Louvre Hotels-owned Sarovar to take over management contracts of Golden Tulip’s portfolio in India

This is an EXCLUSIVE story. Do not reproduce or use in any manner whatsoever without the writer's permission.

 

After acquiring a majority stake in India’s largest independent hotel chain Sarovar Hotels & Resorts back in 2016, one of Europe’s largest hospitality firms Louvre Hotels Group (LHG) is now looking to further consolidate its presence in the Indian hospitality market. This is being done by taking over the management contract portfolio of Golden Tulip Hotels & Resorts (GTHR) and bringing them under the management of Sarovar Hotels & Resorts.

Golden Tulip currently manages 24 hotels (as per https://www.goldentulip.com/en-us/hotels-india) under Royal Tulip, Tulip Inn and Golden Tulip brands across India. It is a separate hospitality firm in partnership between Louvre Hotels Group and veteran hotelier and restaurateur Vimal Singh who is managing director, Golden Tulip Hotels & Resorts, South Asia.

According to industry sources, as a result of this consolidation initiated by LHG, Sarovar Hotels is in the process of taking over the management contract of properties that are currently being operated by Golden Tulip Hotels in India.

“In fact, the management contract of Golden Tulip Hotel in Lucknow is already with Sarovar since a while now. It’s work-in-progress though for hotels in Jaipur and Navi Mumbai as we speak. Over the coming months, Sarovar will take over management contracts of a majority of hotels that are currently under Golden Tulip Hotels & Resorts in India,” said a source requesting not to be quoted.

The possibilities of properties in Golden Tulip Hotels & Resorts network in India coming under a single entity were being contemplated ever since Louvre Hotels Group acquired majority stake in Sarovar Hotels & Resorts. However, Saurabh Chawla, global chief development officer, LHG, during an earlier interaction back in September 2018, had said that Vimal Singh is a partner and that LHG was never looking at acquiring his stake in the company.

”He still is a partner. The commercial arrangements in the scope of the partnership, there is no intention to acquire his stake. I think the idea is to find synergies between the two entities because we are a shareholder in the two and that makes sense and that’s what we are evaluating at this point in time,” Chawla had said then.

The overall hotel industry scenario was considerably better back then and provided no compelling reason for a possible take over of the Golden Tulip portfolio. However, that’s not true anymore. The COVID-19 pandemic has completely devastated the hospitality business scenario globally and more so in India.

The Indian hospitality industry has been under lockdown since March 2020. As a result, owners and managers of hotels, resorts, restaurants across categories are struggling for survival. Furthermore, in the absence of any support, in terms of a financial relief package from the government, most business owners are contemplating shutting shop in the near future.

Continuous fixed costs coupled with no visibility on revenues whatsoever are adding to the challenges of business continuity. Hotel companies with strong balance sheet could probably weather the storm however, a large majority will succumb owing to the after effects of the corona virus outbreak. While efforts are being made to contain the spread of this deadly virus, the overall situation with numbers increasing significantly on a daily basis isn’t looking very encouraging.

An industry poised for growth is now staring at a bleak future. All the planned milestones and projected revenue and profitability targets have gone awry. These not so encouraging signs, industry sources said, would have possibly led to a rethink by Vimal Singh and Louvre Hotels Group resulting in a decision to hand over the management of hotels in the Golden Tulip portfolio to Sarovar Hotels.

“I believe the Golden Tulip partnership between Vimal Singh and Louvre Hotels Group will also complete its tenure over the next couple of years. In a growing business scenario waiting it out would have given a higher payout to the exiting partner. However, with uncertainty looming over the Indian hospitality industry, I think it’s best to move out if one has managed to negotiate a good deal,” said a hotelier on conditions of anonymity. Financials pertaining to this deal could not be ascertained.

