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Indian Hospitality Sector Archives - Red Ribbon Asset Management

India’s economic growth outlook remains positive despite weaker-than-expected GDP

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An initial glance at India’s third fiscal quarter GDP data may have proved mildly disappointing for some. However, looking into the deeper details of the report shows a brighter picture than might have been expected. In addition, the data is backward looking and not overly indicative of what the future holds for India’s economy. This week, we take a closer look at the data and consult more timely measures and assessments of India’s economic performance.

Last week India’s Central Statistics Office (CSO) published the latest GDP figures for the country, which showed growth slowed to 6.6% in the final three months of 2018, the third quarter of India’s fiscal year.

The initial reaction was of disappointment, as the number was below the median estimate for GDP to grow 6.7%. Added to that was the downward revision to GDP growth in the previous quarter; the CSO now calculates GDP grew by 7% in the second quarter of India’s fiscal year cycle, down from the 7.1% increase previously reported. However, the report also contained some positive details, particularly with regards to investment activity.

Separately, more timely survey data on the country’s manufacturing sector along with a broadly upbeat assessment from Moody’s Investor Service also provided brighter news on an economy that is still expected to grow at a rate above that of the broader global trend, for some years, thanks to increasingly business friendly policies and the continued urbanisation of a country with a population of around 1.34 billion.

India’s third quarter GDP details

The details of the GDP data showed a mixed performance across the country’s shifting economy. Growth in the agricultural sector proved a disappointment, as it was notably weaker when compared with GDP from the previous year.  The manufacturing sector also posted a slower pace of growth.

Other sectors were much more promising for the future outlook of the country, including strong readings from the construction and the financial and real estate professional services sector.

Meanwhile, the report also showed that average per capita incomes, were higher than the previous year. Add to that, higher levels of consumer spending and investment, along with stronger exports levels and the overall picture of India’s countrywide economic performance in the third fiscal quarter, is indicative of broad health.

In addition to the detail highlighting strength across India’ economy, was the news that despite a weaker than expected reading and a downgrade to the second quarter growth number, other economies are slowing too. That shows that while India is being affected by other global issues, so far it hasn’t lost as much momentum – or looking likely to – as some other countries have.

But, as we know, while the GDP numbers provide plenty of interesting details on India’s economy, it is a backward-looking assessment. Other, more timely surveys and assessments, proved that despite a situation which has resulted in a tough period for many farmers and led to the Government creation of a financial relief package for them and difficulties with Pakistan, the Indian economy remains in a promising position.

Manufacturing growth expands, growth seen steady

The latest manufacturing purchasing managers index from IHS Markit, meanwhile, which was published just hours after the GDP data, showed that activity in the sector grew at the fastest pace in 14 months. Orders, output and employment across the manufacturing industry were all upbeat, providing a boost.

But that wasn’t the only up-to-date piece of positive news on India’s economy. In its latest Global Macro Outlook, Moody’s Investor Service predicted stable economic growth for the country over the next two years. That was despite its view for the global economy to weaken across 2019 and 2020.

As asset investment managers with a specific interest in India, we pay close attention to all relevant details about the country’s economy, plans, Government and investment-related news and opportunities. We know that the final months of 2018 weren’t quite as strong for India as previous quarters. However, policy makers are also acutely aware of this and that detail was among the reasons for the recent interest rate cut – action that will likely be repeated in a few months.

For Prime Minister Narendra Modi, the headline GDP data was likely considered a bit of a blow, coming as the 2019 General Election approaches. As we’ve detailed though, it’s not the only measure to take notice of.

Investment in India remains strong and not surprisingly, worthwhile opportunities are developing all the time. Whether you’re interested in eco-friendly assets, modular construction possibilities or infrastructure related options, India is currently a real land of opportunity for investors and will be for some years to come.

Red Ribbon CEO, Suchit Punnose said:

The latest CSO release of India’s third quarter fiscal GDP are a case in point. The headline number was a little disappointing. However, the details showed key areas performed well and are primed to remain economically supportive going forward. Overall, India’s economy is in a stronger position than other major countries, which is good news for existing and prospective investors.

