The Indian hospitality industry is undergoing tough times — high cost of debt, increased land prices, a volatile market situation, and more. Amidst uncertainty in the market, HIFI 2014 looks forward to give an insight into the challenges faced by the industry, and the outlook. Vijay Thacker, Director, Crowe Horwath HTL, speaks to Rashmi Pradhan on the highlights of HIFI 2014, and what delegates can expect from the event
- Dec 5, 2019
Courtesy/News Source: hospitalitybizindia.com
Q. How will HIFI 2014 be different from earlier editions?
Vijay Thacker: The focus of HIFI 2014 is to recognise the prevailing mood amidst the challenging market circumstances. Fundamentally, the hospitality industry, at least in India, is going through a tough time, resulting in under performing hotels - a lot of hotels are struggling for debt service, and this is impacting development planning going forward. A lot of hotel projects that have been announced are either deferred (officially or unofficially) and those that are proceeding are on a slow pace. Some of them are being restructured from physical and financial debt points, which is inevitable. When you have a capital-intensive industry on one hand, high cost of debt on the other, and tough market situations in reality, then some large or small degree of restructuring is inevitable. New projects have slowed down and those that need to be completed in three-five years from now have dried up. We clearly need to understand and help mould the developer’s, owner’s and investors’ psyche. I believe HIFI 2014 will concentrate on that. We constantly look to innovate and make HIFI more meaningful for delegates. We have made certain modifications as per feedback, and we hope to meet industry’s expectations.
Q. What are the challenges faced by hotel developers and investors?
VT: There are not just one or two challenges. Developers and investors are facing challenges across the board, be it availability of money, availability of land at reasonable prices, delays due to licensing, high cost of debt, low profit margins, mismatched expectations from hotels etc. All these are impacting the industry, and therefore there is lack of positive mood among developers and bankers – unfortunately, tougher the time, the costlier the money. In tough times, there is no assistance, and in good times, there is lot of assistance. That is the reality. The one positive for hotel developers is the substantial competition among hotel companies to offer their brands and get management contracts. The terms, whether on fees or otherwise, have become more competitive, which is advantageous for developers. There are also opportunities available for acquisitions of completed projects, greenfield or brownfield projects. But this does not hold true to the same extent for private equity investors who are essentially time-bound.
Q. HIFI 2014 is happening during distressed times. How do you think will the event help boost industry sentiment?
VT: In terms of future outlook, we will have speakers providing an insight on several perspectives. The hospitality industry in India does not play a bigger role in the economy, unlike Thailand, Dubai and Singapore (to some extent), where the ups and downs of the industry have a bearing on the economies. Unfortunately, the tourism industry is a small player in the Indian economy. The other aspect is to bring the right expectations, right measures in tough times, a greater sense of balance and to look forward meaningfully. The future is not bleak. The sun will rise, but the question is when? Future planning of operations, development outlook, quality of product, kind of product, expectations from operators, selection of operators, and the product element features are relevant aspects. HIFI will try and deal with these as well as on MICE, F&B, wellness, etc.
Q. ‘Owners Track’ is one of the newly introduced initiatives of HIFI 2014. Please elaborate on the same, and also tell us which are the other new sessions at this year’s event.
VT: We have always looked at the Owner community as key component of the industry – in fact, at HIFI 2013 we recognised two developers for their contribution. Given the situation that we have today, where the development mood is under pressure, it is important that we truly understand what the developer is looking for. It is also important for the developer to understand what the industry can and cannot do. If there are expectations that bankers and operators have from developers, and vice versa, which are not reasonable, then it is important for developers to be educated. No marketing system can have a magic wand that can put guests into the hotel overnight; no operating system can generate profits to service over-leveraged projects. And yet, no owner has an unlimited supply of money. So there are many relevant issues for owners and developers which have a bearing on operators and others. And we hope to be able to deal with the entire gamut of issues through different sessions.
The other newly introduced initiative at HIFI 2014 is ‘HIFI TALKS’. Each of the speakers will deal with different aspects as per their programme schedule, and try to bring a variety of thought on table.
For the Awards, we have a new category, ‘The Rising Star Award’, which recognises an emerging hotel leader under the age of 35 and currently working in the Indian subcontinent.
We are a proud partner of Youth Career Initiative in India. In today’s time it is important to recognise the efforts of employees, staff, associates. The industry is about people, on the user side and the service side – the HR aspect of the industry is critical and hence our effort to recognise and encourage the younger talent. What is not known is that every year we do a ‘students session’ before HIFI taking advantage of several industry seniors who are participating at HIFI.
Q.There is a gap between students who complete their education every year from hospitality management institutes in India, and the industry requirements. How do you think can this be dealt with?
VT: Hospitality management institutes’ programmes need to be re-written. The institutions are not at fault, since they need to follow the recognitions and rules prescribed by the government. In fact, the government needs to acknowledge the gross inadequacy in today’s rules and regulations and change them. The syllabi need to be revamped wholly so that institutes produce students who can immediately be absorbed by the industry and can add value to it.
About The Author -