Best Western scouts for franchise partner to expand in India

US hotel chain Best Western is scouting for a new management partner to expand its presence in India, according to three people familiar with the matter, as the company gears up for growth in the country's hospitality sector. 

Eight years after signing on a franchise partner in India, which it calls an "important" market, Best Western has fallen behind targets due to what industry experts say are quality considerations and the absence of a strong sales and distribution network. 

"Best Western needs more focus on the top management to be able to grow the brand in India. The international partners need to give more commitment and attention that this territory deserves," said one of the people, who earlier worked with the company. 

Best Western had inked an agreement with existing master franchise partner Cabana Hotel Management Services in June 2007. At that time, Cabana had planned to invest over $1.2 billion to add more than 100 Best Western hotels and 10,000 rooms in India by 2017 — targets that are likely to be missed. 

While Cabana acknowledged that growth hasn't taken place as planned, it denied that a change of partner was being contemplated. Best Western International, headquartered in Phoenix, Arizona, was noncommittal. 

"We consider India an important market and we will continue our steadfast efforts to meet the hospitality needs of customers in this significant market," David Kong, president and CEO of Best Western International, said. 

A Cabana (Best Western India) official said the company is currently discussing the terms of an extension of its agreement with Best Western International. 

"In terms of the global Best Western development pipeline, India stands at number 4 amongst all Best Western Affiliates internationally," Gaurav Sarin, associate vice president of Best Western India,said. 

While Best Western India's website mentions 25 operational properties with about 1,250 rooms in the country, he said the company runs 29 hotels. 

Sarin attributed the slow signing of deals to the overall slowdown and financing issues facing the hospitality industry since 2010-11. "Signup numbers might be proceeding at a slower clip in the past two to three years compared to earlier. However, it is still much higher compared to other chains." 

Hotel chains warm up to franchise model

Two months ago, the management of the Tata Group's budget hotel brand Ginger set up a special six-member task force. It's been entrusted with plotting Ginger's rapid growth through franchising, something the brand hasn't attempted before.

"So far Ginger has grown through greenfield developments, but now we are studying the different facets of the franchise model to scale up our presence," said PK Mohankumar, MD and chief, Roots Corporation, the Tata-run Taj hotel group subsidiary that manages Ginger Hotels.

Executives at Indian and international hotel chains are warming up to the franchise concept as it's turning out to be a viable growth model for hotel brands and asset owners. It's also less prone to the risk of going awry than management contracts, although the latter generate more revenue.

Ginger plans 80 hotels by 2016-17, up from the current 30, and the bulk of these will be franchises. Franchises account for a third of the 15 properties in the portfolio of mid-market chain Keys Hotels.

"It helps in ramping up business and to scale brand visibility more quickly," said Sanjay Sethi, managing director and CEO of Berggruen Hotels, which owns the Keys Hotels brand. Global chain Hilton Worldwide opened the Double Tree by Hilton in Pune under a franchise agreement with city-based Panchshil Realty. "We would consider franchising in instances where the owning company of a hotel has strong credentials in managing a hotel to the highest standards," said Rajesh Punjabi, vicepresident, development, India, Hilton Worldwide.

In the last few years, there have been several cases of owner-brand ties turning sour under management contracts. The franchise model bridges the gap between the owner's cost concerns and the hotel brand's expansion ambitions.

"There is lesser friction because if you are not managing the hotel then the owner cannot do the finger pointing," said Dilip Puri, India managing director of Starwood Asia Pacific Hotels and Resorts, which recently converted two of its existing five-star hotels in the south that were under management contracts into franchises.

But brands also need to ensure that standards are maintained. "Some owners develop the capability of managing the hotel well and it is in these cases we consider changing from a management contract to a franchise," Puri said. Under the franchise model, the hotel company gets a fixed fee for licensing its brand while the owner operates and manages the hotel.

"It helps in reducing the operations cost structure and puts the onus of performance on the asset owner without sacrificing fees for the hotel brand company," said Priyakant Amin, director, Convention Hotels India (CHI), which owns and builds hotels. Typically, a management contract entails a hotel brand getting a fixed percentage of the revenue and operating profits whereas a franchise involves only the brand licensing fee.

"The brand takes up almost 10-12 per cent of the top line in terms of all the charges in a management contract, whereas under a franchise we can save almost 5 per cent of that cost on the top line," said a Bangalorebased hotel owner who has plans of converting his upscale hotel into a franchise property.

However, the revenue earned by a hotel brand under this model is only around 40 per cent of what it gets in a management contract.

Sagar Ratna plans Gujarat entry; to open Jain restaurant in Delhi

The Delhi-based Sagar Ratna Hotels Pvt Ltd, which runs the Sagar Ratna chain of restaurants in northern India, is planning to expand its network in Gujarat, according to Mr Roshan Banan, Director of Sagar Ratna Hotels Pvt Ltd.

In an informal chat with Business Line here on the sidelines of the launch of ‘Kudlada Ruchi' (Taste of Mangalore) festival at the Ocean Pearl Hotel on Thursday, Mr Banan said plans are there to open Sagar Ratna Hotels in Gujarat in the next one to two years.

“We are pondering whether to go on our own or take the franchise route,” he said.

Mr Banan said that the company will open an exclusive Jain restaurant at Hotel Ashok in South Delhi in the next three to four months. The food served there will be devoid of garlic and onion, he said.

Stating that the company is also into industrial catering segment, he said it has been catering the needs of a major industrial house in Noida, a major hospital in Delhi and some of professional education institutions in northern India.

On the expansion plans of the company, he said plans are there to have a total 100 outlets in the next five years. Sagar Ratna made an entry into Bangkok three months ago, he said.