We continue to identify the best investment opportunities for ourselves and our clients and believe there are many more years of positive investment outcomes across India, ahead of us.

Eco Hospitality benefits India economy - Red Ribbon Asset Management Plc

How Eco Hospitality provides a double benefit for India’s economy

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How Eco Hospitality provides a double benefit for India’s economy

The World Bank’s January 2019 Global Prospects Report shows that the United Nations institution continues to expect economic growth across India to expand in 2019 and beyond. The group’s estimate for full-year GDP growth in 2018 is for 7.3%. Meanwhile, the World Bank is also anticipating that level to rise to full-year GDP growth of 7.5% in 2019, 2020 and 2021.

There are many details that go into a forecast like this, which means it is an absolutely achievable and likely outcome. However, if some of the assumptions made in those forecasts don’t proceed as expected. Or, something completely unexpected occurs, then India’s economy could either exceed or fail to achieve that forecast rate of growth.

Another interesting figure that has recently been published about India’s economy, comes from the Indian Government’s Ministry of Statistics. According to its 2018 Environmental statistics, the natural capital in 11 of India’s states has declined. Natural Capital “refers to all types of environmental assets existing in the environment” according to the report.

Once again, a lot of work and details go into creating these data and stats to produce reliable and correct information.
The figures in that painstakingly generated report suggest that, at least in some parts of India, pure economic growth is being achieved at the expense of the country’s natural capital, or native environment. And that’s not something that can be allowed to continue unchecked. At least not if the economy is to remain on a long-term and sustainable, positive economic growth path.

 

Sustainable, eco-industry

With that in mind, we now turn to a specific part of India’s growing economy, the Eco, or green sector. While much thought is being put into how to ensure residential building and consumer habits are increasingly sustainable and Eco-friendly, another key area in which India is already developing an Eco-footprint in, is hospitality.

For a country that welcomed over 10 million overseas tourists during 2017 – an increase of 14% in number and 15.4% in income generation – it’s a sizable industry. In GDP terms, the total contribution from travel and tourism across India made up 9.4% of India’s GDP in 2017, likely rising to around 17% in 2018, according to the World Travel and Tourism Council.

If, however, efforts into supporting and growing the eco-hospitality sector of the travel and tourism industry continue, or even gain pace, not only will green hotels, eco holiday destinations and sustainable tourist hot spots generate welcome income for the economy, it will also help improve and even expand the country’s natural capital. That’s something that’s a double boon for the sub-continent that consistently strives to develop, advance and improve.

Eco Hotels is among the green businesses that are investing in India’s economy, in a sustainable way. The world’s first carbon neutral, mid-market hotel brand has been operating since 2012 and is a popular option, for businesses, investors and also among those travellers who include Eco credentials in their search for holiday accommodation.

Growing India’s eco-hospitality sector is something that is will undoubtedly help ensure the country’s travel and tourism industry will contribute to both the financial GDP figures and its nature capital. But, even better, positive eco changes in one country actually contribute to green credentials and work towards stopping climate change on a global basis too.

With so many benefits to be gained from Eco hospitality, there’s little doubt as to just how valuable it is to India’s economic, business and green ambitions.

Red Ribbon is the founder of Eco Hotels, the world’s first carbon neutral hotel brand which offers “green hospitality” as part of a progressive roll out across India designed to take advantage of current market opportunities on the subcontinent. The brand meets all key sustainability criteria without compromising on either quality or standards of hospitality and is designed to cater for commercial and recreational travellers alike.

Red Ribbon CEO, Suchit Punnose said:

Understanding the full implications of the way in which a country achieves economic expansion is an essential part of working towards maximising that country’s growth potential, while also making sure all the ingredients required to continue growing and innovating remain available. While the 11 states experiencing a decline in their nature capital account for fewer than half of India’s regions, its not something that should be ignored.

