Hyatt looks at smaller cities for expansion

New Delhi, Jan 16 (IANS) Luxury hospitality group Global Hyatt Corp is banking on smaller Indian cities for expansion over the next four years, with a company official Friday saying this was where the future lay.

At present, Hyatt operates five luxury hotels in India - two in Mumbai, and one each in Delhi, Kolkata and Goa. Now it will make a $200-million foray into the mid-sized hotel segment in tier-II and even tier-III cities.

'There is a huge gap in the demand and supply of hotel rooms and we see enough scope for expansion, especially in tier-II and tier-III cities,' Steve Haggerty, the company's global head of real estate and development, told reporters.

'Recession does not affect our expansion plans in India because we know the growth lies here,' Haggerty added.

Ratnesh Verma, senior vice president of real estate development for South Asia, said the new hotels will come up in Gurgaon, Hyderabad, Mysore, Lucknow, Indore and Mangalore under the brand name Hyatt Place. 'These will cater to the upper mid-segment,' he said.

'The Hyatt Place chain will be launched by 2011 in a joint venture with (real estate major) Emaar MGF. The hotels will add 950 hotel rooms across the six cities,' Verma added.

The $200-million investment excludes land prices. 'Emaar MGF has already acquired land for these six properties. Of the $200 million, about $120 million will be debt. Of this, Emaar MGF debt component will be 74 percent, and Hyatt's 26 percent. The remaining $20 million will be the partners' equity,' Verma said.

Apart from these six properties, the company has already signed deals for 14 luxury hotels that will add another 4,273 rooms by 2013.

'Luxury hotels have witnessed occupancy level going down by 16-18 percent because of security resons and economic slowdown,' Haggerty said.

'There is also a price correction upto 25-40 percent. I feel this sentiment is going to stay for next two quarters. However, things are going to improve after that. India has a huge potential seeing the rapid economic growth. Mumbai itself requires 30,000 rooms,' he added.