Peter Fulton is an old India hand. While his career with the Hyatt International hotel chain has taken him to exotic locales such as Acapulco and Macau, the Dubai-based Managing Director of Hyatt International, South West Asia, still remembers vividly his five-year stint between 1997 and 2002 as the General Manager of the Hyatt Regency in Delhi.
As the Hyatt chain grows in India, Mr Fulton, a New Zealander, is leveraging his India experience to put plans in place, literally.
While Hyatt is expanding the presence of its full-service hotels with its top-end brands such as Grand Hyatt and Hyatt Regency – a 327-room Regency is to open shortly in Chennai – Mr Fulton knows it is time to introduce in India its select service brand, Hyatt Place, targeted at the mid-market. Also on the anvil is Hyatt Summerfield Suites, an extended stay brand. Speaking to visiting newspersons in Dubai recently at the Hyatt Regency, Mr Fulton says Hyatt Place is well positioned to be in that market.
“We should open our first one in the next 18 months in India. Summerfield Suites is also coming along; we are working on a couple of opportunities. We see that as being a growth driver for India.”
While the location of the planned Place is yet to be decided, Mr Fulton explains that it is a more affordable product, which will also be a driver of growth in the tier two and three cities. “It has only one restaurant, a very functional room and will have only select services. So, it's definitely not a five-star product,” he adds.
This brand will target people who are coming through the mill. “It may not be the MD, although, I have heard of people who are extremely well-to-do and travel frequently and are comfortable in a Hyatt Place. The level of service is unobtrusive so they can get on with their business,” he elaborates.
Hyatt's annual report for 2009 elaborates as much on this strategy. “We believe that the opportunity for properties that provide a select offering of services at a lower price point is particularly compelling in certain emerging markets, such as the BRIC region and the Middle East where there is a large and growing middle class along with a meaningful number of local business travellers,” it says.
Segmenting the market is a strategy also being followed by the other top chains. Starwood Hotels, with its nine brands, has the Sheraton and Le Meridien at the upper end and has launched its Aloft brand for the mid-market. The Taj group too is following a similar strategy of using the Taj and Vivanta brands in the luxury and upscale markets and Gateway and Ginger for the mid-market and budget traveller.
Chennai market
Hyatt, which has 2,631 hotel rooms in all in the country, expects to shortly add 536 rooms with the Regency opening with 327 rooms soon and the Park Hyatt (more a leisure brand) in Hyderabad with 209 rooms. Chennai will also have soon a Park Hyatt of approximately 200 rooms. And, eventually a Grand Hyatt as well, says Mr Fulton.
Asked if so many hotels coming into the Chennai market – the Hilton recently opened up and ITC's Grand Chola with over 600 rooms is on the way – will dampen room rates, Mr Fulton says, “Obviously, with the exponential growth coming out of Chennai, everybody's going to suffer a little bit. But, once the concrete gets into the ground it's going to be there for 30-40 years. In the long term, everybody is going to do extremely well. It has traditionally been an under-served market; there hasn't been a tremendous amount of stock there. In Chennai, if you note, over the years, once there is an upswing in supply, it takes a little while for demand to catch up. If you introduce 600-700 rooms into any market anywhere in the world in a short span of time, there will be a softening in (room rates).”