Indian hotel company Concept Hospitality which operates Fern Hotels and Resorts, plans to add eight more properties to its portfolio in India this year. The company which operates 25 hotels in the country will add new properties in Tezpur, Baroda, Chennai, Tirupur among other places.
“We are looking at expansion this year with about eight hotels opening all over India. Apart from these there are other properties which are in project stage and will complete next year and the year after that,” said Param Kannampilly, owner of Concept Hospitality Ltd.
Of the properties that will open, the hotel slated to be launched in Chennai is in the five star segment, while others are in three and four star segments. The company at present is focussing on business and leisure segment. According to Kannampilly, religion has huge potential in the country but popular religious locations already have a large inventory of rooms.
Param Kannampilly spoke on the sidelines of Hotel Investment Forum India (HIFI) recently held at Leela Kempinski Gurgaon. He said that the industry has started realising that competition in the sector is increasing and over-supply of rooms may become a challenge in some locations.
“We are slowly coming to a realisation that competition does exist. The supply is going parallel to demand and over-supply is coming in. The rate increase we are accustomed to is a thing of the past now. Rate increase may not happen now or it may happen very little. We have become accustomed to variable costs becoming fixed costs over the years. What we need to do now is to identify variable costs and not make them fixed because expenses are going to increase,” he said.
According to Kannampilly, this is the reason why Concept Hospitality is expanding in regions which does not have enough branded hotels.
“Tirupur is a huge bustling town but does not have a single branded hotel there. Asansol is the second largest town in West Bengal, has nothing branded there either. We advise our clients not to enter markets which are saturated or going to get saturated. For example, I wouldn’t advise people to get into Rajasthan market right now because the rate of return is very low,” Kannampilly said.