Global asset management cos check into Indian hotels
LARGE scale expansion in the booming hotel industry is making the international hotel asset management companies enter the country. US-based HVS International has firmed up plans to manage assets of hotels on behalf of the owners, charging them 2% of hotels’ revenue as fees, which is in sync with the global trend. Industry players believe other international hotel asset management companies such as Ashford Hospitality Trust and IFA Hotels & Resorts among others are likely to follow suit. Traditionally, hotel owners have been managing hotels in India but in the last two years many new tieups have taken place in the hotel space with real estate developers tying up with hotel management companies and hoteliers tying up with international brands. “The ownership patterns in the hotel industry are changing. Indian hotel industry has become competitive with so many brands now available. In such a scenario, there is a need for asset management companies to ensure that investors or the owners get best from their operators,” HVS International associate director Siddharth Thaker said. India will have around 40 international hotel brands by 2011. According to industry sources, at least three international hotel asset management companies are holding investor conferences in the next two to three months. Joan Lang LaSalle is also looking at starting hotel asset management operations in India, added a senior executive of a hotel company. Says Sarovar Hotels executive director Ajay Bakaya: “The time is just ripe for asset management companies to come in and we believe many of them have zeroed down on India as high growth market.” Agrees Carlson India executive vicepresident KB Kachru: “The landscape of Indian hotel industry is changing fast. I believe more and more asset management companies will manage hotel properties than ever before. This will help institutionalise the industry and will lead to better bottomline for hotel companies.” Globally, the trend of asset management companies managing hotels is quite rampant, however, in India it has just kicked in. As more private equity capital is being invested in hotels the need for asset management companies will only grow to ensure that the ‘brand’ or the operator is giving best possible returns to the investors, says industry heads. Some of these PE investments include Warburg Pincus Rs 280 crore investment in Lemon Tree Hotels and $55 million investment by Credit Suisse in the Park Hotels.