With Eco Hotels, Red Ribbon is putting both India’s economy and nature capital at the heart of its investment strategy. Combatting climate change, promoting sustainable industry and creating profitable carbon neutral businesses, is the right way to create an investment that will remain popular and relevant for years to come.

Eco Tourism Odisha - Red Ribbon Asset Management Plc

How Eco-Tourism is generating economic boost for India

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How Eco-Tourism is generating economic boost for India’s Odisha state

Eco-tourism is becoming an increasingly important part of India’s economic growth. Just take a look at the state of Odisha. Located on the on the Eastern coast of India, on the Bay of Bengal, Odisha’s investment into eco-tourism is beginning to pay off, as it’s expected to generate some Rs6 Crore (£ 700,000) in revenue by the end of the 2018-19 financial year and providing a boost to local Government coffers.

As the popularity of the sector continues to grow, so too will the India Government’s return on its investment.

Of course, this economic benefit hasn’t happened overnight. However, nor has it taken as long as one might anticipate. The Odisha State Government has invested some Rs34 crore (£ 4 million) during the 2016-17 to 2018-19 financial years, into 37 separate eco-tourism locations across the state.

The eco-tourism offerings, created and managed by Odisha’s Forest and Environment Department are expected to reach Rs 10 crore (£ 1 Million) in the 2019-20 financial year, according to the department’s chief conservator of Forests and wildlife.

As you can see, even though the end of the current fiscal period has not yet arrived, the region is already seeing notable revenue generation form its investments, with further growth anticipated. That highlights the popularity of eco-tourism and hospitality as a something that’s more than a passing trend.

For the Indian sub-continent, which is awash with natural beauty and a growing desire to enhance that, with green, eco-friendly and carbon neutral hotels and other hospitality sector developments, now is the perfect time to support that ambition. Not only does it give tourists – from both India and the rest of the world – the opportunity to retain their eco-consciousness even when they travel far afield. But it also provides an option for investors to make socially responsible and sustainable financial decisions, too.

That’s essentially why opting for sustainable and eco-friendly investments is a good decision right now; they provide an option for travellers, countries and investors, who hold to environmental ideals that are now possible.

But Odisha isn’t the only region in India to pursue eco-friendly tourism. There are a growing number of mid-market eco-hotels that are continuing to expand across India. We’ve previously highlighted how Lemon Tree hotels is already proving a success in terms of cost controls and room occupancy rates.

Our own carbon neutral hotel group Eco Hotels, meanwhile, builds on everything we’ve mentioned here – and more. Demand for hotels across India is strong and rising, boosted in part, by the increasing middle-classes of the region.

Creating an eco-friendly hotel chain fulfills all the needs that we have identified:

  • The growing number of hotels across the subcontinent.
  • Creating sustainable, carbon neutral tourism options.
  • Giving investors peace of mind that their decision to support Eco Hotels, is a socially and environmentally responsible one, as well as a sound financial one.

Red Ribbon is the founder of Eco Hotels, the world’s first carbon neutral hotel brand which offers “green hospitality” as part of a progressive roll out across India designed to take advantage of current market opportunities on the subcontinent. The brand meets all key sustainability criteria without compromising on either quality or standards of hospitality and is designed to cater for commercial and recreational travellers alike.

Red Ribbon CEO, Suchit Punnose said:

The quick and impressive revenue generation from the commitment of an entire Indian state to eco-friendly tourism, only works to highlight our belief that socially and environmentally responsible developments and investment decisions, are the right path for, not only Red Ribbon, but the broader investment community.

Eco hotels, that are created to provide business and leisure travellers with the accommodation they desire, in the location of their choice, is just one way we are supporting this view. With demand for such options growing both domestically and internationally, the Eco Hotels brand is proud to be built with carbon neutrality and green credentials as part of its fundamental core.

I’m proud that Eco Hotels have done just that from the very beginning of the project, and proud too of the part Red Ribbon has played in developing the brand and its ambitions in the succeeding years, spearheading an environmentally friendly response to India’ resurgent tourism demands.

