One-On-One: India's Hotel Demand Spurs Leela Growth

Onno Poortier, president of the India-based Leela Palaces, Hotels & Resorts—along with the hotel group's recently appointed area director for Western India, Indrajeet Banerjee—recently spoke with Business Travel News hotel editor Michael B. Baker about growing corporate travel buyer interest in the group's hotels, the strength of the Indian travel market and the goal to develop a pan-Indian hotel presence in the next four years.

BTN: Does India continue to be a booming business travel market?

Indrajeet Banerjee: We have massive growth in terms of international travel. Recently the world tourism board recognized India as the number-one country in terms of prospects of growth in tourists as well as business travel. The United States is one of the largest feeder countries to India. The boom started from Silicon Valley into the southern part of India, Bangalore. We don't see that upswing anymore. The boom has stabilized. A lot of the Silicon Valley business has moved into neighboring states, and some has moved to Western India, areas like Pune. From a sales and marketing view, the top 15 global accounts of the United States require for the Indian market more than 100,000 room nights a year. The U.S. market is that big. Tourist business revenue in India is $100 billion. By 2018, it's expected to be $373 billion.

BTN: What sort of growth have you seen in terms of corporate travel agreements in the past few years?

Banerjee: Our business out of request-for-proposals contracts we have seen for the group just in the past year has grown over 300 percent. Three years back, if you look at the group, it possibly had 15 RFPs. Today, the group had more than 200.

Onno Poortier: We get high-level executives. At Bangalore, we had Bill Gates, for example. Those people are staying in the hotel because of the industry there. IBM has about 80,000 room nights for our hotel in Bangalore. There are a lot of things happening in that part of the world.

BTN: What has spurred growth?

Banerjee: Our relationship with the businesses is helping us a lot in recognition of Leela as a brand. We've spread our wings with most of the global consortia of the United States and all the big agencies, like Carlson Wagonlit and HRG. We are working extensively with the global distribution service providers throughout the world, doing special ad campaigns. Overall, India is on a great upswing, and most of the international brands are looking at building there because of world tourism prospects.

Poortier: For Asia, it is quite new to have these sorts of corporate agreements. We also have a contract with Preferred Hotels Worldwide, and that has great benefits for us.

Banerjee: Another side is the travel agencies. With airline discounts coming down, the travel agents are looking more into corporate travel. We've recently had an upsurge of travel agencies coming to us from large global corporations like Siemens, for whom we are doing the full management process: hotels, airlines, ticketing, the works. That's a really upcoming market globally, these consortia holding global corporate accounts.

BTN: How are your occupancy and rate?

Poortier: Occupancies are very healthy compared to worldwide standards. In terms of room rates, you're looking at around $400, but compared with New York, that would be on the low side. If you pay $700 U.S. in New York for a room, I would say you're getting value from us.

BTN: The comparison we hear quite often is that there are the same number of luxury hotel rooms in India as there are in Orlando.

Poortier: We have heard that a thousand times.

BTN: Will supply catch up to demand in India?

Poortier: I see probably not enough hotels being built. India is in dire need of about 150,000 rooms, and we expect very high interest of tourists and businesses coming in. The government has identified more IT areas, in Chennai and Pune and Hyderabad, and it's not taking away the business from Bangalore. You should look not only at the international market, but India also is on the move. The resort industry in India is developing, and we are not even there yet, with the number of beaches we have. A lot is going up. We might not have always the highest occupancies, but this is the new center. The Middle East is developing, certain parts of Africa are coming up, Southeast Asia and Shanghai are growing and airlines are changing flight patterns.

BTN: What are Leela's specific growth plans?

Poortier: A number of different properties will be coming. Currently, we have the Leela Kempinski Mumbai and the Leela Kempinski Goa on the Arabian Sea. We also have our success story in Bangalore and the Leela Kempinski Kovalam Beach, in the state of Kerala. The next one, the Gurgaon, outside New Delhi, will open in November. The next opening will be the Udaipur, in Rajasthan in January. In October 2009, we will open the Leela Palace in Chennai, and, in September 2010, we will open our new palace hotel in Delhi. We are developing two new hotels, in Agra—very famous for the Taj Mahal—and in Jaipur, in Rajasthan. Rajasthan is very well known for the palaces of the maharajas. They will be smaller hotels, 85 to 100 rooms. In 2012, we will open two hotels: one in Pune and one in Hyderabad. We are going to create a pan-Indian presence.

BTN: Will you make efforts to grow the brand outside of India?

Poortier: We are building eight hotels in the next four years, so those hotels have to be up and running. There has to be quality control and attention to detail, and that will require a lot of work for us, so I really don't recommend to the owners to go overseas in the States now. Once our projects are recognized—we're already recognized in India, but when our 12 hotels are recognized internationally—the management contracts will come.

BTN: For buyers and business travelers, what are the advantages of doing business with an Indian hotel brand as compared with a multinational company?

Poortier: Our properties have the special Indian touch. With respect to our international colleagues, you know when you go into one of their rooms, on the right hand side is the door, and on the left hand side is the luggage rack. We are creating something different, with the attention on larger rooms, between 450 and 550 square feet. We have very large working desks fitted out with all the latest technology. We are already up to date with our technology in all the hotels. They are Wi-Fi-ready, so people can sit in the lobby and work on the computer. We are adding club floors, so you don't have to go to the main reception to check in, but you're straight away escorted to the top floor with special checkin where you are welcomed with a welcome drink. All that gives the business travelers a world around them where they don't have to see the tourists, and it's a quiet, peaceful atmosphere.