The shake-out in India's luxury hotel segment continues as five-star hotels overpopulate an ever slowing economy. Falling room and occupancy rates in India have strained relationships between hotel owners and the global chains that run them. However many international operators are using this to their advantage, seeing this issue as a short-term problem that will open itself up to maximum potential in the long run.
The latest in this is the ongoing issue with Shangri-La's Mumbia property. Now, US-based Starwood Hotels & Resorts Worldwide is in discussion with the owner to take over management of the property under the St. Regis flag, according to South China Morning Post.
"…while some global operators are leaving, others like InterContinental Hotels, Hyatt Hotels and Starwood are jumping in, using the now unbranded hotels to accelerate their expansion in a country they believe has long-term potential," the article reports.
"More than half the future deals we are looking at are conversions in the four- and five-star category," Dilip Puri, India head and regional vice-president for South Asia at Starwood told the South China Morning Post.
Since 2008, the economic growth in India has halved, which has greatly cut down the amount of corporate guests coming into the country. Business travelers make up about 70 percent of the market for five-star hotels in cities like Delhi and Mumbai. "The declining economy and falling revenues have sparked a blame game between hotel owners and operators, prompting the 'reflagging' of several properties," the article goes on.
Starwood is coming out of this as one of the more aggressive players in this reflagging game. Hilton has opened three hotels there, as well, and announced its first Conrad to open next year. Hyatt runs 17 hotels in India and has another 40 in the pipeline. InterContinental runs 18 hotels in India and has 57 on its agenda over the next five years. It is also looking to take over two hotels that were run by Hilton in New Delhi.