In September 2018, LHG had partnered Indian firm Orange Tiger Hospitality (OTH) to introduce its new brand 'Kyriad' in the Indian hospitality market. As part of the master franchise agreement, OTH would operate and manage Kyriad branded hotels in India and the Indian sub-continent i.e. Nepal, Sri Lanka, Bangladesh, Bhutan, Maldives, Pakistan and Mauritius. 

The master franchise with OTH is for a 15-year tenure and the Indian partner had then committed to launch eight hotels under Kyriad. LHG had also said then that it plans to use a similar master franchise route to introduce its two other brands viz. Première Classè and Campanile in the Indian market over the coming years.

Owned by one of China's leading travel and tourism conglomerates, Jin Jiang International Co Ltd Louvre Hotels Group (LHG) is a major player in the global hospitality industry with over 1,500 hotels and in 54 countries. The hospitality firm operates in segments ranging from one-star to five-star with the its historic brands viz. Première Classe, Kyriad, Campanile, Tulip Inn, Golden Tulip, Royal Tulip), the five brands of the Sarovar Hotels network in India, the french Group Hôtels and Préférence and Chinese brand Metropolo.

(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)

IHCL to home deliver dishes via Qmin mobile app starting July 25

Qmin home delivery service will cover top 10 markets including Delhi, Chennai, Bengaluru etc. over a period of five weeks

Come July 25 and South Asia’s largest hospitality firm IHCL, a Tata Group company, will introduce the Qmin, a mobile application for home delivery of dishes from some of its iconic restaurants. That's not all. This will be followed by the launch of the gourmet Qmin Shop in August and a loyalty platform in September.

A repertoire of culinary experiences, Qmin will commence home delivery of dishes from the hotel chain's eight iconic restaurants in Mumbai, in the first phase. Among the list of restaurants are Golden Dragon and Souk from Taj Mahal Palace; Thai Pavilion and Trattoria from President; and Ming Yang from Taj Lands’ End to name a few. To start with the Qmin service will cover top 10 markets in India including Delhi, Chennai, Bengaluru etc. over a period of five weeks.

According to Puneet Chhatwal, MD and CEO, IHCL, this addition will augment the group’s food and beverage (F&B) offerings leveraging a digital platform to address a growing consumer demand for online gourmet food delivery services. “Qmin will scale up in the months ahead to include the gourmet Qmin Shop with delicatessen-based food choices. Taj has been home to our guests for more than a century. With the launch of Qmin, we bring Taj to their homes,” he said.

Qmin will bring curated dishes made using the highest quality ingredients and a variety of cuisines, delivered in the comfort and convenience of the home. Available on both android and IOS mobile devices, Qmin will offer its guests a differentiated delivery experience with an enhanced focus on maintaining stringent protocols of safety and hygiene.

This will include contact-less delivery and the mandatory use of protective gear for delivery executives in extremely sanitised vehicles. The packaging will be eco-friendly utilising bio-degradable materials and with customised insulation boxes to preserve the food whilst being delivered. A dedicated toll-free number 1800 266 7646 will also be made available for guests to place orders.
 
Qmin will expand its scope and bring Taj@Home to other cities in the near future. The gourmet Qmin Shop presenting epicurean specialities and authentic artisanal brands will open in August. Qmin will be integrated with IHCL's loyalty program in September, where guests can earn and burn points using Qmin services.
(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)

Indian Hotels to debut own home delivery business under a new brand

This is an EXCLUSIVE story. Do not reproduce or use in any manner whatsoever without the writer's permission.

 

Tata Group's hospitality company will launch state-of-the-art mobile application in a week

 

An experiment, to deliver food from restaurants housed in some of its luxury properties in Mumbai, is set to go mainstream soon. Tata Group’s hospitality business, Indian Hotels Company Ltd (IHCL), will launch a mobile application next week that will allow customers to order home delivery of food akin to ordering from online food delivery aggregators like Zomato and Swiggy.

In an earnings call on Thursday evening, Puneet Chhatwal, managing director and chief executive officer, IHCL, said the move is part of the hotel company’s efforts to drive revenue growth. 

