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A Sweet Deal! Why Indian tycoon Jagsish Rai Sood chose to partner with Shangri-La |
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By Steve Shellum, Publisher/Editor, HOTEL Asia Pacific |
Shangri-La MD and CEO Giovanni Angellini, left, with owner Jagdish Rai Sood.
WITH global hotel companies eyeing India as the next big market after China, owner Jagdish Rai Sood had no shortage of suitors lining up to operate his latest property in New Delhi.
Sood, scion of the family which also owns the Parkroyal Intercontinental Nehru Place [also located in New Delhi and managed under a franchise agreement] as well as extensive other real estate throughout the city, did his homework before deciding which flag would fly on the 354-room former Hotel Kanishka, which will reopen in December 2004 following a US$22 million renovation.
As part of their research, his team performed a performance analysis of the three hotels at Hong Kong’s Pacific Place – the Shangri-La, JW Marriott and Conrad – and, says Sood, the choice was easy.
The Shangri-La Hotel, New Delhi, he is confident, will raise the bar for hotels in the city and help lift average room rates throughout the sector.
“We made a thorough examination of the luxury competitive set and, quite clearly, Shangri-La was above the rest in terms of performance and, most importantly, achieved room rates.
“It is an extremely strong and respected brand, with a reputation for highly personalised service that is essential to the success of our new property.”
The fact that the Sood family and the Kuok family, which owns Shangri-La Hotels & Resorts, have similar backgrounds was also a deciding factor. Both families built their initial wealth in the sugar industry, and both keep a firm hand on their respective business empires. “The fact that our families’ backgrounds are similar is a happy coincidence,” says Sood.
“We feel very comfortable working with Shangri-La. We understand and respect them, and feel that their values are similar to our own. We also looked at some American companies, but we decided it was in our best mutual interests to go with Shangri-La.
“We looked at everything from loyalty programmes and reservations systems through to marketing and service standards.
“What we saw was that, whenever there is a Shangri-La and maybe a Marriott and a Hilton near to each other, Shangri-La gets more business. It is always the market leader in its sector.”
Sood says there is immense interest from international hotel companies looking to get into India, with brands like Hyatt, Meridien, Marriott, Crowne Plaza and Holiday Inn already there. But, he says: “To date, India has not seen a brand like Shangri-La. It has not seen the high end - we have the luxury chains, but not the super-luxury chains.”
He says the timing is excellent, with great demand for luxury brands and a healthy increase in revPAR, which increased by 13% in September compared to the previous year.
“This is the time to do it. Things are turning round,” says Sood. “Occupancy is on the rebound and rates are also rising – just a little this year, but next year they are forecast to grow substantially.”
He adds: “There is now great scope for new chains to come to India. The current inventory of luxury accommodation is abysmal – there are only about 3,000 luxury rooms in Delhi, and there is great scope for this to increase.”
He recalls the good days in the early 90s, when luxury rates reached more that US$230 – compared with about $125 now – and is confident that the Shangri-La New Delhi will push up rates across the board.
Although rates have yet to be decided, Sood is confident they will be around the $200 level. “With the Shangri-La name and the quality of the product, it will be the market leader, and will help bring rates back to where they should be,” he says.
Shangri-La CEO and MD Giovanni Angelini says the Indian property represents an exciting new opportunity for the group and “forms a turning point in our expansion strategy”.
“It is a key strategic move, and we are also looking at Mumbai and Bangalore for both Shangri-La and [the 4-star] Traders brand.”
THE 17-storey hotel, which is being redesigned by Hong Kong-based Chhada, Siembieda and Associates, is located in landscaped gardens in the historic government district and 40 minutes from the airport.
It will feature high-speed internet access and wireless LAN throughout the hotel, and the three top floors will be Horizon Club rooms.
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