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Hospitality Industry In Midst Of Turbulent Changes, Says EIH's PRS Oberoi

Almost all large hotel companies have changed their business models from asset intensive to asset light
Almost all large hotel companies have changed their business models from asset intensive to asset light

New Delhi: The hospitality industry is in the midst of "turbulent changes" at present due to disruptions by new-age technology driven businesses such as Airbnb, Ola and Uber, according to EIH Executive Chairman PRS Oberoi.

Addressing the company's shareholders in the company's annual report of 2015-16, Mr Oberoi further said that external risks from incidents like terror attacks in Paris, Brussels and Orlando will have a negative impact on the tourism sector.

"We view the hospitality industry presently in midst of turbulent changes. With the advent of internet, easy smartphone access and ubiquitous mobile coverage, the business to consumer model has become the norm and the online travel agents are growing exponentially," he said.

Explaining further how the old economy business model is being forced to change by newer technologies, he added: "Telephone incomes in hotels have been disrupted by mobile telephones and ground transportation threatens to be overtaken by companies such as taxi aggregators such as Uber and Ola."

Almost all large hotel companies have changed their business models from asset intensive to asset light thus transforming themselves to pure management companies, he added.

On a global perspective, Mr Oberoi said: "The recent merger of Starwood with Marriott valued Starwood at over $13 billion will create the largest hotel company in the world with more than 1.1 million rooms. This would undoubtedly have an impact on rates and rebalance occupancy levels in highly consolidated markets."

Companies such as Airbnb are reportedly valued at around $25 billion, largely underpinned by revenues diverted from hotels to private homes, he said.

Stressing on the external risks from terrorism, he said it will continue to bear negatively against tourism.

"The recent terrorist attacks in Paris, Brussels and Orlando would have a significant impact on travellers' sentiment. The industry and the government must take significant steps to counter any slowdown," Mr Oberoi said.

He also asked the Finance Ministry to accord full infrastructure status to all hotel projects saying the current status is "highly restrictive" and granted to hotel projects in cities with population of less than one million and development costs of over Rs 200 crore, not including land cost or lease charges.

In terms of openings of new properties, EIH Ltd, which runs hotels and resorts under Oberoi and Trident brands, is planning to open more new hotels in India and overseas by the end of 2019 as part of its expansion plans.

"The Oberoi Al Zorah located in the United Arab Emirates is in the final phase of construction... The Hotel is expected to open in the last quarter of 2016," EIH Ltd said in the company's latest annual report.

The Oberoi, Marrakech is under construction. In addition to the luxury hotel consisting of 109 keys, Oberoi branded villas for sale are planned within the development. The hotel is scheduled to open in the last quarter of 2016, it added.

Construction of Oberoi, Casablanca is in progress. The hotel is scheduled to open in the last quarter of 2018, EIH said.

"The Oberoi Al Zorah, Oberoi Marrakech and Oberoi Casablanca will all be managed by a wholly owned subsidiary of the company," it added.

Construction of Oberoi, Doha is currently underway. The hotel is scheduled to open in the first quarter of 2019 and will be managed by an overseas subsidiary of the company, EIH said.

In India, the construction of Oberoi Sukhvilas near Chandigarh is in the final phase of completion. The hotel will be managed by the company and is scheduled to open in October, 2016, it added.

The work has commenced on Oberoi Rajgarh Palace located near Khajuraho in Madhya Pradesh. The construction at the site is progressing, EIH said.

In Goa, the planning consent for the company's 55 acre beach front site is awaited. Other Government and environmental approvals are in the process of being obtained.

The planning in respect of Oberoi Hotel and luxury branded residences in Bengaluru is presently in progress, it added.

The planning and design of Oberoi luxury service apartments in Lusail, Qatar is also in progress. It is scheduled to open in the last quarter of 2018. The development will be managed by an overseas subsidiary of the company.

A luxury jungle resort 'The Oberoi Gir', spread over 50 acres, located on the periphery of Gir National Park in Gujarat is scheduled to open in the last quarter of 2019.

(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)