10 Reasons to Invest in India by Red Ribbon Asset Management Plc

The place to be: 10 reasons to invest in India

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India’s economy and business landscape are changing, ushering in a period of growth, prosperity and investment opportunities. All the ingredients are in place for India to become a world leader investment destination.

Let’s look a little more closely at just a few of the more compelling reasons why investing in India is an opportunity you can’t afford to miss:

1. The Perfect Demographic For Growth: India is the fastest growing large economy on the planet. Its rapidly increasing population is predicted to overtake China by 2022, and become the largest in the world.

2. Exceptional Consumer Led Demand: A large part of the 1.34 billion people are increasingly sophisticated, technologically literate and wealthy.

3. Supportive Fiscal Regime: The government has been making radical changes to create a more business friendly environment. There is now a uniform tax regime (GST) across all 29 states of India, and introducing an affordable housing programme with additional tax breaks.

4. Dynamic Real Estate Market: India is experiencing an unprecedented demand for both domestic housing and commercial property. Real Estate investment in India’s six major cities doubled in the first half of 2017.

5. Vibrant Private Equity Sector: 2017 was the busiest year for more than a decade for private equity deals in India, with total investments of £16.84 billion.

6. Unprecedented Infrastructure Spending: There is a public infrastructure programme of moving scale. This includes 83,677 km of new road being built over the next 5 years (The UK’s motorway network is a little over 3,000 km).

7. Regulatory Certainty: The government has been decisive. Demonetisation has removed much of the ‘black economy’ and over 6,000 companies suspected of improper activities have been closed. Arbitration and court procedures have been overhauled and sped up.

8. Global Trading Hub: Major international companies, such as Virgin and Amazon are now moving to India to invest in and participate in the expansion.

9. World Leading Computer Technology: India is now recognised globally as a technology powerhouse, with an increasingly IT literate population.

10. Stable Federal Structure: India’s federal structure offers highly effective risk management, that helps protect the economy from any unpredictable events. Which means that investors are more than ever protected against localised market risk.

For these reasons and more, India is now one of the most exciting places to invest. At Red Ribbon, we use our expertise and resources to identify the investment opportunities that have the potential of delivering superior returns to our investors.

Nobody understands that potential for growth better than Red Ribbon Asset Management, which has placed India at the very heart of its investment strategies since the company was founded more than a decade ago. With an unrivalled knowledge of market conditions on the subcontinent, Red Ribbon offers a unique opportunity to share in that vast potential.

Red Ribbon CEO, Suchit Punnose said:

India is more than just an exciting investment opportunity, it’s also a driver to global economic growth and that’s why Red Ribbon has long held the view that no investment portfolio can be considered properly balanced unless at least 10% of its holdings are deployed in Growth Markets and, of course, for us that has always meant India in particular.

At Red Ribbon we are very proud to have been playing our own part in India’s economic resurgence over the last decade, investing in just the kind of projects that are at the heart of the interlocking triangle of growth mentioned in the article: everything from the modular construction technologies now being developed by Modulex so as to deliver affordable housing at the pace demanded by the subcontinent’s urban expansion, through to innovative sustainable energy infrastructure investment. And to see India now firmly established at its place on the economic top table, uniquely well placed to move further forward still is, of course, a particular source of pride for us.

We look forward to continuing to play our part in India’s future, participating to the utmost in the opportunities the subcontinent’s explosive growth has to offer and at the same time providing above market rate returns from our investors in what I am convinced will continue to be one of the world’s most exciting markets for many years to come.