“Our RESET response to COVID-19 is based on revenue growth. We have lined up a number of key initiatives including new lines of revenue. In fact, within a week from now we will be launching our own home delivery business under a new brand through our own state-of-the-art (mobile) application. This was long desired in our business from the digital side,” said Chhatwal without sharing further details.

So far, IHCL has identified seven key initiatives to help drive revenues that will be unveiled gradually over the next four to six weeks (depending on the opening up of hospitality sector in India). Earlier this week, the hospitality chain launched the first initiative in Kerala, which is based on the concept of DriVacations i.e. holidaying at destinations and properties that are within three to five hour driving distance.

The new initiatives, Chhatwal said, are meant to compensate for the loss in revenue, or earnings before interest, taxes, depreciation and amortisation (ebitda) as well as profit after tax (PAT), which is the case for IHCL as well as the overall hospitality, travel and tourism industries across the globe in the first quarter of fiscal 2020-21.

“Additionally, we are coming up with strategies for new corporate, leisure, wedding and meetings, incentives, conventions and events (MICE) business across different space. “We will have new business based on the upcoming app involving gourmet shops in our hotels at key city locations,” he said.

In April, the hotel company had launched Hospitality@Home initiative involving three different varieties of hampers for people to pick up for personal consumption or gifting purposes. IHCL has also been driving The Chambers (its exclusive private club) membership for some time now.

The Chambers boasts of a completely new look, feel and design now and will be launched at Taj Mansingh in Delhi by September or October this year.

“It was delayed by three to four months for obvious reasons including air-pollution issues followed by COVID-19 pandemic as a result of which the hotel was shut. The Chambers will also debut in the London market giving the private club brand a great positioning. This will also be our competitive advantage going forward,” said Chhatwal.

As for the impact of COVID-19 pandemic on IHCL’s hotels, the company said in an investor presentation that approximately 50% of its properties across portfolio were closed or were acting as active quarantine centers as on May 31, 2020. The hotel company has put together a staggered opening plan post relaxation of the lockdown.

The management will also undertake effective asset management initiatives including monetisation of non-core assets, monetisation of hotel assets and minimisation of lease costs. 

For instance, in fiscal 2019-20, IHCL has raised a total of Rs 211 crore by selling land parcel in Pune (Rs 63 crore), 24 apartments (Rs 105 crore) and Taj Madras Flight Kitchen, Chennai (Rs 29.8 crore). The hotel company is also in talks to divest a few more assets in the current fiscal and lease it back or take it up on a management contract basis.

(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)

Liquidity issues add to worries of cement dealers in Tier I and II centres across 13 Indian states

Trade channels, accounting for approximately 60% of annual cement sales, stare at around 30% demand contraction

With April and May becoming a total wash out months due to the COVID-19 pandemic, cement dealers in the country are headed into a vicious cycle. Delay in new construction activities, gloomy business outlook, fear of income loss, labour shortage and uncertainty with respect to resumption of normalcy were among some of the reasons cited.

In fact, a significant decline in cement sales followed by prolonged credit period and higher working capital requirements have already made life difficult for the fraternity thus adding to their survival challenges. The trade channels account for approximately 60% of annual cement sales.

According to Rahul Prithiani, director, CRISIL Research, the cycle of recovery of retailer dues is expected to extend by four to six weeks over and above the usual four weeks. “This will potentially increase the working capital requirement of dealers by 12-17%, even as they reduce credit exposure, infuse capital and curb non-essential expenditure,” said Prithiani.

Courtesy: CRISIL Research

A recent CRISIL Research survey with over 100 dealers across Tier 1 and 2 centres in 13 states, indicated a significant decline in volumes and an extended lockdown can only worsen the overall situation. A whopping 93% of the respondents said they expect volumes to shrink 10-30% in fiscal 2021 in the base case scenario, i.e. the lockdown easing in May.

