This is an EXCLUSIVE story. Do not reproduce or use in any manner whatsoever without the writer's permission.
No clarity on the operational status of 300-rooms five-star boutique hotel Swissôtel Grand Mumbai in association with the Litolier Group
Accor, the French multinational hospitality company, has discontinued its association with hotel asset owner Ambuja-Neotia Group for Swissôtel Kolkata effective July 1, 2020. The management contract tenure for this five-star business hotel, according to Accor India, had ended and hence the decision to move on.
Responding to queries, Accor spokesperson confirmed the development saying, “Effective July 1, 2020, following the conclusion of our management contract with Ambuja-Neotia, Swissôtel Kolkata will no longer be a part of the Accor network in India. We are thankful for our decade-long partnership and to the hotel team for their support.” There is no clarity about whether hotel employees are being reassigned to some other property (as and when the market opens up) or laid off post this development.
The Accor spokesperson also did not share any updates on their
association with Ashok Mittal’s Litolier Group for a 300-rooms five-star
boutique hotel Swissôtel Grand Mumbai that was to come up close to the
Mumbai International Airport. This property was announced way back in
April 2012 however, a search on Accor’s website showed up no results on
the operational status of this hotel. This could possibly also mean that
Accor doesn’t have a single Swissôtel flag up and running in the Indian
hospitality market anymore.
Swissôtel as a hotel brand has not had a great run in the Indian hospitality market. For instance, the Swissôtel Goa property (owned by Bangalore-based Convention Hotels India Pvt Ltd) launched amidst great fanfare in March 2013 was, in most likelihood, the shortest owner-operator alliance the Indian hospitality market has seen thus far. Swissôtel Hotels & Resorts had pulled out of this five-star deluxe resort at Calangute in Goa within six months of launching the property. This 135-room resort was relaunched as Hard Rock Hotel Goa in December 2015 and it continues to be operated under the same banner.
Coming back to the topic of management contracts, it appears hotel asset owner Ambuja Neotia Group is the first casualty of the COVID-19 pandemic situation that’s creating havoc in the Indian hospitality industry. Accor did not respond to queries seeking clarity on whether the ongoing COVID-19 situation was instrumental in not renewing the Swissôtel Kolkata management contract. The spokesperson also did not respond to queries on the status of other management contracts for its other brands in India that are likely to come up for renewal and whether Accor will let them expire as well.
This development has also brought to light the fact that COVID-19 is not only impacting business for industry players but also souring relationships between the hotel brands and asset owners. The situation raises concerns on the future of hotel management contracts that are up for renewal over the next six to 12 months.
In fact, taking into account the fate of Swissôtel Kolkata, the current market scenario poses a major risk to hotel asset owners as the business impact due to COVID-19 pandemic may result in a lot of the management contracts not getting renewed at all. While some may say there is a brighter side to it because some other hospitality brand/ chain will pick up the property and sign a new management contract. That’s a possibility for sure, but given the prevalent and near future market conditions, it looks unlikely that a new brand would take up the stress when there is hardly any business in the market.
Industry experts are of the view that there is significant churn in the market and contractual relationships are being re-looked and re-discussed across the hospitality industry. “Generally speaking, every association between hotel brand(s) and asset owner(s) be it management contracts, franchise agreements or lease arrangements is being reconsidered or getting restructured. Seeking safer avenues hotel asset owners are demanding income/ revenue guarantees, capping of operational costs and downside protection from the hotel brand operator,” said Abhijeet Umathe, chief executive officer, Eco Hotels India Pvt Ltd.
Players in the Indian hospitality market have been bleeding financially ever since the lockdown began in March 2020. Almost negligible business and zero visibility on revenues in the near or even distant future for that matter is forcing hospitality chains and hotel asset owners to reassess their business continuity plans. While branded hospitality chains managing the hotel asset(s) have to option to move on, that’s definitely not the case with the asset owner(s) who are stuck with the property and possibly no takers for their hotels in the market.
(The writer is a Mumbai-based independent business journalist and has extensively covered diversified consumer businesses over the last two decades. He can be reached at hello@ashishktiwari.com)
Swissôtel as a hotel brand has not had a great run in the Indian hospitality market. For instance, the Swissôtel Goa property (owned by Bangalore-based Convention Hotels India Pvt Ltd) launched amidst great fanfare in March 2013 was, in most likelihood, the shortest owner-operator alliance the Indian hospitality market has seen thus far. Swissôtel Hotels & Resorts had pulled out of this five-star deluxe resort at Calangute in Goa within six months of launching the property. This 135-room resort was relaunched as Hard Rock Hotel Goa in December 2015 and it continues to be operated under the same banner.
Coming back to the topic of management contracts, it appears hotel asset owner Ambuja Neotia Group is the first casualty of the COVID-19 pandemic situation that’s creating havoc in the Indian hospitality industry. Accor did not respond to queries seeking clarity on whether the ongoing COVID-19 situation was instrumental in not renewing the Swissôtel Kolkata management contract. The spokesperson also did not respond to queries on the status of other management contracts for its other brands in India that are likely to come up for renewal and whether Accor will let them expire as well.
This development has also brought to light the fact that COVID-19 is not only impacting business for industry players but also souring relationships between the hotel brands and asset owners. The situation raises concerns on the future of hotel management contracts that are up for renewal over the next six to 12 months.
In fact, taking into account the fate of Swissôtel Kolkata, the current market scenario poses a major risk to hotel asset owners as the business impact due to COVID-19 pandemic may result in a lot of the management contracts not getting renewed at all. While some may say there is a brighter side to it because some other hospitality brand/ chain will pick up the property and sign a new management contract. That’s a possibility for sure, but given the prevalent and near future market conditions, it looks unlikely that a new brand would take up the stress when there is hardly any business in the market.
Industry experts are of the view that there is significant churn in the market and contractual relationships are being re-looked and re-discussed across the hospitality industry. “Generally speaking, every association between hotel brand(s) and asset owner(s) be it management contracts, franchise agreements or lease arrangements is being reconsidered or getting restructured. Seeking safer avenues hotel asset owners are demanding income/ revenue guarantees, capping of operational costs and downside protection from the hotel brand operator,” said Abhijeet Umathe, chief executive officer, Eco Hotels India Pvt Ltd.
Players in the Indian hospitality market have been bleeding financially ever since the lockdown began in March 2020. Almost negligible business and zero visibility on revenues in the near or even distant future for that matter is forcing hospitality chains and hotel asset owners to reassess their business continuity plans. While branded hospitality chains managing the hotel asset(s) have to option to move on, that’s definitely not the case with the asset owner(s) who are stuck with the property and possibly no takers for their hotels in the market.
(The writer is a Mumbai-based independent business journalist and has extensively covered diversified consumer businesses over the last two decades. He can be reached at hello@ashishktiwari.com)
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