Investments in mid-segment and 5-star hotels have their own merits. As lower costs limit the risks involved in mid-segment hotels, higher risks in the 5 star category hotels also come with higher returns, according to K.R.V. Ramani, Chairman and Managing Director, Sabari Group.

He said the company, which has now four hotels in operation – in T.Nagar and on OMR in Chennai, Coimbatore and Kodaikanal), has one more coming up in Bangalore and plans to expand to other metros.

Explaining to Business Line the rebranding of the Coimbatore hotel as Clarion Hotel and bringing it as part of Choice Hotels International chain, he said this was done as he “wanted to upgrade the hotel and brand for better returns”.

The Sabari Group was associated for 15 years with Choice and was “very happy with them”. He said Clarion was positioned as an “entry level 5 star hotel” whereas Park Plaza was a 3 /4 star brand. The group has two other hotels associated with Choice chain (Quality Inn T. Nagar, Chennai and Kodaikanal).

(In its earlier name as Park Plaza, the Coimbatore hotel was part of the Carlson Rezidor Hotel Group having major global brands such as Radisson Blu, Radisson and Park Plaza under its fold. Choice Hotels International has major global brands like Quality Inn, Comfort Inn and Clarion).

Asked about the investment made on the upgrade of the Coimbatore hotel located close to the airport on Avinashi road, Ramani said the property had been upgraded in terms of facilities, amenities and finishes and the poolside was being renovated to meet the expectations of Clarion clients. He put the cost at around Rs 8 -10 crore when all the upgradation works are completed.

Answering a question on the stress the hospitality sector was currently facing because of economic slowdown and excess capacity, he said “good times and slowdown are a part of any business”. He said his company was for the long haul, the country has great prospects and cities like Coimbatore will grow as the country moves forward. He said the tier II cities were “on the growth path as the economy grows”.

On the prospects of mid-segment hotels vis-a-vis 5 star hotels, he said both categories had their own markets. The “advantage of mid-size hotel is lower cost, and hence the risks are relatively limited”. The investment needed for a 5-star hotel is higher but higher the risks, so are the returns.

Apart from the four hotels in operation, Sabari's Bangalore hotel is expected to open by end of 2014 and the group plans to expand to other major metros shortly, Ramani said.

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