Category: News & Reports

Expects future growth to come from Indian, middle-class travellers

Mumbai, April 15, 2015

At a time when the hospitality industry in India is reeling under a slowdown, the US-based Marriott International looking for local distressed hospitality companies for potential acquisitions.

“We will look at taking over distressed hotels and then sell them to somebody else in the future. These would be individual assets, not the typical M&A style of acquisitions and would be in consultation with our partners in India,” Arne M Sorenson, President and Chief Executive of Marriott International, said during a recent India visit.

The company has been acquiring assets across the world like Delta Hotels in Canada and Portea Hotels in Africa in recent years.

“We have been acquiring hotels globally and as long as it is the right property, we will not rule out further acquisitions in India,” added Rajeev Menon, Chief Operating Officer, South East Asia & Pacific, Marriott International.

Last year, the hospitality industry’s revenue per available room (RevPAR) had slowed down to 0.8 per cent with occupancies and room rates under pressure.

“While the hospitality industry growth rate was at 0.8 per cent, Marriott’s portfolio growth rate was at 8 per cent. We expect faster growth rates in the future coming from local and middle class travellers at our hotels,” claimed Menon.

Mid-segment brands

Marriott has 28 properties with seven brands and about 7,000 rooms across Ritz Carlton, JW Marriott, Courtyard, Fairfield Inn and Renaissance.

With 52 new hotels in the pipeline, Marriott expects future additions to come mainly from its mid-segment brands such as Fairfield and Courtyard.

“The bulk of the new deals will happen from the brands like Fairfield and Courtyard by Marriott and we also expect to grow these brands through local franchises in tier 3 markets. While there are also chances of upscale brands like Edition and Bulgari entering the Indian market, it may take a while to launch them since luxury lifestyle hotels are likely to do well only in places like Mumbai and Delhi. The next decade will see more franchise operations in India from Marriott International,” said CEO Sorenson.

For its latest five-star luxury hotel of JW Marriott, the company has K Raheja Corp as its real estate partner. Sanjay Sethi, Managing Director and Chief Executive of Chalet Hotels, a part of K Raheja Corp, said: “On the construction side, K Raheja Corp has invested Rs.600 crore behind the new property of JW Marriott.”

India contributes one per cent of Marriott International’s global revenues but Sorenson expects the country to emerge as one of top five markets in the next five years. Business Line

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