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Hospitality unicorn OYO is among the latest to join the list of hotel properties engaging in rebranding by converting the Hooters Casino Hotel in Las Vegas, US.
While standalone hotels tend to undergo conversion for several reasons such as shift in corporate strategy, ageing of the property or demographics, the most popular reason remains empire building, said Nandivardhan Jain, Founder and CEO of Noesis Capital Advisors, a hotel investment advisory firm which deals in hotels-specific real estate.
A widespread growth tactic in the hospitality industry, rebranding has led to occupancy rates soaring and average room rates registering a drastic improvement. Operating profits, too, are on the upside, given the optimisation of cost of operations. Strategically, hotel rebranding is quite logical given the intensity of competition in the hospitality sector. Hoteliers also opt for this to increase market share quickly with minimum investment, he said.
Expansion strategy
A perfect example is the Intercontinental Hotels Group (IHG) expansion strategy when they took over 14 of Indian lodging company SAMHI’s properties and converted them to Holiday Inn Express. The move increased IHG’s room strength to approximately 9,000 globally — a 50-per cent jump in just a single year.
Similarly, the conversion of Hotel Vikram at Lajpat Nagar, New Delhi, to Park Inn by Radisson resulted in a rise in occupancy levels by 17 per cent and a rise in ADR (average daily rate) by 45 per cent. The conversion of Hotel K Star in Navi Mumbai to Hotel Beacon also sent the occupancy levels rising by 82 per cent and ADR by 53 per cent.
Jain pointed out that building a continuous, sustainable hospitality brand is more than an association with a name, and that it involves a carefully channelised effort. Rebranded hotels need to emphasise on sales and marketing, operational excellence, financial techniques, training and customer focus, he adds, to remain competitive.
Moreover, Jain said there is ample opportunity to develop good quality lodging infrastructure across the country, given the dismal unorganised to organised hotel conversion landscape.
Pointing to the 388 government notified MSME industrial clusters across the country Jain said quality lodging infrastructure could easily be developed in most of these clusters.
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