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Taj, Leela, Oberoi look across Indian shores: The Economic Times
Bangalore, Sept 25: The overseas expansion bug appears to be bitting some leading hospitality brands in India again. The Taj, Oberoi and even the Leela are mulling different routes, including management contracts, direct buys and JV acquisitions, to take their brand into the international markets.
Bangalore, Sept 25: The overseas expansion bug appears to be bitting some leading hospitality brands in India again. The Taj, Oberoi and even the Leela are mulling different routes, including management contracts, direct buys and JV acquisitions, to take their brand into the international markets.
Apart from generating business overseas, some of these markets, especially in the west, are viewed as source markets for their properties in this part of the world.
Both Taj and Oberoi have already said they are considering an ‘asset light’ strategy of international growth, which means using the management contract route where the Indian chain lends its brand name as well as its expertise to the owner of the hotel to run it. While Indian brands are pretty well known in the Asia and Mid-east regions, the same cannot be said for all of the west. Unlike the Taj and Oberoi which alrady run hotels abroad, for Leela it will be the first time.
Taj, officials said, is therefore adopting a mixed strategy for overseas growth. While within Asia and the Indian Ocean region, it may primarily be expansion on the back of management contracts, in key western markets like the US and select European capitals, it could well be equity investment or direct acquisition. For instance, hoisting the Taj flag on top line properties in the west and east coast of the US, among the biggest source markets for the Asia region, will make good business sense, officials said.
A similar approach may be followed for select European capitals to showcase Taj brand’s strength and quality in the Indian market. While no figures are available for acquisition programme, trade sources said a hotel can cost anywhere from $50 million to $100 million depending on its location and market value. In New York for instance the cost of a top five star room can range from $1,00,000 to $2,00,000. Taj, incidentally, in the past has owned hotels in the US which were sold off as they became unviable. Taj already owns and manages some 11 hotels abroad including one in London.
Leela, which has not forayed into international markets at all, is looking at venturing out in partnership with Kempinski, a major luxury brand. Leela Venture chairman Captain Krishnan Nair said it has shown interest in select markets like North America and China with equity exposure in some form of joint venture with Kempinski which is Leela’s marketing partner for its hotels in Mumbai and Bangalore. For Goa, a partnership exists with GHM-Aman Resorts, a top end Asian resort brand.
Oberoi is talking to star hotels in Mauritius and Dubai for management contracts. It runs 11 hotels overseas including countries like Australia, Egypt and Indonesia.
It also ran a hotel in Sri Lanka from where it has exited recently.
Both Taj and Oberoi have already said they are considering an ‘asset light’ strategy of international growth, which means using the management contract route where the Indian chain lends its brand name as well as its expertise to the owner of the hotel to run it. While Indian brands are pretty well known in the Asia and Mid-east regions, the same cannot be said for all of the west. Unlike the Taj and Oberoi which alrady run hotels abroad, for Leela it will be the first time.
Taj, officials said, is therefore adopting a mixed strategy for overseas growth. While within Asia and the Indian Ocean region, it may primarily be expansion on the back of management contracts, in key western markets like the US and select European capitals, it could well be equity investment or direct acquisition. For instance, hoisting the Taj flag on top line properties in the west and east coast of the US, among the biggest source markets for the Asia region, will make good business sense, officials said.
A similar approach may be followed for select European capitals to showcase Taj brand’s strength and quality in the Indian market. While no figures are available for acquisition programme, trade sources said a hotel can cost anywhere from $50 million to $100 million depending on its location and market value. In New York for instance the cost of a top five star room can range from $1,00,000 to $2,00,000. Taj, incidentally, in the past has owned hotels in the US which were sold off as they became unviable. Taj already owns and manages some 11 hotels abroad including one in London.
Leela, which has not forayed into international markets at all, is looking at venturing out in partnership with Kempinski, a major luxury brand. Leela Venture chairman Captain Krishnan Nair said it has shown interest in select markets like North America and China with equity exposure in some form of joint venture with Kempinski which is Leela’s marketing partner for its hotels in Mumbai and Bangalore. For Goa, a partnership exists with GHM-Aman Resorts, a top end Asian resort brand.
Oberoi is talking to star hotels in Mauritius and Dubai for management contracts. It runs 11 hotels overseas including countries like Australia, Egypt and Indonesia.
It also ran a hotel in Sri Lanka from where it has exited recently.