By: Manu Sharma
Track2Realty Exclusive
An emerging segment to attract the hotel industry of India has been the MICE (Meetings, Incentive, Conventions and Exhibitions) segment as it has the potential to change the face of several upcoming Indian cities. The overall international visitors are likely to grow many fold due to MICE as it allows for the sale of several hundreds or even several thousands of room nights as opposed to the transient travellers who utilise only a few room nights at a time. Additionally, most delegates often travel before and after the event, thus adding to the overall growth of the hospitality industry.
The marketing mantras of hospitality, which many other verticals of real estate need to learn, are differentiation, consistency, customer satisfaction, delivery of brand promises and customer retention. Hotel brand has evolved from a one-way communication stream to a two-way process that is more flexible and accommodates the customer’s needs and wants.
Hotels built in India very often exceed the brand specifications that might exist for these brands internationally and that developers often tend to spend more money on their hotels than required. A typical mid-market business hotel in the US or Europe, thus, does not cost nearly as much to construct as it does in India.
Development of hotels in India was historically undertaken by high net worth individuals who would approach banks for debt to finance a portion of their construction cost and then raise equity through personal resources or from family and friends to cover the rest of the costs.
Unlike the US or the UK, where a developer could obtain 75-85% of construction costs in the form of debt from banks on a long-term basis (30 years), Indian banks have typically lent only upto 60% of the construction cost and that too for a much shorter duration.
…..to be continued
