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India needs more infrastructure, less corruption: Hyatt's Thomas Pritzker

Hyatt Hotels Executive Chairman Thomas Pritzker says India and China were the best performing market for the chain the past four to five years, but "India might not be right, right now".

Manisha Singhal | October 17, 2013 | Updated 16:13 IST
Hyatt Hotels Executive Chairman Thomas Pritzker
Hyatt Hotels Executive Chairman Thomas Pritzker

Hyatt Hotels Executive Chairman Thomas Pritzker is as excited about India today as he was 30 years ago when he launched the first Hyatt brand hotel in Delhi, The Hyatt Regency.  

The US billionaire, the only family member still involved in the hotel giant, says India and China were the best performing market for the chain the past four to five years, but "India might not be right, right now".

"If you are short-term investor, India will be challenging for you. But if you are a long-term investor and the wind is at your back, India will be a wonderful place. But that is only for people who think of a decade or more," Pritzker told Business Today in an interview during a visit to India for a Hyatt board meeting. "India is more of a strategic element and not an opportunistic element for us."

The Hyatt hopes to have a presence in seven categories in India by 2015, all the way from business hotels such as the Hyatt Place in Mumbai to boutique hotels such as Andaz in Delhi.

Hyatt's global capital expenditure is expected to be $250 million this financial year, of which about $80 million will be spent on new properties. The Hyatt's global portfolio consisted of 524 properties in 46 countries at the end of June.

It acquired the Ista brand in India last year, which helped extend its presence to smaller cities. Hyatt has 17 hotels in India and has several projects in the pipeline in 27 cities.

"Hyatt has been a hugely successful brand in India. They have invested a good amount of money here as well and India has become a strong part of their story," said hospitality analyst Manav Thadani, Co-founder and Director of PE-backed hotel chain SAMHI and Chairman, South Asia, at HVS Hospitality.

Thadani said the challenge for Hyatt lies in attracting the right talent pool for the kind of expansion it plans in India.

Pritzker said talent is not just an issue for India alone. "I would say the crunch of talent is not specific to these acquisitions alone but there is a scarcity of talent in the world. And for our situation, we talk about people who have been 'Hyattised'. Our talent needs to be a certain type of talent as our product is really our people."

Pritzker and his team are looking at Indian markets with a 10-year investment horizon. The hotel chain is shortlisting cities and states with strong governments for future growth. Pritzker said cities like Ludhiana, Raipur and states like Bihar are on the radar for future expansion.

"It is not about just the cities but also states that are particularly good in governance systems. That is a lead indicator. If they have got good leadership, that's the place you want to be," he said.

Pritzker said India has its share of challenges and getting the right partner is one. "If you get the right partner, you can conquer the world. But it is one of the challenges in India to get the right partner," he said.

Hyatt's business has been hit with the hospitality industry in India going through a lean patch. Average room rates have fallen in Delhi and Mumbai by 11 per cent and 14 per cent, respectively, across the industry.*

But Pritzker is not worried about these market fluctuations - at least not immediately. His major worry in India is governance and infrastructure development.

"We would want more infrastructure and less corruption. The government has a legitimate role and it needs to play that role. But if you need 100 permits to get something done, it just saps the energy of the project," he said.

(*The sentence has been updated to reflect a fall in room rates for the Indian hospitality industry)

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