The turmoil in the global economy has hit
the hospitality industry hard. Despite being
impacted by the slowdown, ITC’s mid-market brand
of hotels, the Fortune chain, is growing as
consumers are downgrading from luxury brands.
Fortune Park Hotels is on an expansion mode and
could also opt to own properties rather than
just managing them, says Pawan Verma,
senior executive vice-president, hotels, ITC
Ltd, in conversation with Surabhi Agarwal of
The Financial Express. Excerpts:
Where does the Fortune chain of hotels fit in
the hotels division of ITC?
Each
segment has its own dynamics. Fortune is
primarily a mid-sized brand, and caters to the
up-scale and the upper scale segment. Fortune is
not competing with luxury brands in our
portfolio.
How is this segment performing vis-a-vis your
other brands, considering the tough market
conditions?
It
hasn’t performed as per our expectations, but is
doing well. Everybody has suffered due to the
downturn. The consumer is downgrading from
luxury hotels as they are looking at cheaper
options. We see it as an opportunity to grow the
Fortune brand.
What has been the impact of the downturn on this
segment, as compared to your other brands?
It
is very difficult to put a number to it. All I
can say is this segment’s revenues and occupancy
are still growing, whereas the luxury brands are
showing de-growth. The average occupancy at
Fortune is around 60%. On the other hand, the
luxury brands should have done around 80%, but
are finishing at around 55%.
Since the consumer is downgrading, have you seen
a shift from your luxury brands to Fortune?
There is a general shift in the market to
lower-priced hotels and it is not necessarily
from our own brands. But, yes, there is shift as
people are downgrading.
Given the changing market dynamics, is there
more focus on expansion of the Fortune chain?
With
the launch of the Fortune Inn Grazia Hotel in
Noida on April 10, we have 26 operating hotels.
There are another 26 hotels that are in various
stages of development and should be ready in two
years. So, by 2011, we will have 52 operating
hotels. At the same time, there are new hotels
being signed.
However, if we come across a company that has 20
hotels, we will be open to buying it. By
2012-13, we are aiming to have around 100
hotels. That is the long-term vision. In the
next two months, we are opening four more hotels
and at least two more hotels will come up before
the year end--in Goa and Hyderabad.
How keen are you on owning properties instead of
managing them?
There are one-two properties that are already
with us as they are legacy properties. But, we
are looking at more properties. The funds will
be provided by ITC. Initially, we will see how
the prototype works. We are taking a long-term
view. Good times will come, and so will bad
times. We have seen bad times in the past also;
so, this is not the first for us. It is a
passing phase.
Owning a hotel means more profitability. Will
this be the way forward for you?
You
never know. We would also like to own the
topline; right now we only get a service fee.
But, there is a risk and reward to it. We are
keen on owning properties and we are moving in
that direction.