At present, the group runs around 75 Sagar Ratna chain of restaurants in various parts of northern India and in Mangalore. In Delhi National Capital Region alone, the company owns 25 outlets.

The company entered the hospitality market of Mangalore with Ocean Pearl (an 84-room luxury hotel) last year. Sagar Ratna has outlets in Punjab, Haryana, Rajasthan, Uttar Pradesh, Himachal Pradesh and Jammu.

Source : The Hindu Business Line

Choice Hotels to bring two new brands to India next year

Global hospitality chain Choice Hotels International today said it will introduce two of its global brands into India by next year to cater to rising consumer demand in the country.

While the company has not disclosed the names, it is understood that the two brands that the hospitality chain plans to introduce are budget hotel 'Econo Lodge' and 'Cambria Suites', which caters to upscale customers.

The company, which currently operates 27 hotel properties in India, mostly through franchise agreements, aims to have 40 hotels in its portfolio by the end of the next year.

"We have conducted market research and realised a need to bring in an upscale brand and an economy brand into the country, possibly by the end of next year," Choice Hospitality India Sales and Marketing Vice-President Shivali Sharma told PTI without disclosing the names.

Industry sources, however said the two brands are Econo Logde and Cambria Suites.

Globally ,the company has over 800 Econo Logde hotels positioned as 'an affordable and convenient place to stay'. On the other hand, Cambria Suites is positioned as an upscale full service brand.

At present, Choice Hotels operates 27 hotels with a total capacity 1,800 rooms are operational under the Comfort, Quality and Clarion brands in India.

Of the entire portfolio, three hotels in India are currently managed by the company and the rest are franchisee operated.

"By the end of next year, we intend to operate 40 hotels with a total capacity of 2,200 rooms, mostly franchised and some under management contract, if required," Sharma said.

Besides the existing three brands, Choice Hotels is also set to launch the economy brand 'Sleep Inn' India, for which a property is currently under development in Faridabad.

"The Sleep Inn hotel in Faridabad will open later this year," she added.

The locations for the future expansion include Ahemadabad, Rajkot, Delhi, Ludhiana, Manesar and Rameshwaram.

While the investment for setting up new properties will be made by respective franchise partners, the company will invest in technology support and marketing initiatives.

"Choice Hotels India, which is a wholly owned subsidiary of Choice Hotels International, is currently self-funded, but going ahead, the parent company will make need-based investments in certain areas of marketing and technology," Sharma said without giving financial details.

Globally, Choice Hotels International has more than 6,000 hotels, representing more than 4.85 lakh rooms in the United States and more than 35 other countries, according to the company's website.

Source : Business Standard

Chatwal ties with Wyndham for major hotel expansion in India

Noted Indian American hotelier Sant Singh Chatwal plans to set up 50 new hotels in India in five years as part of a major expansion into South Asia in partnership with Wyndham Hotel Group. "India has just 100,000 hotel rooms at present. It can easily seek 100,000 more," said Chatwal at a media event

on Wednesday noting that there was potential for at least another 100 hotels.

The hotelier whose New York headquartered Chatwal Hotels & Resorts currently runs two hotels in India has already tied up nine sites for the planned India expansion starting with a 200 room hotel in Jaipur.

There are lots of tourist spots in India like Jaipur, Jodhpur, Udaipur and Varanasi but lack of quality hotels prevented realisation of their full potential, Chatwal said.

Poor infrastructure, high cost of land and the need to get 120 odd clearances also made India operations a tough thing to do, he said. However, things are now changing in India, he said.

Chatwal Hotels has entered into an agreement with Wyndham Hotel Group, which runs 7200 hotels in 67 countries around the world, giving them exclusive rights to franchise and manage its Dream(r) and Night(r) boutique hotel brands globally.

Dream and Night hotels currently are open in New York; Bangkok, Thailand; and Kochi in India. Chatwal Hotels & Resorts will continue to own the Dream and Night brand trademarks and intellectual property.

"The addition of the Dream and Night brands will complement Wyndham Hotel Group's diverse brand portfolio which focuses on meeting guest needs with a hotel product for every kind of traveller," said Eric Danziger, Wyndham Hotel Group president and chief executive officer.

"These design driven, destination-within-a-destination brands are favoured by travellers who crave an avant-garde yet cosmopolitan experience," he said.

"We are especially proud to work with Sant Singh Chatwal, an innovative hotelier and entrepreneur, to expand and evolve these brands in key business and leisure markets around the globe," Danziger said.

Wyndham, which at present runs just 27 hotels in India under various brands as against 400 in China sees a big potential in India.

"Our job is to see the right brand in the right place," said Danziger describing Chatwals as the right people with the right brands to grow in India.

Even as it expands in South Asia, Chatwal group plans to open a Dream hotel in New York's Meatpacking District during the second quarter of this year.

In addition, the 108-room, Art-Deco-inspired Dream South Beach is set to open shortly in Miami Beach, Florida, adjacent to the former Versace Mansion on Collins Avenue.

Chatwal said Wyndham Hotel Group will "take the development of the Dream and Night brands to the next level" by leveraging Wyndham's global distribution system, Wyndham Rewards loyalty programme and extended reach of development professionals.

"The relationship with Wyndham will unlock the true potential of our Dream and Night brands, which have proven their success in key markets like New York and Bangkok during the last six years and are prime to further expand globally," said Chatwal.

The Night brand, which Wyndham plans to develop in primary and secondary markets, will be positioned as an 'affordably chic' hotel option featuring innovative designs and services such as guest deejays in lounges, discounts for green motorists with hybrid and electric cars and gourmet quick-serve food and beverage options.

The Dream brand is positioned as a full-service, lifestyle brand for gateway cities and resort destinations.

Source : Hindustantimes.com