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Murray Bailey's Update / 
Big Hotel Groups
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 in 2002.
  • 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 MBD.
  • 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.
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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."

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 portfolio.

"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 recently.
  
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 Oriental. 
  
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.

 

 
Contact:
Murray Bailey, Editor/Research Director
TRAVEL BUSINESS ANALYST
46 Blvd des Arbousiers
83120 Ste Maxime, France
Tel: (33-4)-9443-8160
Fax: (33-4)-9449-0949
Email: [email protected]
www.travelbusinessanalyst.com


 
Also See: Carlson Hotels Enumerates Expansion Plans in Asia Pacific / Murray Bailey, Editor, Travel Business Analyst / Feb 2003
Retro Rates?; Big Event Blues - Murray Bailey, Editor, Travel Business Analyst / Oct 2002
Despite Push in Europe, Regent Is Losing More Hotels than Adding / Sept 2002


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