Leasing of hotels has emerged as a promising business model, but a lot depends on the brands’ risk appetite.
OVER THE PAST few years, the iconic Hotel Ashok, in the heart of Lutyens’ Delhi, has been grappling with an uncertain future. First, there were talks of disinvestment, and of late, plans are afoot to lease it out for 60 years to allow private players to redesign, rebrand and run the business. It may sadden old loyalists, but the leasing model seems to be gaining traction as real estate is exorbitantly priced and no one is too keen on large-ticket exposure.
The hotel industry has witnessed two key business models – brand-owned and operated properties and those managed by brands under management contracts. Now comes the leasing model, under which a brand takes over both day-to-day running and the P&L of the asset, for which the lessor gets a fixed return and at times, an added revenue share, as per the deal. According to Saurabh Gupta, Managing Partner at the Gurgaon-based hospitality consulting firm Hotelivate, “Leasing works for property owners who are looking to invest in the hospitality industry but need the comfort of assured returns. It also incentivises fresh capital to enter the sector. In addition, leasing of hotels allows brands to grow robustly, thus paving the path for some investments.”
Leasing of hotels is yet to take off in a big way in India (even the ITDCowned Ashok is getting few offers), but some operators are quite bullish about its growth prospects. “We handhold owners until the completion of the asset, and when the hotel is ready, we take possession,” explains Zia Sheikh, Chief Managing Director and Chief Executive Officer of Svenska Hotels. This Swedish boutique hotel chain runs as many as 21 properties in India while 20 more projects are on the cards. Svenska started onboarding leased properties in FY2014/15, around the same time when the model became prevalent in the Indian market.
Denne historien er fra February 10, 2019-utgaven av Business Today.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
Allerede abonnent ? Logg på
Denne historien er fra February 10, 2019-utgaven av Business Today.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
Allerede abonnent? Logg på
Pension Scheme - Safety Net
The move to introduce the UPS has evoked mixed reactions. Analysts believe its funding will have limited impact on the fiscal math
The Reit Choice?
Real Estate Investment Trusts (Reits) Are Gaining Traction As Interest Rates Stabilise. But Returns Could Be Affected By Adverse Economic Conditions And Market Volatility
CORPORATE - Calling to Account
The sudden exit of Byju's auditor BDO marks the latest in a long series of setbacks for the edtech firm
EMPLOYMENT: Skills Push
The skill development ministry plans to partner with the UGC to improve the employability of undergraduates
Building on a Vision
L&T'S CHAIRMAN EMERITUS A. M. NAIK HAS BUILT A MAMMOTH ENTERPRISE THAT IS BUILDING A NEW INDIA, FROM ITS METRO RAIL SYSTEMS TO THE RAM TEMPLE
"KYS more important than KYC"
Vijay Kedia is a renowned equity investor; the value of his listed portfolio stands at around ₹1,750 crore
ROXX STAR
THE THAR ROXX COMBINES LUXURY WITH PERFORMANCE TO MAKE A STRONG STATEMENT IN THE MID-SIZE SUV SEGMENT
HIT THE GROUND RUNNING
Smartwatches have become indispensable tools for runners, offering real-time insights into pace, distance, heart rate, and more. Here are a few you can consider
TURNING THE TABLES
INDIA'S FURNITURE MARKET IS POISED FOR A GLOBAL TAKE-OFF. ALREADY, A HOST OF GLOBAL BRANDS HAVE MADE THE COUNTRY THEIR HOME, BUT INDIAN COMPANIES ARE NOT TOO FAR BEHIND
THE EVOLUTION OF ATHERA
IDENTIFYING OPPORTUNITIES IN ADVANCE HAS STOOD THIS BENGALURU-BASED VC FUND IN GOOD STEAD. NOW, WITH A HEIGHTENED FOCUS ON TECHNOLOGY, IT WANTS TO SUSTAIN THE SUCCESS