By: Ravi Sinha
Track2Realty Exclusive
Global experience has it that typically convention centres are done as part of a large integrated township, commercial complex (hotel, office and convention center). Hence such projects are of more interest to large developers.
“Convention centres require different capabilities to manage at the operations stage. Currently, in India most developers are undertaking significant construction projects and are concentrating on improving project management capabilities. Only few developers have focused on building strong facility management capabilities (specifically those with existing portfolio of large built up assets),” says Neeraj Bansal, Director, Risk Consulting, KPMG, India.
Agrees Bharat Dhuppar, CMO, Omkar Realtors, “Institutional Projects/Convention Centres are projects that require on ground expertise in operational management. Running and managing such projects do not form the core business of any real estate developer. Thus these projects lack financial viability in the absence of an operational partner.”
Across the world convention centres and hotels feed on each other and hence work on cross subsidized model. Experts believe in a developing market like India one must have the knowledge to tie-up with strong brands in the world, as foreigners must recognize names, say like Marriott. Tying with unknown brands will not work here. It may be like brick and mortar by somebody but management by somebody else.
Then appetite for hotel should also be there as K Rahejas have done in Powai with Marriott. The Renaissance Mumbai Convention Centre is a luxury hotel on the bank of Powai Lake where the convention centre offers 230,000 sq ft of indoor and outdoor space to suit a multitude of occasions.
Pranay Vakil, Chairman, Knight Frank India says not many people understand hotel business because pay back time is 7-8 years. Then you have to get access to specialised funds only for the hotels. It has to be very specialized like the IT space. According to him at this moment it is a learning curve in India and once people have knowledge and ability to tap international resource, added with the technology and facility to maintain, then only India will be able to match the global standards.
“It is a painful process but we have to go through it. If you do it when the core business is not doing well, then it is a gamble. Many of these developers failed because they got into it for more FSI and Government sops. Like multiplexes where because of tax breaks and other Government sops (before 2009) and they wanted to take advantage of tax benefits. But knowledge and foreign resource was lacking. Technology has changed in the last 5-7 years. Singapore succeeded in the business of convention centres because of technology. Creation is not alone, maintenance is also needed,” says Vakil.
…to be continued