The survey pointed that over 60% of dealers are holding low inventories (two to four days), but spoilage concerns persist. Dealers are hopeful of liquidating inventory by offering discounts as soon as the lockdown eases, to contain spoilage and get volumes going.

Additionally, payment delays from retailers appear inevitable considering these players are small and fragmented, and most likely to delay payments amid liquidity crunch, gloomy demand outlook and cement spoilage concerns. That, in turn, would stretch the receivables cycle and negatively impact cash flows of the dealers, as much as 95% of whom offer credit, CRISIL said in the report.

The elongated working capital cycle could last at least a couple of quarters, and the risk of retailers defaulting on payment dues would aggravate the financial pain. However, the collateral-free MSME loans announced by the government on Wednesday will come as a big relief, since it will help cement dealers access working capital debt.

Over 90% of the dealers surveyed are hopeful of manufacturers’ support in terms of better margins/ incentives, or liquidity support to weather the hard times. But chances of a swift revival post ease in lockdown remain bleak, with 58% of the respondents believing it will take over three weeks for operations to normalise, said the CRISIL report.

Guranchal Singh, associate director, CRISIL Research, said, “An intermittent rise in daily wages, freight cost, and construction material prices will deter restart of construction activity. Return of labour, freight disruption and dwindling consumer confidence will weigh on resumption of normalcy in the near term.”

Improvement is envisaged in the second half as demand picks up and receivable days gradually decline. But even here, recovery in urban areas may take longer due to extended lockdown, slowdown in real estate construction and higher dependence on migrant workforce.

A few dealers, though, are optimistic that the labourers, who have not been able to earn wages for nearly two months, would return quickly post-kharif sowing to capitalise on pent-up demand and halted construction activity.

Courtesy: CRISIL Research

(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)

Lemon Tree partners Al Waleed Real Estate for Dubai hotel foray

Lemon Tree Hotels, one of India's leading hospitality firm in the mid-priced hotel accommodation segment, in partnership with Dubai's Al Waleed Real Estate LLC has entered the Middle East hospitality market. Through its management subsidiary Carnation Hotels, the BSE-listed hospitality chain has debuted in the international market with the launch of its first Lemon Tree Hotel in the United Arab Emirates (UAE).

According to Rattan Keswani, deputy managing director – Lemon Tree Hotels and director – Carnation Hotels, said, the UAE market holds immense business potential for the hotel chain and their's is the first branded mid-scale hotel in the area. "We have a locational advantage, with the hotel strategically situated close to famous destinations like Burj Al Arab, Kite beach and the Mall of Emirates, and are equidistant from Business Bay and JLT, the two major business districts of Dubai. Such is our proximity to the Burj Al Arab, that our guests can enjoy unhindered views of the iconic building from the pool deck, and even some of the rooms," said Keswani adding that the hotel company is hoping to have many more hotels in the region in the future.

Owned by Al Waleed Real Estate LLC, the hotels is located on Al Wasl Road and is within a kilometre from Sheikh Zayed Road and Jumeirah Open Beach. Featuring 114 guest rooms, the property boasts of a multi-cuisine restaurant, Lemon Tree Café, with al fresco extension, a conference room, a swimming pool, a well-equipped fitness center among other facilities.

The addition of this hotel, Keswani said, opens a new location for the brand, thereby increasing its appeal to existing and potential customers. "We are confident that our partnership will enjoy mutually beneficial results within a reasonable stabilisation period after the launch. The UAE and Gulf Cooperation Council (GCC) is a resilient market in the long term and we could foresee the need for a recognised mid-market hotel in the branded space," he said.
 

Ideal for business and leisure travellers, the hotel is a short 20-minute drive from Dubai International Airport and close to Dubai Internet City, Dubai Media City, Barsha Heights, and Knowledge Park. It is also well connected by road and air to the other Emirates, including Abu Dhabi, Ajman, Fujairah, Ras Al Khaimah, Sharjah and Umm Al Quwain.

(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)