The Pride Hotels will keep expanding but without over-burdening themselves with debt, says the MD. He denied any possibilities of looking into equity, and argued that with a better understanding of domestic markets and consumers, domestic brands would continue to give a tough fight to the foreign onslaught.
MD, THE PRIDE HOTELS
The Pride Group is in midst of an impressive expansion. The group began with one property in the year 2000, and eye a target of a 3,000 room strong inventory by 2020. This ambitious target, however, comes with a challenge of accumulating sufficient resources. But, S P Jain seemed confident of managing resources needed for the intended expansion. “We have our internal resources, and our domestic promoter is also pumping in money. We do not require international promoters or funding,” he told us. Giving us a better understanding of their management of funds, he said that they had borrowed from banks, apart from seeking equity funding. “We have borrowed from the Kotak Equity Fund which accounts to ten percent share of the total investment,” he explained. The big revelation, however, was that the group may even look at going to public for more funds. “We may further try to give a wider range of investment option through the IPO (initial public offer) route. We plan to take a call on the IPO route in another two-three years. We are waiting for the right moment. But, we are not going to get into the equity route anymore,” he ascertained.
Noting that the Pride was a young group, he pointed towards their considerable growth from a single hotel to seven owned and five managed properties. “We have considerably expanded our portfolio in the last decade and a half. We are growing at our own steady speed; we are also not in a debt trap,” he said, indicating how many of the home-grown brands had fallen into a debt-trap while attempting to expand their businesses. “We do not borrow too much. We have borrowed amounts that can be serviced easily by the revenue we generate. We have generated around thirty-five percent GOP (gross operating profit) constantly,” he told us. On the question of whether the group had leveraged its investment, he said that till now not much had been leveraged.
What has been a major challenge for domestic brands is to match the ferocity with which some of the international players have forayed into the Indian markets in the recent years. They have used varied means ranging from mergers and acquisitions to deepen their stakes. But, S P Jain brushed aside these challenges, stating that those brands had little understanding of the domestic market and needs of the clientele. “Foreign brands are not investing money. They are working on resources created by domestic investors. Secondly, they have yet to understand the domestic market well,” he argued. He said that domestic brands had an innate upper-hand in understanding the requirements of patrons. “We know our customers very well; we have made our product suited to our customer, as per their requirement,” he reasoned. It is indeed true that the Pride Group has always remained a full-range of hotels; a good ‘value for money’ for domestic and foreign clientele, focusing on servicing a particular segment of upper and mid-class business segment. With the launch of Pride Plaza in the Aerocity, it is for the first time that they are foraying into the upper segment in Delhi, besides in Kolkata and Ahmadabad. “We have a strong sales group of over hundred people, and thirteen sales offices in India. Therefore, we are continuing to grow at a good pace, and giving a tough fight to foreign brands. If you look at the balance sheet, Indian hotels are doing better than foreign brands,” he reasoned. Adding that growing numbers of mergers and acquisitions would not be a threat to them, he quipped that they, themselves, were the master of acquisitions. “We have acquired four hotelsm including ones in Nagpur and Ahmadabad etc.
Sharing that he hoped to register a substantial twenty-five percent growth jump in turn-over, compared to the last year, he said “the hotel industry was in the latent state. So, the profitability of the sector was naturally not very high. But, this year we are expecting serious growth.” He added that by the next financial year they aimed to double that turn-over. “So, basically, we are gunning for a hundred percent jump in the turn-over by 2017,” he elaborated.
The Pride Group now intends a robust expansion in the years to come, we were informed. Having acquired seven acres of land in south Goa, the group in on course to constructing a resort, said the MD. “We are going to come up with a hotel with 300 rooms in Goa. We will have a hotel in Mumbai with 200 rooms; as you are aware, we have already acquired two acres of land in Saki Naka. We are adding 75 more rooms to our Nagpur property; we have acquired some land to carry out the expansion work,” he detailed. We were also told that work on two of their properties in Nashik and Indore was already underway – which would be managed by them. “So, we are all geared up to expand our inventory to three thousand rooms with 25 hotels by 2020,” said S P Jain.