The Eco Hotel Phenomenon and Donald Trump’s observations- Red Ribbon Asset Management Plc

The Eco Hotel Phenomenon and Donald Trump’s observations

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What turns a run of the mill, resource hungry hotel into an Eco Hotel and why does it matter? Well, the clue lies partly in the question: an Eco Hotel isn’t resource hungry at all. Instead of gobbling away at all before it, an Eco Hotel sips and nibbles at its key resources: energy, water and raw materials. Eco Hotels are hard wired to save water and minimise on energy and waste material usage. But what about the second part of the question: why does any of this matter? Look no further than last week’s US National Climate Change Assessment, the work of 300 scientists and 13 Federal Agencies which concluded that “ Earth’s climate is now changing faster than at any point in the history of modern civilisation, primarily as a result of human activities…” Donald Trump may have dismissed the three-inch thick report out of hand as “largely based on the most extreme scenario”, but virtually nobody else is.

And for a President so intent on wrapping himself in a mantle of economic competence (and hotel owner to boot), the supreme irony is that key policies at the heart of a concerted response to adverse climate change are now proving to be drivers of commercial growth too. Eco Hotels are a case in point.

By definition, a non resource hungry hotel will also have reduced operating costs: it’s also likely to have reduced liabilities, will generally produce a higher return on relatively low risk investments and also deliver greater profitability across the board than its more resource hungry counterparts. Those are the hard conclusions arrived at in the seminal sector report for the subcontinent “Green Hotels and Sustainable Hotel Operations in India” and, perhaps inevitably, the markets haven’t been slow to see their potential either. Green hotels are more popular than ever on the subcontinent and if you need solid evidence of that, look no further than the explosive growth of Lemon Tree Hotels after the company’s successful IPO earlier this year.

Donald Trump could usefully brush up on his bedtime reading before leaving the West Wing to resume control of his own hotel chain …

The travelling public (business and leisure) is now increasingly aware of the importance of environmental compliance when it comes to choosing a hotel room, and the current surge in demand on the subcontinent is running well ahead of supply: not least because India’s tourist numbers have reached unprecedented levels in absolute terms as well.

But when it comes to meeting this burgeoning demand in practice, something much more is required than simply re-branding an existing hotel with “green credentials”. Key consumption variables have to be built in from the very beginning of the construction phase: making water saving devices and waste reduction part of the DNA of the hotel from the outset of the project. That’s why Eco Hotels are being built with solar tubing that reflects light across the hotel day and night, resulting in electricity bills that are roughly half those of a conventional hotel and its properties also has a single kitchen which dramatically reduces the carbon footprint. All those savings go straight to the bottom line.

Red Ribbon is the founder of Eco Hotels, the world’s first carbon neutral hotel brand which offers “green hospitality” as part of a progressive roll out across India designed to take advantage of current market opportunities on the subcontinent. The brand meets all key sustainability criteria without compromising on either quality or standards of hospitality and is designed to cater for commercial and recreational travellers alike.

Red Ribbon CEO, Suchit Punnose said:

The boom in Indian tourism (both domestically and internationally) is currently playing a huge part in driving forward the subcontinent’s resurgent hotel and hospitality sector, and as the article says eco credentials are playing a bigger part than ever in determining where this burgeoning tide of travellers are deciding to stay. Recent surveys confirm so called “green credentials” are high up on the scale of priorities when they come to make their choice.

And as the article also says, meeting that demand is certainly not just a matter of a last minute rebranding. To deliver properly on green credentials, the hotel has to be built with eco compliance as part of its structure (from the ground up). Only by doing this will cost savings and sustainability criteria properly come together in the future operation of the hotel, delivering the range of benefits described in the article.

I’m proud that Eco Hotels have done just that from the very beginning of the project, and proud too of the part Red Ribbon has played in developing the brand and its ambitions in the succeeding years, spearheading an environmentally friendly response to India’ resurgent tourism demands.

India Mid Market Hotels - Red Ribbon Asset Management Plc

How and why mid-market hotels are taking over India’s branded sector

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In the late 1980’s Esso commissioned a survey of its UK customers and found less than 7% travelled onto Mainland Europe with their cars. Why this reticence on the part of families clearly capable of making their way from Poole to Provence in an overcrowded Metro? And no, it’s not what you think: back in those days we hadn’t even thought of Brexit. As Esso found out, there was a more homely explanation: the Continent simply had far fewer automated pumps on its forecourts, so drivers were in danger of having to talk with an attendant and you know how the English are with languages. Better leave the car behind than risk the unseemly spectacle of sign language on the forecourt with a Frenchman.

