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Hotelier India speaks to some experts on what their perception of the right partner investor is

Real estate stole the limelight from individual owners a few years ago but it appears that individual owners are reclaiming their past glory. However, institutional owners are on their way to taking on some control too.

But who presents the best partner? Is there any such thing as the ‘best’ among the owner’s community or does the owner-management company relationship depend on how well the latter delivers?

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Which category of owners will stand by a management company to weather a storm, should another one brew? Hotelier India talks to consultants and management companies to identify the cause, nature and future of the shift.

In good times...
Real estate found their way into the hospitality business during the boom years of 2006 and 2007. “Real estate hotel owners only emerged due to the fact that being developers, they owned the sites and with so many hotels coming in during those years, they entered the business,” Sarovar Hotels managing director Anil Madhok points out.

The problem is that for these real estate developers, hotels were simply an asset class within their development portfolio that also included commercial and residential projects.

“A real estate developer cannot be a serious hotelier – the long gestation, need for loans to develop the property and risks against commercial and residential is not their cup of tea,” comments Vijay Thacker, director, Horwath HTL.

The boom in real estate investments in hospitality is today seen as a thing of the past that is unlikely to be seen in hospitality again very soon – at least not in the mega sized avatar we saw a few years ago.

“It’s true that in 2007-08, there was a perception that real estate developers would do better but today most partnerships are being undertaken with individual owners,” says Manav Thadani, managing director, HVS-India.

Real estate companies tarnished their image by signing huge deals and then walking out on the agreements.

“When the recession came, land alone at exorbitant rates like `300-400 crores were seen as unsustainable investments on hotels as the returns would take too long to allow the real-estate developer to break even,” says Uttam Davé, head of development, Accor Hotels - India, Bangladesh, Nepal , Sri Lanka and president and CEO, InterGlobe Hotels (Accor JV).

For Accor of course, current and future development within India remains in partnership with InterGlobe Hotels.