NEW YORK—While Chatwal Hotels & Resorts’ aggressive expansion into India is something of a recent initiative, it is by no means a move into unfamiliar territory.
Sant Chatwal, chairman and CEO of Hampshire Hotels & Resorts, the ownership arm of Chatwal Hotels, grew up in the country. More importantly, he knows the ins and outs of the Indian business environment—a necessity when developing in the region.
“I have a good grip on the way business is done there and am able to utilize many long-term relationships I have there to help advance development,” he wrote in an email.
But Sant Chatwal isn’t doing all the legwork himself. The company began building a management team in India six years ago in anticipation of expansion. Having recently announced a goal of 52 new lifestyle properties in the country within five years, “that framework is primed for expansion now and will mirror the expansion to our U.S. and European teams,” he said.
Sant Chatwal, chairman and CEO of Hampshire Hotels & Resorts
Chatwal Hotels has partnered with Parsippany, New Jersey-based Wyndham Hotel Group on the expansion. Chatwal will manage and franchise 40 Night hotels and 12 Dream hotels. Chatwal also is in talks to manage some of Wyndham’s other brands in India as well, Sant Chatwal said.
Chatwal Hotels has 18 properties signed in India. Construction already has started on a Dream hotel in Goa and a Night property in Chennai.
“The Wyndham model offered the opportunity to scale the brands quickly in a time-tested franchise model,” he said.
And time is of the essence. Chatwal is looking to capitalize on India’s rapidly emerging middle class, especially at a time when the country’s 1.2 million square miles have approximately the same number of hotel rooms as Orlando, Florida’s 102 square miles.
“The middle class is growing exponentially, which makes a case for more rooms needed in all hotel market tiers (not even taking into account foreign inbound travel to India),” Sant Chatwal said.
There were other synergies with Wyndham, as well, he added.
“First and foremost, the ability to add lifestyle brands to their portfolio, which was a gap that needed to be filled,” Sant Chatwal said. “My long-standing relationship with (Wyndham President and CEO) Eric Danziger gave me a great comfort level in working with WHG as well.”
Skin in the game
While Chatwal Hotels will only franchise and manage the Wyndham-branded properties for the time being, the company could contribute an equity stake, with possibly ownership outright, in certain scenarios, Sant Chatwal said.
“It will be something we look at on a deal-by-deal basis and dependent on our development partners,” he said.
For now, the company has committed an initial investment of 2,000 crore rupees ($41 million) to fund its expansion efforts.
“Undoubtedly some of these funds will be used in the development of the new properties,” San Chatwal said. “Aside from specific investment in bricks and mortar, there is also significant expense involved in broadening a management team to take on such accelerated growth to be sure.”
But funding development isn’t as big of a challenge as is developing the concept of a “lifestyle” brand in India’s hotel market, he said.
“Imparting the sense of ‘lifestyle’ into the equation that will offer the greatest challenge since this notion is largely absent from the market currently. India has a fantastic service culture, and we have to mold that into the modern adaptation we call 'boutique' or 'lifestyle.'”