Leela Group Plans Expansion Into Four New Cities

Will Establish Presence In New Delhi, Chennai, Hyderabad And Udaipur By 2007

Ashish K Tiwari - Mumbai

Mumbai-based Hotel Leelaventure Limited will expand into four new Indian cities within the next three years. By 2007, New Delhi, Chennai, Hyderabad and Udaipur will see five-star Leela hotels with 200-300 rooms depending on the project feasibility. The Leela group already has three properties in India - one each in Mumbai, Goa and Bangalore.

Except for Udaipur where it already has a property under construction stage, the company is scouting for properties in the other cities.

Confirming their expansion plans, Captain C P Krishnan Nair, chairman, The Leela Group of Hotels said, "Having created a name for our brand in the Indian hospitality industry we have now decided to further strengthen it. This will be done by having a presence in other potential cities in the north and south of India. We want to see The Leela Palaces and Resorts as a brand synonymous with offering the best in Indian hospitality. Besides, every property we own or manage in the future will aim to reflect 'The Essence of India'."

Also, the promoters aim to make Leela hotels garner the highest market share and yield per room in the country and to convert this ambitious plan into reality, recently, Peter J Leitgeb - a management expert renowned for his professional success in hoteliering internationally, has been brought on board as president, The Leela Palaces & Resorts.

The promoters are not looking at investing in newer projects and would adopt the operate and manage approach. Speaking on the expansion strategy,

Leitgeb said, "There are two ways of looking at it. We would either have a straight forward hotel management contract or take a certain percentage of equity in addition to the hotel management contract on a case-to-case basis."

Added Nair, "After the outstanding success of The Leela Palace Kempinski Bangalore, we have been approached by corporations to open hotels in different parts of the country by way of entering into joint venture agreements. We are currently in the process of appraising the companies and their proposals.

If we find them interesting and feasible, we will go ahead with entering into a JV agreement." Leitgeb will also be responsible for setting up the management team to operate hotels owned by The Leela besides those joining the portfolio under The Leela Palaces & Resorts brand in the years to come.

When inquired whether the new projects will also have the Kempinski affiliation, Leitgeb opined, “It is an option we will seriously consider because Kempinski is expanding quite well into the markets we are interested in, viz Europe and America. And since we have a franchise, reservation, marketing and sales agreement with them, they would certainly be the first choice.”

On the question of whether they would be open to having a tie-up with other international hotel chains which are vying for a presence in key Indian metros, Leitgeb replies, “Why should we go with any of the international hotel companies, especially when most of them focus on the Asian market and our core markets are America and Europe? Another ten years down the line the entire focus of hotels in Asia would be

Western markets which we are targeting aggressively at the moment.”

On leading Indian hospitality companies venturing into the economy/budget segment and the Leela group’s plans in this direction, Nair confirmed, “Our focus for the next three years is to consolidate the brand in the five-star and five-star deluxe segment. Thereafter, we will look into the possibilities of getting in the economy/budget segment.”