Mr. Sushil Gupta, Chairman and Managing Director, Asian Hotels (West) has made a mark in the travel and tourism industry in India, having set up hotels and participated actively in promoting India Internationally. He is a hotelier by profession, is the Chairman & Managing Director of Asian Hotels (West) Limited owning Hyatt Regency in Mumbai. has been actively involved in the promotion of tourism in India while serving as the President and is currently Vice President of Federation of Hotel & Restaurant Associations of India (FHRAI). He has been a Member of the Executive Committee of the Federation of Indian Chamber of Commerce and Industry (FICCI), and Director on the Board of Tourism Finance Corporation of India. He is currently President of Experience India Society, a public-private partnership between Ministry of Tourism, Government of India and the hospitality industry of the country, for marketing India through its “Incredible India” campaign. He was awarded the Padma Shri by the President of India for Distinguished Service to the Tourism Industry and Social Work in 2007.
Asian Hotels (West) Ltd was originally incorporated as Chillwinds Hotels Private Limited on January 8, 2007, under the Companies Act, 1956, with the Registrar of Companies, NCT of Delhi and Haryana. The Company was converted into a Public Limited Company and the subsequently the name was changed to Chillwinds Hotels Limited w.e.f August 25, 2007. The Company entered into a Scheme of Arrangement and Demerger with Asian Hotels Limited (Transferor Company) which is now known as Asian Hotels (North) Limited) and its shareholders & creditors and Vardhman Hotels Limited (Transferee Company – II) now known as Asian Hotels (East) Limited and its shareholders which became effective on February 11, 2010. On the scheme becoming effective the Mumbai undertaking of the Transferor Company was demerged and vested in the Company. The name of the Company was further changed to Asian Hotels (West) Limited w.e.f February 12, 2010.
Replying to Anil Mascarenhas of IIFL, Sushil Gupta says, “We are exploring the possibility of entering into mid market segment hotels to achieve sustainable and balanced profitable growth.”
Give us a brief overview of the hospitality industry. What is the demand-supply equation in the country?
India as a destination has become far more attractive to foreign tourists as evidenced by the fact that as per a report published by the World Travel and Tourism Council, India stood 18th as far as business travel was concerned and it featured alongside the top 5 most visited destinations in 2010. Dwelling perfectly on the principle of ‘ATITHI DEVO BHAVA’ (Guest Is God) the Hotels in India are just the apt concoction of luxury, humility and unparallel hospitality. The hotels in India are known for offering the best of products and services at absolutely pocket friendly rates.
According to a study conducted by the World Travel and Tourism Council the hospitality industry in India is all set to grow at a steady rate of 10 percent per annum. However the growth rate will shoot up in the next few years considering the number of rooms required by both luxury and budget hotels. Indian Hotel Industry is adding about 60,000 quality rooms, currently in different stages of planning and development and should be ready in next two to three years. With the GDP growth of 8-9%, the demand for the hotel rooms is also increasing in the same pace, if not more. The hotel Companies are expected to do well accordingly, more so in Mumbai and Delhi.
What are some of the challenges being faced?
The impending supply pressures will prompt rate corrections and will put pressure on hotels to maintain quality and benchmark service standards and facilities in their respective competitive sets. The price correction induced by the new supply as well as introduction of more budget and mid-market hotels will increase the market's potential for attracting high volume segments such as MICE (Meetings Incentives, Conferences/Conventions & Exhibitions). Other challenges include availability of trained manpower; higher cost of operation.
There is a concern of pressure on europeon markets because of debt conditions of Greece, Portugal, Spain etc., which can impact the traffic from Europe. In addition, India has to get out of the present flux situation because of governance issues, which does have a long term effect on Foreign Direct Investment.
With International luxury brands eyeing India for growth, what impact will it have on your business?
Entry of international luxury brands in India poses a challenge as well as an opportunity for the domestic players. For us, our affiliation with the Hyatt International & Marriott International gives us competitive edge & supports our business objectives.
