FOXTROTS 

 

Fox – sly.  Trots – left-leaning (Trotsky) plus its more insalubrious meaning.  Foxtrots – leading the industry in a dance. 

 

2007 April 27

 

 

 

Hilton in
India. Very trying.
 

 

 

Hilton has embarked on its fourth attempt to expand in
India.
 

 

 

It has formed a joint-venture with the DLF real-estate company, with a target of building 50-75 hotels and service apartments in seven years. 

 

 

DLF (whose original name was Delhi Leasing and Finance) will hold 74% in the JV company, which will develop these properties, and Hilton will manage them. Hilton expects its investment over the next 5-7 years will be about US$143mn. 

 

 

The initial stage will involve 20 hotels in locations including
Chandigarh, Chennai, and Kolkata; most will be Hilton Garden Inns.
 

 

 

Earlier attempts began in 1995 Hilton signed an agreement with Bharat Hotels to develop as a start 11 hotels in the country, including taking over and renaming Bharat’s then-Crowne Plaza (the brand that is now under the control of InterContinental Hotels) in Delhi. No dates were set, but the indication was that all 11 would be operating within five years. Only one opened, in Chennai.  

 

 

Next, in 2002 Hilton signed a joint-venture with Blue Coast Hotels (aka Morepen Hotels). Initial projects, all due to open in 2005, were for
Bangalore,
Goa, and Mumbai.
 

 

 

And then in 2003, it signed what was billed as an ‘alliance’ with Oberoi Hotels. This covered nine hotels with 1900 rooms, including the

Oberoi
Towers in Mumbai, which was to be rebranded as

Hilton
Towers.
 

 

 

In addition, existing Trident hotels in Agra, Bhubaneswar, Chennai, Cochin, Jaipur, Udaipur, and proposed hotels in Gurgaon and North Mumbai, were all due to become Trident Hiltons. This re-branding was due to be finished by early in 2004. Almost none of this happened. 

 

 

At the time we flagged the risk. Oberoi’s launch of its Trident brand came at a time when it had a contract with Accor hotels to develop that company’s brands, particularly Novotel. Oberoi’s Trident brand is billed at a higher level than Novotel; we put the two brands at the same level. 

 

 

The Oberoi/Accor agreement was signed in 1993 and abandoned in 1997 after fewer than five Accor-branded hotels had been added in the intervening period – although Oberoi’s own brands were growing well. 

 

 

Let’s hope this new agreement with DLF produces some hotels. If not, Hilton – and some other groups – should review their industry strategy. 

 

 

The conventional view is that foreign companies need to work with local partners to expand faster than one hotel at a time. But with results such as this, surely it is better to go for one deal at a time? 

 

The Fox