And when you think about it, that’s all quite interesting. It’s the reason petrol stations have gradually come to look exactly the same all over the world: with the pumps all roughly in the same place, all self service and roughly the same kind of shop to pay in. It’s why you can now buy a burger (from a screen) in identical McDonalds outlets from Vienna to Vladivostok without once having to speak a word of German or Russian, and it’s why Esso long made sure you can buy your petrol the same way. There’s simply no need to leave the car at home anymore…so we don’t. We buy more petrol instead and everyone’s happy.

Economists call this phenomenon Brand Synergy and until recently India’s mid-market Hotel Sector was widely perceived to be more or less dead to its charms. A senior analyst on the subcontinent memorably (and anonymously) put it as follows: “…it was like an airline that uses a Boeing 747 for travel between Delhi and Mumbai, a Dakota for Kolkata-Delhi, and a Dornier for Bengaluru-Pune”. The poor old travellers never knew what to expect when they got there. Just like trying to buy petrol by word of mouth.

But not anymore…

The subcontinent’s mid-market Hotels including Ibis Styles, Lemon Tree Hotels and Eco Hotels have all made progress over the last decade in adopting a much more uniform approach to product profiling, achieving a consistency in specification that has now seen the mid-market secure nearly half the branded hotel sector: spurred on, no doubt, by an increasing number of private equity investors, none of whom are noted for being slow in recognising brand synergies when they see them.

All of which has made the mid-market uniquely well placed to take advantage of the surge in India’s middle class and increasingly urbanised travellers that has doubled airline occupancy rates over the last seven years.  And with the average cost of building a mid-market room coming in at between Rs 3 Million and Rs 7 Million, breaking even within six years, it all makes bottom line economic sense too. Compare that with the larger branded chains where average construction cost for each room is Rs 15 Million and break even takes 15 years: more than twice as long.  In the past 10 years alone the mid-market has expanded at more than 15% annually (according to Howarth HTL) and now accounts for 43% of total branded stock.

Having got away its successful IPO earlier this year (raising Rs 311 Crore from key investors), Lemon Tree Hotels last week took the trend a stage further by launching its brand overseas: signing a deal for the first of its hotels to open in Dubai next year. It will be the first mid-market hotel on the luxury studded Al Wasi Road, sitting literally in the shadow of the Burj Al Arab and Al Waleed Real Estate’s CEO didn’t miss the significance:  “There was a need for a mid-market hotel of this calibre in this location and India has been the largest source of tourists into Dubai, as well as the UAE as a whole, for over three years now.” To save you Googling it up, the exact figure is 13%: India now accounts for a whopping 13% of total tourist numbers into the Emirates, which shouldn’t come as a surprise to anybody given the subcontinent’s wealth and proximity as well as the population’s found mobility.

And now they’ll recognise at least one familiar, distinctively Indian hotel brand when they get there…Plus ca change.

Red Ribbon Asset Management is the founder of Eco Hotels, the world’s first carbon neutral mid-market hotel brand, offering “green hospitality” as part of a progressive roll out across India which intended to take full advantage of current market opportunities on the subcontinent. The brand offers sustainable living without compromising on standards of hospitality and is designed to cater to commercial and recreational travellers alike.

Red Ribbon CEO, Suchit Punnose said:

Working as part of the Eco Hotels Project has certainly taught me the importance of branding and product profiling in the hospitality sector, so I was pleased to read about the renewed emphasis on branding generally and unsurprised to see that it has now increased the mid-market share to just shy of 50%. Monolithic 2000 room hotel chains are no longer the first choice for travellers, especially given all the evidence suggests they are increasingly looking for accommodation that also complements their preference for sustainability.

