We are focusing on state capitals, tier I and tier II cities for future growth: Sarbendra Sarkar
Tourism in India accounts for 9.6 per cent of the GDP and is the 3rd largest foreign exchange earner for the country. In 2016, over 8.8 million foreign tourist visited India and domestic tourism recorded a growth of 12.5% from 1.43 billion to 1.61 billion travelers across states and union territories. India currently has a supply of over 113000 hotel rooms. Cygnett brands of hotels is one of the fastest growing hospitality service providers in the country with strong plans to open over 40 hotels in next 3 years and also foray into international destinations.
Manish Joshi of NewsBarons provides you the highlights of a media interaction where Sarbendra Sarkar, Founder & Managing Director, Cygnett Hotels & Resorts informed “We are looking at adding another 4000 rooms by 2020.”
NB: What is the current size of the hospitality sector in India?
Sarbendra: With the raise of technological development and government initiatives in terms of travel and tourism sector, we have seen notable growth of hospitality industry in India and world.
According to World Travel & Tourism Council’s Economic Impact 2016 – India report, the total contribution of travel and tourism was 6.3% of the GDP in 2015. This is projected to grow by 7.3% p.a. till 2026 reaching INR 18,362.2 bn (7.2% of the GDP).
The direct contribution of travel and tourism to GDP is expected to reach US$ 147.96 billion by 2027.
NB: What are the demand-supply gap in the hospitality industry and other factors hampering the sector growth?
Sarbendra : Indian hospitality industry has witnessed a compounded annual growth of 12.5% in branded room supply over last ten years taking the total room count to 113,622 rooms in 2016.
During the same period, the demand reflected an equally strong growth at ~11%. The cycle started turning this year where demand growth overtook the supply growth improving hotel occupancies. The trend is expected to continue improving hotels’ performance that have been under pressure on account of strong supply growth over last few years.
Three star and Four star hotels have witnessed highest ARR CAGR growth rate at 4.8% and 4.2% despite maximum new supply getting added in these segments. Domestic travelers will steadily convert from using Independent hotels to Branded hotels.
In summary, Branded hotels in India will show a strong growth in the coming years, supported by socio-economic development of the market.
NB: What according to you will improve Foreign and Domestic tourism?
Sarbendra : One of the biggest attractions of Indian tourism is its architecture and prosperity of historic monuments. Hence, an effective solution for improving the tourism would be to maintain the heritage monument to corporate giants in return for some branding opportunity at the monument.
Second, all the tourist destinations around the world are merely made up of created experiences, like botanical gardens, architectural monuments, backwaters, the sightseeing places, etc. The tourism sector should see the potential of a place to attract the tourists rather than merely banking on the natural beauty of a place.
Effective infrastructure should be at the highest point, which is a very generic statement but it is critical to have quality and quantity approach points to a certain tourist destination.
Competitive broadcasting of ‘Incredible India’ campaigns should be held effectively like, holding tourism seminars or offering locations with facilities to promote foreign film productions in the country. Disseminating, the awareness of our diverse culture and its immortal hereditary as being competitive is absolutely critical to be seen and heard well.
NB: What is your outlook towards the growth of hospitality industry in Tier I & II locations in India?
Sarbendra : As a fastest growing hotel (Cygnett) brand in India, we are focusing on state capitals, tier I and tier II cities for future growth. For tier 2 cities our plans is to open more hotels, targeting pilgrimage and adventure tourism.
NB: Please inform us on your growth plans?
Sarbendra : Encouraged by the enormous industry recognition and user appreciation, Cygnett is actively working to add at least 12 to 15 hotels per year for the next three years which will work out to about 4000 rooms by 2020. And Cygnett is also planning towards to open over 103 Hotels throughout 75 cities across South Asia and India within the next Five years.
NB: Are you looking at raising funds? If yes, please specify the amount and the deployment plans?
Sarbendra : We are planning to raise around $25 million from private equity funds as we are looking to take hotels on lease and operate them.
NB: Are you looking at foraying into international locations? If yes, please inform on the location/s, operational date and the reason for choosing the locations/s?
Sarbendra : Yes, we are planning to expand Cygnett brand beyond India and are looking at Bangladesh, Sri Lanka and Vietnam for overseas growth.