Give some respect to young India hotel owners

The next generation of India hotel investors is less risk-averse and is looking to invest not only in mature markets in India but in bigger markets outside India, said panelists spotlighting opportunities and challenges in South Asia on Day 2 of HICAP in Singapore.

“They are willing to invest, are more aggressive, well-traveled and aware of global trends. They don’t care what other people are looking at – they understand the business. There is wealth but what they need is respect and attention,” said Shrurti Khanna, managing director, Majestic Hospitality India. The company focuses on hotel development, capital solutions and transactions advisory in the luxury segment.

Responding to questions from Hotel Investment Today following the session, Khanna explained that previously Indian hotel investors would want to contain all their wealth within India. But the pandemic has taught them the need to diversify.

“So, increasingly, the trend is that in every rich Indian family, at least one member is parked outside. So, it's all in the family but they’ve got a foothold in another country as well,” she said.

At the same time, the older generation recognizes that it is best for their adult offspring, who are far more educated and well-traveled, to lead the business diversification to other markets.

“They let them take the front seat because they realize that in a room where you need to speak numbers and understand business models, it is far easier for the younger generation to comprehend,” Khanna said.

I don’t think they get enough respect, not because they are young, but because brands have been wearing their collars too high. They need to remember they might be the brand but are they putting the money on the table?

Shrurti Khanna, Majestic Hospitality India

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Khanna also urged brands to give these younger investors some respect. “I don’t think they get enough respect, not because they are young, but because brands have been wearing their collars too high. They need to remember they might be the brand but are they putting the money on the table?”

South Asia opportunities

Overall, South Asia is doing well. Recovery year-to-date through September 2023 indexed against the same period in 2019 is at 98% occupancy, $114 ADR and $111 RevPAR, said session moderator Karan Mahesh, STR account manager Central & South Asia.

The region covers India, Sri Lanka, Maldives, Nepal, Bhutan, Bangladesh and Pakistan.

Recovery is nuanced, of course, as while countries such as Sri Lanka are on the mend, the progress is still slower than the other key South Asian markets, namely India and Maldives.

And although there are opportunities in the big three South Asian markets, challenges abound.

Mihir Thacker, principal consultant of Revitru based in Singapore, said that while the current India government has eased regulatory hurdles, it is still “not easy” to transact there.

For instance, lengthy bankruptcy procedures set by the National Company Law Tribunal (NCLT) remain a hurdle to acquire distressed hotel assets in India, especially during COVID-19.

Over in the Maldives, investors face rising payroll costs. Panelist Shrikant Dash, deputy managing director - Corporate, Atmosphere Hotels & Resorts, said his payroll costs in the Maldives now constitutes 1% to 2% of GOP.

“We just have to manage other expenses better – it’s the new reality,” he said.

Atmosphere Hotels & Resorts is a brand under Atmosphere Core, which currently operates eight hotels in the Maldives under three brands and is expanding for the first time into India. On October 8, it announced it would be operating eight hotels in India, including in key markets Kolkata, Goa and Bangalore, although it did not give specifics on whether this was a management contract or a buy-out, and from whom.

The company said it plans to have 25 properties in India by 2025.