And that’s important because the boom in Indian tourism (domestically and internationally) is playing a significant part in driving forward the subcontinent’s resurgent hotel and hospitality sector. It’s certainly an area that cannot be overlooked when seeking out the best investment opportunities over the coming years.

That’s why I’m very proud that Red Ribbon has played such a significant role in the creation and development of the Eco Hotels Project, spearheading the response to that demand in an environmentally friendly manner.

Hospitality with Responsibility - The Explosive Growth of India’s Mid Market - Eco Hotels

Hospitality with Responsibility: The Explosive Growth of India’s Mid Market

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Jawaharlal Nehru famously championed “hospitality with responsibility” and riding high as it is on the crest of an unprecedented surge in tourism, India is holding hard to the father of the nation’s message. Not least because public awareness of environmental imperatives has never been higher on the subcontinent, leading Prime Minister Modi’s Government to respond (characteristically) with a programme of market driven “green hospitality” initiatives that embrace everything from streamlined Visa procedures through to water sustainability programmes and everything in between. The result is a striking pattern of explosive growth in India’s important mid market sector where the bulk of those initiatives are currently taking root.

And it’s not all about the environment either, with most analysts also pointing to the importance green hospitality is having on financial performance as well, and not just on the bottom line either where reduced energy costs and leaner waste targets have an obvious potential to cut operating costs. Environmentally friendly policies also have an almost unique potential to attract the new generation of business and social travellers who are placing sustainability at the top of their checklists, with even the hardest nosed business travellers supporting the trend: Deloitte’s, scion of the pinstriped traveller, has published polling results taken from 1,000 businessmen and women, no less than 95% of whom wanted more green initiatives with 38% admitting to checking whether their chosen hotel was sufficiently green before deciding to book.

Put it another way, in less desiccated language not favoured by Deloitte, Eco Hospitality has now become an essential part of Mid Market’s success story on the subcontinent… and there’s no sign of it losing any of that importance any time soon.

Just look at Lemon Tree Hotels and Eco Hotels both of which are blazing a trail in making the most of the opportunities India’s mid market hospitality sector has to offer, each of them pursuing ambitious expansion programmes and delivering above market rate returns for investors.

Red Ribbon Asset Management is the founder of Eco Hotels, the world’s first carbon neutral mid market hotel brand, which has “green hospitality” built into its genetic structure. The company has embarked on an ambitious programme to roll out a chain of new facilities across the subcontinent, designed to take full advantage of market opportunities currently available in India’s mid market segment. The brand offers sustainable living without compromising on quality and will cater for commercial and recreational travellers alike.

Red Ribbon CEO, Suchit Punnose said:

India has become something of a crucible to test out trends in the hospitality sector. As most of us will have observed over recent years “green tourism” and “green hospitality” have become increasingly dominant in determining the choice of hotel for business and recreational travellers alike: part of a global environmental trend that seems, ironically, to have picked up pace even more following Donald Trump’s withdrawal of the United States from the Paris Climate accords.

But what makes India different from other bellwether economies worldwide is the sheer pace of the change that is currently taking place on the subcontinent. Number of travellers choosing to travel to and across India has reached an all time high, carriers are reporting exceptional volumes and occupancy rates and the mid sector is picking up a larger percentage of these travellers than ever before. I’m sure that will all in lead to an acceleration of the rate at which the trend for “green tourism” evolves in India as opposed to other markets across the world, meaning we can expect to see green tourism’s importance on the subcontinent before anywhere else.

As the article also points out, Eco Hospitality is an essential part of this trend so I’m very much looking forward to seeing how things develop, especially with Red Ribbon’s Eco Hotel project playing such an important part in the market.

