Changing Times, Changing Tactics
- Marketing alliances with foreign brands, mergers, acquisitions, management contracts and franchising are some of the routes hotel managements are taking to stay in business

The Past
Management contracts, mergers, acquisitions and franchising have became the new mantras in boardrooms of hotel companies in the ’90s with hospitality majors Hilton, Shangri-La, Sheraton, Inter-Continental, Hyatt, Marriott, Le Meridien restructuring their corporate strategies to extend their brand into different countries.

In 1995, Radisson Hospitality Worldwide (RHW) entered India with two separate franchise agreements; one with the AB Hotels Limited (ABHL) and the other with the Lokhandwala Group. Similarly, Hilton International entered India through its management alliance with Bharat Hotels. However, the alliance faded out and Bharat Hotels has now associated itself with the Intercontinental. Then there was the Marriott International alliance with Lok Hotels and Resorts - a subsidiary of the Lok Group, to build five-star hotels in Kochi and Jaipur. Besides international brands entering into tie-ups with domestic companies, Indian hospitality majors like Taj and Oberoi also ventured onto foreign markets like Mauritius, Seychelles, Dubai, the United Kingdom, Australia, Egypt, Saudi Arabia, Indonesia, etc.

The post 9/11 slump saw a trickling down of tie-ups, alliances and new ventures, which revived once tourism picked up from 2003 onwards.

The Present
Indian hoteliers and restaurateurs are now increasing their presence both in international markets and domestically. The model opted is usually management contracts, franchising contracts and joint ventures. Notable examples are the joint venture between the Delhi-based Chanakya Hotels Ltd and Carlson Hospitality Worldwide to develop the Country Inn Brand in India; the tie-up between the Indian Hotels Company Ltd and the Hyderabad-based GVK Group to form Taj GVK; the UVI Holidays Limited tie-up with Radisson hotel for a five-star hotel at Kovalam; the Sarovar Carlson tie-up for the Park Inn and Park Plaza franchise in India.

Currently, the top hospitality players in the market are non-resident Indian groups, especially the Sarafs, Jatias and Guptas with huge projects having tie-ups with international brands like Hyatt and Four Seasons. One of the biggest shifts in management strategies has been witnessed in the big two of Indian hospitality - Taj and Oberoi. The latter went in for a franchise tie-up with Hilton, while the Taj has linked a marketing alliance with Raffles. Taj is into a major restructuring program and both chains have decided not to own hotels anymore and will restrict themselves to management.

With the cost of setting up luxury five-star properties skyrocketing and the growing domestic and corporate traveler market, the latest strategy of leading hotel companies is to target the budget, no-frills and boutique segment. There is the Taj 'Indione', Sarovar Park 'Hometel', Kamats 'Kamfotel' and international brands such as Accor's 'Ibis', Marriott's 'Courtyard', Shangri-La's 'Traders', Hilton's 'Scandic' and 'Microtel'.

The Future
Industry pundits predict that the future will witness more NRIs venturing into the Indian market, especially in the budget segments. Foreign hotel companies, mainly those from South East Asia like Peninsula, Mandarin Oriental, Shangri-La, Ascot, and from Gulf countries like Emaar, will be vying for a slice of the Indian pie. This is expected to have a considerable impact on the way hotel companies go about their development plans. Franchising and management contracts will be the route most hoteliers will be opting for.
India is poised to become a hub for leading hospitality brands. More franchising, more management contracts and more budget hotels are certainly in the offing. However, many international players are waiting in the wings and watching to gauge the unpredictable nature of the Indian market and government. Indian hotel brands making it big on foreign shores will be the future of Indian hospitality.

Finance - Pockets Get Deeper
One the changes witnessed in hospitality finance is the influx of NRI funding, primarily the result of the government making it easy for them to invest in India. Besides the money available from financial institutions like TFCI, IDBI, ICICI, Indian Bank, etc, Indian hoteliers now also have access to international funds like the US$ 150 million Brooke International Fund, US$ 50 million Dalmia Capital Fund, US$ 100 million Indian Real Estate Opportunities Fund, the Merlion Fund of Temasek Holdings and the fund available from US-AEP for those developing environmentally sensitive hotels. Recently, in its Budget, the Indian government promised to make available a corpus of Rs 40,000 crore for infrastructure development, which includes hotels.

However, the most important effort of the government to boost international funding into hotel projects has been the increase in FDI cap from 50 to 100 per cent in Union Budget 2003-04.

In future, more international financial institutions will be providing their financial services to the Indian market.