Leela succession plan taking shape

Lijee Philip MUMBAI
The Economic Times dt.8/9/08

THE succession plan for the Leela group of hotels has been given shape with the two sons of founder chairman CP Krishnan Nair, 86, in charge of key portfolios, while the third generation is already being groomed in most aspects of the hospitality business.
Although Mr Nair stoutly denies any plan to relinquish charge soon, the Mumbaibased hotels major, which currently owns properties in Kovalam, Goa and Bangalore apart from Mumbai, is ready with its second-in-command; elder son Vivek Nair, 56, looks after finances and day-to-day operations while sibling Dinesh, 52, spearheads the group’s new ventures.
“Just when everyone of my age is retiring, I still play an active role in the business,” Mr Nair told ET at a recent meeting. “I am obsessed with every small detail (at the hotel),” he said at a function after he was included in the global list of 50 septuagenarians. Business Week recently came up with a list of industrialists in the age group of 75 to 100, that continue to run companies or wield real influence. Hotel Leelaventure plans to add seven new luxury properties at Chennai, Udaipur, Delhi, Jaipur, Agra, Hyderabad and Pune, adding about 2,600 rooms through these projects.
The Gurgaon and Udaipur hotels will start operations next year, while the Leela Palace at New Delhi would open in 2010. The company is planning another 200-room hotel in Mumbai, adjacent to its existing property. The Leela group has annual revenue of Rs 520 crore and a net profit of Rs 150 crore and is currently looking at a revenue of Rs 600 crore in the current fiscal year, said Mr Nair while outlining his plans for the company. The group plans to invest around Rs 2,500 crore in the next 2-3 years. “We will finance the new projects and existing expansions through internal accruals and bank loans,” said Mr Nair.
The group currently has a marketing alliance with the Kempinski group and is not interested in diluting stakes to private equity funds or to a strategic investor.
After building a strong domestic brand the Leela group is also looking to generate revenues from outside India. Sources indicate that the Leela group is currently scouting for greenfield sites in New York, Boston and other major cities in the US. Although room rates and occupancy have fallen in the recent months across metros and tier two cities, Mr Nair says it’s a temporary phase while the luxury hotel segment will continue to grow.
Hotel companies are adopting a more consumer-centric strategy and leveraging revenue and cost synergies in the system at a time when the industry is heading for a rooms oversupply by 2010, say analysts.