Sanjay Narang seeks global tie-ups

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Sanjay Narang, the entrepreneur who has set up several food and beverage concepts, such as Dosa Diner, Not Just Jazz by the Bay and SkyGourmet, is hoping that a tie-up with global hotel network Preferred Hotel group will help his boutique luxury hotel in Mumbai attract more international clients and boost profits.

“The tie-up with Summit Hotel and Resorts and being a part of their Iprefer global loyalty programme will help us further increase our proportion of international guests from around 60-65 per cent at present, by attracting more customers from Europe and the US. We expect the tie-up will help us increase our average room rates by about a fifth by bringing contracts with multinational clients worldwide,” Bruno Loosli, chief executive of Mars Enterprises told Financial Chronicle.

Mars, owned by Sanjay and Rachna Narang, controls the Waterstones Hotel and Waterstones Club, a boutique luxury hotel and exclusive club, in North Mumbai close to the international airport.

Sanjay Narang had earlier set up a boutique chain of Hotels under the ‘Gordon House brand’ which was subsequently sold to India Hospitality Corporation. The Waterstones property marks a reentry into the luxury hotels business for the hotelier. Mars is also constructing a 600 room capacity complex in Mumbai adjacent to the existing property, which will have serviced apartments, an office complex and a larger function than the under 75 room hotel currently operational.

“In the last five years, the fall in average room rates in the North Mumbai market coupled with steady inflationary cost pressure have eroded all margins. While four years ago this market had an average room rate of Rs 8,500 now its closer to Rs 7,000 per night. We are hopeful that the first quarter of 2013 will herald a revival in tariffs,” said Loosli.

Waterstones’ move to tie-up with Summit chain of 115 luxury hotels and resorts is expected to allow it access to a global distribution system that could help it compete better with competitors such as Hyatt, ITC, Le Meridien, all of whom have set up shop in close proximity to each other.

Rating agency Crisil forecasts that the average occupancy rates of premium segment hotels in India will touch decadal lows of 56 per cent in 2013-14 from 64 per cent in 2011-12. “The mismatch between supply and demand will precipitate a fall in the industry’s revenue per available room (RevPAR) to a nine-year low. As the increased room inventory intensifies competition, average room rentals will dip by about 10 per cent over the next two years. The RevPAR, will dip annually by around 12 per cent. At Rs 3,900, the RevPAR in 2013-2014 will be the lowest since 2005-2006,” said the agency in a recent research report on the sector.

“The north Mumbai market is forecast to see an annual increase in supply by around 11 per cent per annum till the year 2015-2016. Increasing demand will see occupancy levels stay stable or fall marginally from the 67 per cent seen in 2011-2012, but average room rates are forecast to fall in this market every year till 2015-2016,” Benaifer Jehani, director of Crisil Research, told FC.

She added that access to the global distribution system of the international hotel management companies does give hotels in India access to reservations from international clients. “Customers patronize these international brands because they accrue points that can be redeemed for stay in any country where the chain has a property,” she added.


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