|April 2003 - Hilton International
which, like other big hotel groups, has found it difficult to expand in
India, is not the first to try, try again.
The failure rate is high:
Accor first tried with Oberoi, signing an agreement
in 1993 and abandoning it in 1997 after fewer than five hotels had been
added - but Oberoi's own brands were growing well. That year Accor signed
an agreement with Mahindra, which had its own Guestline hotels. The target
was to add 15 hotels before 2002; none were added, and the JV was abandoned
Ironically, Century Hotels, now owned by Accor, had
earlier signed with Mahindra. After that link-up failed, it signed with
Jaiswal - which also failed.
Carlson tried with state-owned ITDC/Ashok, then in
1997 with Saraf Industries to develop 20 hotels, mostly in India. It has
under five, and no one talks of Saraf any more. In 2002, Carlson said it
would add 18 hotels by 2005, and has announced some with a local group
April 2003 - One sentence from Paul McManus, head
The Leading Hotels of the World, sums up the substantial changes taking
place at the company: "(LHW) was a club, but we decided to become a business."
Hilton International signed an agreement in 1995
with Bharat Hotels to develop an initial 11 hotels in the country, including
taking over and renaming Bharat's Crowne Plaza in Delhi. No dates were
set, but the indication was that all 11 would be operating within five
years. Yet only one opened, in Chennai. The Crowne Plaza in Delhi went
full circle and is now an Inter-Continental (being first lost by the Holiday
Inn group, and eventually regained after Holiday Inn and IC came together
under Six Continents). Hilton's new attempt started in late 2002 when it
signed a new joint venture, this one with Blue Coast Hotels & Resorts
Limited (which was previously Morepen Hotels). Initial projects for the
joint venture, Hospitality Holdings India, all due to open in 2005, are:
175-unit Hilton Residences (serviced apartments), Mumbai; 250-room Hilton
Hotel, Bangalore; 160-room Hilton Resort, Goa.
But even that hides the significance of one of
those changes - the creation of Leading Trust (LT). With this venture,
The Leading Hotels of the World could become an important owner and operator
of luxury hotels, alongside companies such as Four Seasons and Mandarin
Oriental - some of which currently have hotels in LHW's representation
"In the mid-1990s," explains McManus, "there were
a number of consolidations and mergers which touched our portfolio, and
there are many special names in our membership. We would like to bid for
them if the opportunity arose."
This would include small groups such as Ciga,
Rafael, Savoy - all coveted top-of-market groups whose ownership has changed
Leading Trust may also help hotel management
companies that have some hotels in The Leading Hotels of the World, even
if not a factor at present. About 20 hotels in LHW are managed by big-name
hotel management companies. If there was a danger of ownership change at
those managed hotels, Leading Trust might become involved (with or without
the management company) and maintain membership in LHW.
However, acquisition would not be limited to
member hotels. Although McManus has no numerical targets, he expects Leading
Trust to have ownership in 6-8 hotels in the next two years, and 16-25
in the next phase. The first hotel was expected to be announced in the
first quarter of this year - the target was missed.
Leading Trust's focus is on Europe (where The
Leading Hotels of the World has 45% of its member hotels). Ownership could
vary between just a position, such as to keep a hotel in The Leading Hotels
of the World, to 100%.
Partner in Leading Trust is Trinity Trust of
Honolulu - one-time 50% owner of Rafael Hotels before it was sold to Mandarin
McManus says it will continue to use the Leading
name for Leading Trust-owned hotels - which supports the theme that this
scheme is about asset protection more than marketing. However, we believe
that once the equity portfolio reaches a certain size - 10 properties?
- there will be pressure to establish a marketing presence in the form
of a common name.