It’s tough to find the right partner, but when you do, miracles can happen! Rajit Sukumaran, Chief Development Officer—EMEAA, InterContinental Hotels Group, talks about the company’s successful partnership with SAMHI to re-launch its Holiday Inn Express brand.
Q. 14 hotels at one go! How have you managed to stay on such an ambitious target?
We had been trying to collaborate with SAMHI for some time and the opportunity presented itself in 2017. The way they approached us was to say that they wanted to use it as a way to re-launch the Holiday Inn Express brand. It was an interesting proposition! There were obviously some challenges but the key drivers working for us were great locations and a great partner.
This partnership is probably the largest portfolio transaction of that nature for a hotel management company – to do 14 hotels and 2,000 rooms in one go. In India, that was almost probably the largest one announced so far. We signed the deal in 2017 and we opened the first 10 hotels by the end of 2018. Something that was unheard of. But we managed to pull it off and we not only managed to open them but also open them on budget. In some cases, like the first one we opened in Gurgaon six months ago is operating well above expectations. Six months in and we are already seeing 21 per cent above the forecasted RevPAR we thought we will achieve within the year!
Q. So the partnership mix was right. What is the status so far?
It shows what you can do if you have the right partner, bringing in the right asset, in the right locations and with the right collaborators. 10 hotels are operational as of now. The others are in various stages of construction since some were brownfield projects. So it will take another year and a half.
Q. Are you looking for other similar collaborations in India?
In the last five years, IHG has grown by 160 per cent! We now have close to 40 operational hotels and another 40 under construction across India. Our growth drivers are the Holiday Inn brand family, which accounts for probably 70-80 per cent of our growth in India. Almost 70 per cent of the hotels in the pipeline are under the Holiday Inn brand family and 80 per cent of the properties under construction are under this same family.
You can excel if you have the right partner, bringing in the right asset, in the right locations and with the right collaborators
Q. Why do you have so much focus on the Holiday Inn brand?
India is largely a domestic player. So you want to be able to go to the market and cater to that domestic guest and not just look at international tourists. That’s why we recognised early on that our growth strategy should be from the Holiday Inn brand of family, which is in the mid and upper-mid scale and is perfect for the domestic market. It also allows you to have lower investment costs. We managed to achieve close to 10 per cent RevPAR increase last year, making it one of our best years.
Q. Does that mean IHG will not look at other brands for the India market?
Not at all. We currently have four brands present in India – InterContinental, Crowne Plaza, Holiday Inn and Holiday Inn Express and we are in active talks to bring in more brands. It is just about finding the right partner at the right time. In fact, we are in active discussions to close deals for InterContinentals and Crowne Plazas in India. We are also looking at bringing our Kimpton brand into India. We are also looking at opportunities in the extended-stay area in India for our StayBridge Suites brand.