KB Kachru, Chairman, South Asia, Carlson Rezidor Hotel Group, played a pivotal role in establishing Carlson Rezidor as the largest international hotel company in India. In an interaction with Entrepreneur, he shares his journey with the group.
Carlson Group is the pioneer in Indian hotel industry. Share your journey with the group.
We established our offices in Singapore and India. When we started, we had no property. In 1998, we started our first unit in India, and today, we have 114 hotels either in operation or under construction. Our main model is the management model. But we do have some franchised properties. The majority of the hotels are managed hotels and the rest are pure franchised. However, managed hotels are also franchised ones. I am looking after south Asia. We have two hotels in nDhaka and one in Bangladesh. We also have a hotel operating in Nepal. We are actively looking at Sri Lanka and Pakistan. We are on talking terms in both these markets. At the moment, we are the ninth largest hotel company in the world. In India, we are the largest international operator.
Is your business model a hit?
We are really not in the business of real estate. We manage properties on behalf of those who own and who invest. We have multiplepartners. For around 114 hotels, I would easily say we have close to around 300 owners with whom we are working. Sometimes the hotel is owned by two or three people. The same model is followed all across the world. In hospitality business, this is the prime model.
What attracts you in franchise?
We are primarily looking for people with good reputation. They must have the taste and ability to perform. At the end, you look at partners who have a good track record. We do our due diligence, and they do their due diligence. We have a process and each franchisee has to qualify on that. Our first partner in India was a joint venture of a real estate company. We had Gujarat Ambuja as our partner. We started a hotel with them in Kolkata. We have had many big names as our partners. Besides these 114 hotels, we have recently signed a 49 hotel deals with Bestech, which is one of the largest real estate operators. Construction for some has already started. We have various HNIs who want to get into the hospitality business. We have some of our partners who are in machine tools, manufacturers or in textiles but yes we have substantial amount of partners who are in real estate. If they have the will to know the specifications of the brand and have the know-how of the brand, processes and systems, we wil run it for them. They create the asset.
Are all brands by Carlson Group present in India?
We have Radisson Blu, Radisson, Park Inn by Radisson, Park Plaza and Country Inn and Suites in India. Our luxury brand Quorvus is not yet in India. We are looking at opportunities but Quorvus is a brand which only twothree cities in India can have. We are not actively looking at having Quorvus in India. We are looking at all other brands for which we already have presence.
Has Carlson been able to reach pan India?
We have hotels all over India. We have been a little late in going to Mumbai where we will open our first hotel in the first quarter of next year. Otherwise majority of our hotels are in north India. We have all our brands in NCR. Our focus will be on all metro towns and all state capitals. Then we will move on to industrial towns. In next five years, we hope to add another 40 hotels across all our brands.
What kind of cost a franchisee has to entail?
Each brand has certain specifications and the cost differs from brand to brand. A Country Inn and Suites room may cost minus the land value Rs 40 lakh a room and a five star hotel may cost a crore. Radisson may cost Rs 85 lakh to Rs 1 crore a room.
How soon one can get the ROI?
Profitability depends on the kind of rates we are getting in a particular location. ROI in some towns is much higher because the average rates are higher. If you look at Goa or Kashmir where the average rate is high, the ROI is better but in the market like NCR where the average rate is low ROI is difficult. Hotel business has a long gestation period. It’s seven to nine years these days. We have seen good days when hotels pay back in four years. But these days when the market is tough it takes seven to nine years.