AAHOA Visits India, Explores Investment Possibilities

In January, the 2010 AAHOA Delegation to India visited major cities such as Chennai, Bangalore, and Mumbai, as well as the state of Gujarat.

The more than 25 delegates who made the trip — including AAHOA Officers, Board members, members, vendors, franchisors and media – attended a number of important meetings with distinguished representatives of the Tourism Industry in India.

With the help of the Federation of Indian Chambers of Commerce and Industry (FICCI), the delegation attended interactive meetings regarding investment in hotel infrastructure in India with local ministry officials, real estate brokers, developers, bankers, consultants and prominent hoteliers. Agendas for each meeting included presentations and panel discussions about the investment opportunities regarding tourism infrastructure.

Gujarat’s Chief Minister Shri Narendrabhai Modi and Tarun S. Patel, Chairman of AAHOA

"In terms of our delegation, AAHOA brought a wide representation of the American hospitality industry to India, and it was a very informative and productive trip," said Tarun S. Patel, CHA, Chairman of AAHOA. "There are tremendous growth opportunities for all sides involved when it comes to getting involved with the hospitality industry in India."

A closed-door meeting with Gujarat’s Chief Minister Shri Narendrabhai Modi was a major highlight of this trip for the AAHOA delegation. As many people already know, a majority of AAHOA’s members hail from Gujarat, and they have a vested interest in its prosperity.

Modi listened to the concerns of the delegation on Floor Space Index (FSI) rules, incentives for hotel projects, liquor policies, high land costs, title insurance problems and singlewindow clearances. He said he was proud to mention that Gujarat now has an energy surplus and has invited private investors for the power sector, excluding nuclear power. He urged everyone at the meeting to promote Gujarat in the United States and participate in the golden jubilee celebrations that will be held in May 2010.

During the delegation’s visit to Chennai, a study compiled by the FICCI and Evalueserve was released. It suggested the creation of land banks for budget hotels, provisions for 100 percent Foreign Direct Investment (FDI), creation of civic amenities under the private-public partnership (PPP) model and single window clearances for hotel projects, which have not been approved. Currently, more than 421 hotel projects throughout India have been approved by the authorities, which will create approximately 72,000 rooms in the next five years.

"The Indian hospitality industry is clearly poised for tremendous growth in the coming years," said Fred Schwartz, President of AAHOA. "We certainly appreciate the hospitality and generosity of all of our hosts during our trip and look forward to continue building on the significant progress we were able to make during our visit."

The study also stated that despite the huge earning potential, there has been little effort by the government to expand the country’s hospitality industry. This sector also expects the grant of infrastructure status, delinking hotel projects from commercial real estate and foreign exchange benefits (as it earns more than $12 million each year in foreign exchange). M. Rafeeque Ahmed, Chairman of the FICCI, Tamil Nadu, said the global recession caused a liquidity crunch, and that as a result a number of projects were on hold or scrapped entirely. However, the tourism industry fought back, and occupancy is starting to climb back to where it was, said Ahmed in his address to this delegation. FICCI has also launched a new company — "Invest India" — to help garner investment in tourism infrastructure.

Tarun S. Patel said his delegation sees the growth potential in India, and that AAHOA’s members are experienced hotel operators who can successfully operate hotels in any environment. He also said that while he will relay this information to AAHOA members back in the United States, he is looking for strong and positive feedback from policy makers.

At the Chennai meetings, Indian government officials promised to lend support, as Rahul Chakravarty, joint director FICCI, suggested that the state government helps the delegation by processing applications more quickly.

S. Bakthavatchalam, joint director of the department of tourism for the government of Tamil Nadu, said the state would take a special interest in developing the ECR corridor as a Corridor of Tourism Expressway. He promised government support in clearing all projects in a timely manner. In addition, S.V. Ranganath, Chief Secretary of the government of Karnataka, said the state is "dead serious" about attracting private investors in the hotel sector. He also said that the government’s land banks would be available for tourism projects promoted by private investors and urged the AAHOA delegates to act as "brand ambassadors" for the state. Additionally, he estimated that the state’s tourism policy through 2014 would amount to roughly $5 billion.

The delegation also visited Mumbai, where they participated in the Hotel Investment Forum India (HIFI) conference, which took place January 12-14, 2010, at the Renaissance Mumbai Hotel & Convention Center. HIFI was co-hosted by BHN and Horwath HTL, India.

The conference focused on hotel and tourism investment opportunities in India, which has seen rapid growth as of late. International hotel chains were eager to expand the upscale brand into the Indian sector. A handful of global luxury hotel chains shared their perspective on investing in the hotel sector and discussed the opportunities and challenges of doing business in India. Yogesh Chander Deveshwar, Chairman of ITC Limited, provided the keynote address.

Industry experts suggested that China and India are expected to be the hottest markets for the next several years. This was resonated by top officials from Marriott, Hilton, Wyndham, Carlson, Choice and Hotel Leela.

[ By R. PadmanaBhan ]