Financial Daily from THE HINDU group of publications
Monday, May 20, 2002
`Park Hotels open to ideas of going overseas'
Ms Priya Paul
CHENNAI, May 19
THE years 1999 to 2002 have been dull for the hospitality industry. Recession, terrorism and natural calamities have brought down occupancy levels and hit the bottomline of many hotel companies.
In these troubled times, The Park Hotels, a part of the Apeejay Surrendra group, has made major investments in properties in Bangalore and Chennai.
Positioned as deluxe boutique hotels, The Park Hotels are designed with the same attention to detail that one would find in a specialised store or a boutique that offer customised service and products.
Boutique hotels are characterised by distinctive architecture and unusual design elements.
The first Park Hotel was set up in Kolkata in 1967, followed by the beachside Park in Visakhapatnam. The Park, New Delhi was set up in November 1987. There are now five hotels belonging to the group in the country.
Last week, the group unveiled its new property in Chennai. In this interview, Ms Priya Paul, President, The Park Hotel, and Vice-President, Hotel Association of India, talks about the group's plans, and the industry in general. Excerpts.
How do you plan to take the business further?
We are in the process of completely restructuring the hotel business. The hotels in Kolkata, New Delhi and Visakhapatnam will be merged into one company, while Bangalore and Chennai will become one company.
As of now, all policies are the same and standards are uniform.
The merged entities would be beneficial for future growth.
What about Mumbai?
Mumbai is one major city where there is no Park. I am aware of the gap. The Navi Mumbai property in not in that league. We will be looking at this seriously. Otherwise, we are present in all the major cities and in two gateway cities - Delhi and Chennai. In Delhi, we are already an important hotel in the tour market.
All our hotels are city-centric, except Visakhapatnam, which is a beachfront property.
The first hotel was set up in Park Street in Kolkata from which we have taken our name.
he location has been advantageous in all the cases.
The hotel business is actually real estate business and we always look for city-centric locations. These locations are of immense value.
How did you fare during 1999-2001, which were difficult years for the industry?
We have had around 72 per cent occupancy.
We also made two major investments in hotel properties, of around Rs 110 crore in Chennai and Bangalore (undisclosed).
Do you have plans to go overseas?
That should be interesting. I am open to the idea of going overseas.
Do you have plans to go public?
Once the restructuring is through, I have an option to go public. So far, most of the funding has been from internal accruals and debt; naturally, if we are to go forward, we will require more funding.
Are you planning any foreign tie-ups?
We have had 40 years of learning and experience in the business. We have our strengths and learned the markets. We have marketing tie-ups, but not for management. It is not an option.
We are very strong in Delhi and in Kolkata markets, with a strong focus on Bangladesh, Bhutan and Nepal.
We are hooked on to all the major global distribution systems.
We have seven sales offices overseas and take part in various trade fairs.
What is your view on family-owned hotel companies?
Most of the large hotel companies are family-owned. The hotel business is a personality-driven business.
There are strong individuals behind all the big names. It is these individuals who make the difference.
What are the problems facing the tourism industry?
Tourism is an important driver of the economy. One of the major problems facing the industry is the plethora of taxes.
Though the Central Government has recognised this, in four States, the tax is on the published tariff and not on the rate paid by the customer. This is contrary to any consumer product where you are levied tax on what you pay for.
Ideally, the tax should be 10 to 15 per cent on the room component of the bill.
Rationalisation of taxes at the State-level is an imperative. Besides the tax on room tariff, there is tax on food. This drives the cost up. All these issues have to be addressed
Not everyone who stays in the hotel is rich.
With the increase in domestic travel, there is a need to put up quality hotel in a large number of places like pilgrim towns.
It is very difficult to put up a hotel or even a restaurant in a pilgrim town as there are so many licences to get. This is a huge issue.
Despite this, a number of hotels, especially smaller ones, are coming up in unusual places. There are adventure zones and jungle camps, which cater to domestic travel (which has really grown in the last few years).
Access to information is also another issue.
For instance, it is very difficult for a foreigner or someone from out of town to buy a railway ticket.
The good news is that infrastructure has improved. The railways, though crowded, have always been there. The roads today, especially on certain stretches, are good.
For foreign tourists, airline seats are another major issue. The Government should permit other airlines to bring in additional flights when there is a rush.
This decision has to be taken immediately; not six months down the line after the rush is over.
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