Hilton India, a fully-owned subsidiary of the U.S.-based Hilton Hotels and Resorts, plans to manage 16 additional hotels in the next three to four years, helped by a rise in the number of international business travellers and domestic tourists, Navjit Ahluwalia, country head - India, said.
“Sixteen are in the pipeline for the next 3-4 years,” Mr. Ahluwalia said. “Every year, we are signing new properties and by the end of the year it may become 25 and by third year it might become 50. How fast we grow is something that we need to see.”
More than 10 million foreign tourists arrived in India in 2017 compared to 8.89 million in 2016, registering a growth of 15.6%.
Hilton India currently manages 17 hotels. Its first property was in New Delhi built by DLF in 2009.
“Hilton is a management company and we rely on third party owners like DLF and Embassy Group. We have not made any investments in these hotels per se. We make investments in our brand and our infrastructure which are very significant. As far as hotels are concerned, they are funded by individual owners,” Mr. Ahluwalia said.
Currently, Hilton India operates five brands in the country – Conrad, Hilton, Double Tree, Hilton Garden Inn and Hampton. Globally, the company has 14 brands.
Business growth
“Our economy is growing at 7.5% and institutional capital from all over the world is coming into India. There is growth in both domestic and inbound as far as businesses and leisure are concerned. Indian companies are doing a lot of expansion and there is also a lot of international leisure travel that is coming.
Global Fortune 500 companies are growing and expanding their business in India. It is a mix of these factors that are contributing to an increase in demand,” he said.
Mr. Ahluwalia said supply had dried up earlier. “All the supply which had to come into the market earlier has been tied up. So the new supply that is further to open is very limited. This means we will see a very significant increase in terms of occupancy, which means it will make sense to people to make more hotels. That is why we are very buoyant and confident that the next 5-10 years in India is going to be the golden period.”
Between 2004 and 2010, there was a significant increase in supply, he said. “Then the global financial crisis happened. Then everybody who wanted to build hotels changed their plans. Since then, we have not seen this rapid increase in supply. Already the hotels planned at that time have opened and no new hotels were planned in the last 3-5 years.”
“Land has been of a scarce commodity. The cost of the land is very high in India. That has always been a big barrier to hotel development. Second barrier has been the very high interest rates and the amortization periods are low.
“You do not get 30-year loans like in the U.S. to build assets like hotels. Therefore, the financial capability to service the loan becomes very difficult. That is why we are not seeing so many hotels in India,” he said.
