Leela Vies for Indian Dominance

Aggressive expansion plan and $500mil will help make this company a player in the Indian hotel luxur

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. October 14, 2008

AUGUST 21, 2008. American lodging companies are staking out locations in India. It's a veritable free-for-all that's capturing the attention of the press. But U.S.-based hotel companies are not the only entities looking to leverage opportunity born from the nation's rapidly rising middle and upper classes. In fact, Indian lodging companies are making a splash both in the Indian market and around the globe.

One company looking to become a predominant player in the luxury market is The Leela Palaces, Hotels & Resorts. Armed with US $500 million, the company is in the midst of an incredible expansion effort that will take the company from the 4 properties it operates today to 13 in 2012.

It's a lofty goal that its president Onno Poortier says is not just attainable, it's critical to the future success of The Leela. "It is going to happen. Designs are made and everything is in progress and financing is in place," said the former Peninsula Hotel Group executive, who expects to bring the same luxurious standards to its mix of business and resort properties. "I joined this group to bring it to a different level."

And Poortier will have his work cut out for him as the company rolls through an aggressive expansion campaign to more than triple the company's size in just four years. The company has properties in such key cities as Mumbai, Bangalore, Goa, and Kovalam (Kerala). On the drawing board and in the ground are a variety of hotels in key Indian cities such as Gurgaon, Chennai, Pune and more.

Those names might not sound familiar to the average American hotel executive, but it's akin to building - from the ground up - properties in New York, San Francisco, Miami and other gateway cities all at once.

In all, six new hotels are set to open during the next three years, and another three by the year 2012. Its first foray into northern India will occur with a new hotel in Gurgaon, a business hub just outside Delhi's city center, which will open this November, followed by a Palace hotel surrounded by a moat in Udaipur, accessible only by boat and scheduled for completion in January 2009. Following shortly thereafter will be additional hotels in Chennai, Pune and Hyderabad and New Delhi, where the company invested in the most expensive land acquisition per acre ever in the city on which The Leela Palace, Delhi will soon rise. This constellation of properties will more than double Leela Hotels' room capacity. Finally, Leela has acquired land for commencing work on The Leela Palace, Kempinski Agra and The Leela Palace, Kempinski Jaipur.

"Tourism is coming to India and we will be prepared. In 2007 tourism saw $100 billion in revenue. By 2018 it's expected to rise to $273 billion. There is long-term perspective growth here," said Poortier.

Poortier explained the sheer depth of the market, explaining that more than 10 percent of the population is about to earn the kind of money that leads to fulfilling the desire to travel. And in a country of more than 1 billion people, that 10 percent represents more than 100 million people. It's a number far greater than the total population of most of the countries on earth.

The plan at The Leela is to build a strong network of resort and business hotels, a "pan-Indian network of properties", as Poortier calls it. The idea is to get travelers to combine a business trip with some additional days at a resort hotel. Another tactic is to provide highly customized experiences so that even if a guest is just on business or pleasure, they'll actively seek The Leela the next time they are looking for the opposite experience.

Because labor is still relatively cheap, said Poortier, the company is able to deliver a level of service that is unheard of at U.S. hotels. For example, there are 1,200 employees at the Mumbai property. And it has just 400 rooms. Additionally, a strong service culture helps provide proactive employees, as does a rigorous training program. The company is even building a hotel training school to make sure they get it right. "The staff makes or breaks you," said Poortier. "But they are very interested in learning."

Hotels are also being built with room that average more than 550 square feet and will include plush accommodations and oversized bathrooms to heighten the luxurious feel. And to make sure they get the rooms right, they've built mock-ups that are being fully tested for usability as well as design.

"I joined this group to bring it to a different level and that is exactly what I plan to do," said Poortier.