Sarovar Hotels and Resorts, majority-owned by Louvre Hotels Group, the world’s fifth largest hotel chain, is planning international expansion under its own brands across locations in Africa and West Asia.
Some of the markets targetted for the expansion within the year include Dar-es-Salaam in Tanzania and Auxum in Ethiopia; while Somaliland may also be considered.
Sarovar’s current international presence is restricted to Nairobi (Kenya) — with two hotels, The Heron Portico and The Zeheneria Portico — and Zambia with The Neelkanth Sarovar Premiere.
According to Ajay Bakaya, Managing Director, Sarovar Hotels and Resorts: “We are looking at Africa more aggressively and would like to be in the Middle East at some stage. It (Middle East) is a natural bridge between India and Africa,” he told BusinessLine, adding that “there are only discussions” that are taking place with regard to expansion in the Middle East.
“International expansion will be through Sarovar’s home-grown brands only,” Bakaya said.
Sarovar operates mostly under a managed property model, i.e., it does not own the real estate. Hence, cap-ex requirements are limited when it comes to investing in the properties. It manages the property under the “Sarovar” brands – “Sarovar Premiere”, “Sarovar Portico” and “Hometel” and some other branded properties of the Radisson Hotel Group.
Growth in Indian market
Within India, the company plans to open 10 properties this year that will see it add over 650 keys across Sarovar brands. Properties will come up mostly in non-metros, such as Gorakhpur (Uttar Pradesh), Junagadh and Morbi (Gujarat), Goa, Jammu, Dalhousie (Himachal Pradesh) and Bodh Gaya (Bihar); while the Hometel property will come up at Dahisar (Mumbai).
“We see the market with guarded optimism. The fundamentals of India are strong; but for the rest of the world, (fundamentals) are a little worrisome. But considering the local market, and Sarovar being largely in the mid-sized space, we see a very good year ahead (2019),” he said.
Turnover growth in 2019 should be “on similar lines of 2018”, around 9-10 per cent.
Supply has stabilised a strong domestic demand and upward movement of room rates are being witnessed. Occupancy rates are also expected to improve to 72-73 per cent (as against 70 per cent in 2018).
As Bakaya pointed out, there is also a trend in play, of domestic travellers preferring resorts over business hotels during a leisure stay. Over the next 5-10 years, there will a change in the company’s hotel portfolio with the share of resorts over business hotels moving up. From a 65-35 ratio (business to resorts) at present; the portfolio is likely to be around 55-45.