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Monday, September 9, 2013

Are hotel owner-operator marriages becoming flings? Now Swissotel pulls out of Goa property

An edited version of this story first appeared in DNA Money edition on Monday, Sep 9, 2013.

With relationships between Indian hotel asset owners and international hotel operators getting sour, for various reasons, the Indian hospitality market is set to see an increase in the instances of such marriages hitting a rocky patch.

Emulating the split between Phoenix Mills and Shangri-La Hotels that happened last week, another foreign hotel operator has decided to call it quits.

This time it is Zurich-based Swiss hospitality chain Swissotel Hotels & Resorts which is pulling out of its five-star deluxe hotel at Calangute in Goa. The Goa property is owned by Bangalore-based Convention Hotels India Pvt Ltd (CHI).

Officials of both CHI and Swissotel could not be reached for a comment.

However, Swissotel’s website confirmed the development saying, as of September 9, 2013, Swissotel Hotels & Resorts will no longer manage Swissotel Goa. The hotel will be renamed and operated by the owner.

The international hotel chain -- Swissotel -- is owned by FRHI Holdings Limited, a leading global hotel company with 102 hotels and resorts worldwide under the Raffles, Fairmont and SwissĂ´tel brands. The company also manages Fairmont and Raffles branded Residences, Estates and luxury private residence club properties.

Interestingly, Swissotel Goa was launched amidst great fanfare just six months ago i.e. March 2013 and, in most likelihood it is the shortest owner-operator marriage the Indian hospitality market has seen thus far. The fling between Phoenix Mills and Shangri-La Hotels had lasted nine months.

Convention Hotels is currently developing four hotels in the country with a combined guestroom inventory of 715 keys. The company’s development pipeline includes a 35-room tented resort is under development at Kabini (Bangalore), a 220-room Holiday Inn hotel in Goa to be managed by Intercontinental Hotel Group (IHG), a 200-room Hilton Garden Inn to be managed by Hilton Worldwide and a 260-room Hyatt Place hotel in Bangalore that will be managed by Hyatt Hotels & Resorts.

Industry experts said the Indian hospitality market will see many more asset owner-hotel operator relationships turning sour, citing conflict of opinion (on business operations and expected returns on investments) as the key reason for the split.

Another possibility of a fall-out, industry sources said, will be between Shiva Satya Hotels which is developing a five-star hotel to be managed by IHG under its Crowne Plaza brand. The duo had signed a management agreement back in August 2008 and the hotel was to be operational in 2010. However, the project has got delayed significantly and there is no clarity on its completion timeline as yet.

Information Update:

Before launching under the Swissotel brand, the management contract for the Goa resort was signed with the InterContinental Hotel Group and was to be operated under the Holiday Inn Resort. However, Swissotel came in at the last moment and bagged the management contract.

As of now, this flagship hotel from the
Bangalore-based Convention Hotels India Pvt Ltd (CHI) has been re-branded as North16Goa.

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