What would be the revenue drivers going ahead?
Revenue drivers for the industry will be Foreign Direct Investment (FDI) Inflow, Changing demographics resulting in the increase in domestic travelers, ease of finance and increasing focus on other revenue generating departments like the Food & Beverage segment and Wellness Spas. Also, developments like the hospitality district at Delhi's international airport clearly highlight the unique opportunities available for planned hotel developments in and around new or existing airports. The infrastructure development will also give an added impetus to domestic and international conferences and conventions.
Could you briefly outline your plans for Asian Hotels (West) Ltd.?
The Company is on the lookout for sites having growth potential and reasonably confident that it will result in expanding our footprint and thereby enhancing the Shareholders’ value. In addition the Company is also exploring the possibility of entering into mid market segment hotels to achieve sustainable and balanced profitable growth. In line with the same, the Company has already acquired controlling stake in The Clarion Hotel, EPIP Zone, Whitefield, Bengaluru, Contemporary Boutique Hotel and also land, approved for construction of Hotel, at Pune.
What is the project update at The JW Marriott at New Delhi? What would you describe as its USP?
The J. W. Marriott, New Delhi is scheduled to be completed for soft-launch in April 2012. As of end March 2011, the company had incurred around 42% of the planned capital expenditure. The company has received all critical approvals required during the construction phase and has engaged experienced architects and reputed contractors for the project. The construction of project is as per schedule.
Favorable location of the project (Delhi Aerocity), in proximity to Delhi International Airport and with easy accessibility from key commercial areas such as Connaught Place and Gurgaon, with a backing of the strong reservation system of the Marriott enhances its competitive positioning. As the only JWM property in Delhi, we will have an edge and offer a high quality product and service to business and leisure travelers at Delhi.
What needs to be done to improve the industry’s prospects?
Improved infrastructure, aggressive communication of a safe and enjoyable destination and proper connectivity are some of the steps that encourage tourism.
What is your domestic-international tourist mix?
Hyatt Regency Mumbai enjoys a healthy domestic-international tourist mix of around 35:65.
What have been the overall occupancy rates and ARR?
In FY 2010-11, Hyatt Regency Mumbai reported ARRs of approx Rs. 9000/- with Occupancy of 68%. The industry is still in the recovery path from slowdown in the economy starting September 2008 and adverse market conditions (travel advisories issued because of the H1N1 flu and terrorist attacks) and occupancy rates and ARR is expected to witness an increase constantly.
What are your capex plans and how would they be funded?
The Company is presently focusing on the J. W. Hotel Project being undertaken by the subsidiary of the Company. The total estimated cost of the project is approx Rs. 7.05bn. All the funding including our equity is in place.
Besides the above, the Company is evaluating the market conditions at Pune, and the decision for construction of Hotel at Pune shall be taken at an appropriate time considering the market conditions.
Brief us on your financials. What is the outlook ahead?
The company (Hyatt Regency Mumbai) has achieved an aggregate turnover of Rs. 1.37bn and EBITDA of Rs 459.3mn during the FY11. The Company expects to achieve growth of 10% turnover during the current financial year. However with the opening of JWM the total aggregate turnover of the Company on consolidated basis would increase by 150%.
Environmental issues are also close to your heart. What have you been doing as a company?
The Group firmly believes in the concept of sustainable development and ensures that the Properties under the group umbrella are environmental friendly and uses energy in optimum manner. For the purpose, Hyatt Regency, Mumbai has been continuously adopting the latest technologies in the field of rain water harvesting, recycling of STP water and lighting equipments. Besides, the J.W. Marriott Hotel being developed by Subsidiary of the Company adheres to the Green Building Standard and using products and technologies that are energy efficient.
What is your message to your shareholders?
Our company is committed to develop and offer world class luxury hotels offering high levels of service to its customers. The company is consolidating and will continue to grow in the hospitality space and maintain its position in the industry.