Real estate group K Raheja Corp-owned hospitality firm Chalet Hotels wants to continue to work with major global chains to manage its hotels despite launching its first in-house hospitality brand - Athiva Hotels and Resorts - and will assess returns on investment before deciding on branding.
"...We are not in the business of flags. We are in the business of getting returns on investment. So, if we see an asset - say a 600-room hotel - and there is an opportunity for a brand prefix, am I going to say this will be only our brand? No, we could choose to work with a global chain as well. We evaluate on its own merit, what will do best justice to that particular hotel, and we’ll go with that decision," Chalet Hotels’ managing director and CEO Sanjay Sethi said in an interaction with Moneycontrol.
Sanjay Sethi said the decision to operate in-house or through a chain will depend on the property's location, and the expected returns. Sethi, however, added that as and when management contracts for third party hotels run out, the firm can look at operating them in the future under the newly launched brand Athiva, derived from the Sanskrit word for 'abundance'. Chalet owns 11 hotels, resorts and serviced apartments across India, totalling around 3,300 keys, managed under brands such as Westin, Marriott, and Four Points By Sheraton.
Around 900 keys are expected to be added under the Athiva brand - across six properties - with the first one under the brand opening on October 16, at Khandala, near Mumbai. Of the 900 keys, 400 rooms are operational, with Chalet undertaking renovation projects for a number of those properties.
Overall, Chalet has a pipeline to expand its key count by around 1,200, through hotels in Delhi, and at Airoli in Navi Mumbai, besides its Athiva expansion plans.
The Khandala property - bought by Chalet in 2023 - was earlier branded as The Duke's Retreat. The other properties under the Athiva brand will be located in Mumbai's Aksa Beach and Vashi, the latter being a current Four Points By Sheraton-branded hotel, as well as two locations in Goa, along with Thiruvananthapuram in Kerala.
Sethi said the renovation of existing properties, buying land and construction of properties under Athiva has seen a capital expenditure of around Rs 1,300 crore.
Despite a significant shortage of branded hotel rooms in India, more supply has not come into the market due to the capital-intensive nature of the business, back-ended returns and high interest rates.
"A lot of people, who are not professional hotel investment companies, burnt their fingers by wrong investments. So, they're now not investing - they're out of the game. The 2007-08 cycle, which went on until supply was growing in double digits, mid-teens every year, until 2015- today, it's only growing at 3-4 percent... You see a lot of bankruptcy among hotel owners, especially in that period building up to now. Many (hotel) companies are going through the NCLT process," Sethi added.
Chalet's new brand has been aimed at millennials and Gen-Z travellers seeking experiential travel, and is priced in the ‘upscale or upper-upscale’ category, below luxury hotels. Sethi said most branded hotel chains target the upscale category, as the budget and luxury segments are the most impacted by economic and geopolitical tensions.
(With inputs from Maryam Farooqui)
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