The Real Estate Finance for The Hotel Industry – New Perspectives
Until 2007, most hoteliers, investors and developers when it comes to buoyant growth prospects in the hospitality industry. I had reasons to be optimistic as all the factors that influence the industry, directly or indirectly, was on a growth trajectory.
The GDP was growing as never before and everyone had their eyes on the Indian growth story. Expansion plans filled the newspapers and press releases, and investors were more willing than ever to get a fair share of the pie.
The recession, however, had plans of most of their own and devoured the cake. The global economic slowdown and its impact on India’s economy has put out the fire of enthusiasm of even the most optimistic developers and investors.
The result has been an extreme crisis for investment in the hospitality industry, along with the decrease in demand for rooms. This double blow put to rest most of the ambitious expansion plans across the country.
All players have been reviewing their development plans, due to the increasingly difficult macro economic situation at this time. The total number of rooms added is estimated that today almost half than previously announced. One quarter of the plans announced so far have not materialized, while the rest are hanging on the edge of viability.
DLF, Parsvnath and other developers of similar tables have been reduced or delayed their expansion plans. Parsvnath had plans to add at least 10,000 rooms has stopped acquiring land for the new plans than twenty hotels for those who have done the same.
There have been reports that DLF has been in talks with several hotel companies to sell eight to nine of their land zoned for hotel projects to raise funds. Unitech has sold its Gurgaon hotel project to reduce its massive debt.
The developers are more focused on completing projects in hand in planning for the future. The assignment of the strong investment plans of the hotel seems to be the best way out of the box tied players, heavily indebted to survive the current economic climate.
Financial Projections goes wrong
Seeds were sown, the cultures were fed through the tough times, but inflation when it is harvest time came, flooding the recession dragged the anticipated reward. Cost and revenue assumptions made during the good times have been so for the draw.
When it comes to disbursement of loans, real estate is now the black sheep of the family. Private banks are lending freely available earlier have dried up. Public sector banks continue to provide, albeit cautiously, now require a greater guarantee to pay the same amount.
Tags: buoyant growth, global economic slowdown, growth prospects, growth trajectory, parsvnathThe Hospitality Industry in India is Growing
According to industry reports, the hospitality industry in India is growing at a rate of 15 percent. More companies in India are investing in the sector to fill the gap between supply (61,000 rooms) and demand (100,000 rooms).
International hotel chains such as Hyatt, Radisson, Marriott Meridian and are expanding their chains in the country for business links with India. Hotels around the world will be signing an agreement for a resort in Maharashtra Aamby Valley, and the opening of business hotels in New Delhi and Chennai to enter the hospitality industry. InterContinental Hotels Group (IHG) has partnered with Holiday Inn Express, a brand of mid-range hotels, and its first property is expected to open in Noida in 2012. Lebua Hotels & Resorts, a luxury chain based in Thailand, the hospitality is planning to enter India. Lebua has hotels in Bangkok and New Zealand.
According to the World Travel and Tourism Council (WTTC) 2011 report, India is expected to attract 6.179 million international tourist (overnight visitor) arrivals in 2011, generating U.S. $ 15.05 billion (INR678.6bn) in the visitors’ exports (foreign visitor spending, including spending on transportation). The direct contribution of travel and tourism to GDP is expected that the U.S. $ 34.8 billion (INR1, 570.5bn) in 2011, which is about 1.9 percent of GDP. This reflects the hospitality industry in India will have to prepare to meet the demand so high. Companies in India are investing their capital and industry reports predict that capital investment in India in the field of travel and tourism will grow at a rate of 8.8 percent between 2010 and 2020.
Taking the cue, the online travel companies are also making its entry in India to capitalize on the booming travel and hospitality industry. Hotels. com, an international portal for hotel reservations online, plan to spend about Rs 25 crore on promotional activities. ERevMax, an online management system channel technology provider, has developed an innovative product for the hospitality industry. The product enables fully automated inventory management and calculation of the rate by more than 700 websites linked based on channel performance.
Mandarin Oriental Group, which has one of the world’s most luxurious hotels, resorts and residences, will be the addition of 16 new properties in India over the next five years. Other companies in India, such as Small Luxury Hotels of the World (SLH), a marketing company for luxury hotels, is expecting to expand its presence in India. Currently, SLH has 13 hotels in India and expects to add 10 hotels in late 2011. The company also has a website for travel agents through which agents can book rooms for their customers.
Tags: holiday inn express, hospitality industry, intercontinental hotels group, intercontinental hotels group ihg, international hotel chains