‘Our Strategy Is To Have Lower ARRs But Higher Volumes’

After much postponement and change in alliances, the Royal Palms' hospitality venture has finally started. Dilawar Nensey, joint managing director, Royal Palms India Pvt Ltd speaks to Reema Sisodia about the company's first hotel venture and its future business plans…

From realtors to hoteliers, what prompted the transition?

The business of hotels is not novel to the group as under Amir Construction and Motel Pvt Ltd we have owned and managed resorts before. Through, Royal Palms, however, we have charted out plans to establish ourselves as a serious player in hospitality industry. The hotel is part of our mega plan of providing Mumbai with a self-contained urban township, which is a result of an in depth feasibility study.

Could you elaborate on the business relationship between Royal Palms and Park Plaza?

The tie-up with Carlson Hospitality Worldwide was inked six months ago. It is a franchise agreement under which Park Plaza will also provide management consultancy and marketing support. I firmly believe in management consultancy and not management contract, as in the former you as an investor is in control of the business and its operations. Our property will be the first Park Plaza hotel in Mumbai.

How do you aim to position your property vis-à-vis competition?

The property is positioned as a five-star business hotel. We aim to benchmark ourselves against the Renaissance Mumbai. As per our information, they have the third highest ARR in the city and are having 87 per cent occupancy figures. Keeping that in mind, the fear of being at an odd geographical location is put to rest. We are convinced that factors like distance and travel time are psychological and if you have all that a business hotel requires in terms of facilities and quality product, business will happen. We aim to offer room rates that would be around 20 per cent lower than competing hotels around the airport.

What potential do you see for your property in terms of business?

India is booming in the field of business, tourism, civil aviation. There is a great demand for hotel rooms with the right business facilities. In fact, the situation is such that there is more demand than the supply. More airlines means more crew accommodation, more business leads to more travellers and also the need for more conference facilities. Today, most hotels are packed. Hence, apart from our own top of the line client base, gained through our golf memberships, we get a lot of business from this new emerging demand.

What are the projected occupancy levels you aim to reach in the first few months of operations and what is your strategy for the future?

We have started with an occupancy of 65 per cent. 40 per cent of our business comes from large corporate chains that use our golf facilities. Our aim is to have comparatively low ARR and have high volumes. This will only result in positive business growth in terms of all the other services.

What about future expansions and projects?

Within our self contained urban township plan, there is room for three more hotel projects. We have started work on another five star project, which will have 50 luxurious villas each, with a swimming pool attached and is expected to be ready by 2006. Apart from this, we plan to float a palace theme hotel project and another business hotel in the four star category.