The Phenomenon of Eco Hospitality - Red Ribbon Asset Management - Eco Hotels

The Phenomenon of Eco Hospitality

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This year’s Sustainable Travel Report has reinforced the continuing momentum of Eco Hospitality in India: 84% of business and recreational travellers now confirm a preference for sustainable destinations, and as the saying goes, “sustainability starts where you stay”. Two thirds of travellers are willing to spend 5% more on accommodation if it meets sustainable criteria, meaning everything from water and energy consumption through to macro environmental management systems. But to get a real feel for the importance of those findings, you have to place them side by side with tourist and business statistics on the subcontinent and, in particular, for the first half of this year. It helps explain why India is currently experiencing an Eco Phenomenon.

The subcontinent will be the fourth biggest tourist economy in the world within the next four years, bigger than Italy, the United Kingdom and Australia put together and a major factor in this explosive growth is internal demand. In May alone airlines in India reported a 16.6% growth in passenger numbers, carrying 11.9 million customers with 80% occupancy (Spicejet reported an astonishing 94.8% occupancy rate). And with tourist numbers on the subcontinent riding at such an all time high with 84% of tourists preferring sustainable destinations (they have to stay somewhere when they arrive), even the most rudimentary of economists could spot an emerging trend.

Certainly Lemon Tree Hotels and Eco Hotels haven’t been slow to pick it up: both companies are currently spearheading key innovations in India’s hugely significant mid market hotel segment, with eco hospitality at the heart of each of their business models.

No surprise then that JP Morgan reported Lemon Tree in June to be delivering better than average cost control and execution ratings as well as higher return rates on room occupancy. Better Eco credentials aren’t just a honey pot for prospective travellers, they make sound business sense too with reduced commodity use (and costs) delivering straight to the bottom line. JP Morgan have also pinpointed enhanced operating leverage as a driver for future growth for at least the next three years, which is likely to deliver improved capacity for better pricing and capacity structures.

Lemon Tree and Eco Hotels continue to roll out new hotel units across the subcontinent, with the former last month investing another Rs 850 Crore into its aggressive expansion programme. Interestingly enough, Lemon Tree’s President Vikramlit Singh has also again highlighted a continuing mismatch between demand for hotel rooms and availability as a likely source of future profitability, so there’s no sign of those capital programmes losing their momentum anytime soon.

Red Ribbon Asset Management is the founder of Eco Hotels, the world’s first carbon neutral mid market hotel brand, offering “green hospitality” as part of a progressive roll out across India, designed to take full advantage of market opportunities available on the subcontinent at the moment. The brand offers sustainable living without compromising on quality and will cater for commercial and recreational travellers alike.

Red Ribbon CEO, Suchit Punnose said:

Market changes rarely come about in isolation, with one revolutionary event: the iPhone would have been an expensive mirror without something to plug it into. And the same goes for economic trends generally where we should look for the confluence of a number of key factors before drawing any conclusions. That certainly applies to the Indian Eco Hospitality sector where a huge uptick in business and recreational travel on the subcontinent has coincided with a surge in demand for sustainable destinations. With mid market hotels already roaring ahead, added eco credentials are giving the platform a turbo charger.

And I would add a third factor too. As may not be generally known the whole, vast expanse of the subcontinent currently has less hotel rooms that the island of Manhattan alone. So the point mentioned at the end of the article also has considerable importance to my mind: demand for hotel rooms is in any event seriously outstripping supply and that is bound to make for a more profitable outlook. A turbo charge for the turbo charger perhaps?

Sustainable Tourism - Hospitality - Eco Hotels - Red Ribbon Asset Management

Sustainable Tourism: Balancing the needs of the fastest growing hospitality market in the world

By | India, News | No Comments

The World Travel and Tourism Council predicted this month that within the next decade India will be the fourth largest tourism economy worldwide, snapping at the heels of China, the United States and Germany. The Report makes a particularly interesting finding that this trend is not just driven by increasing numbers of international business and tourist travelers: significant growth is being driven from within the subcontinent itself, fueled by India’s rapidly expanding middle class and an increasingly technology literate young population who are quicker than ever to reach for their smartphones to book a holiday. Domestic travel is now the real catalyst for change in a burgeoning hospitality sector with a striking 90% of travelers being Indian Nationals.

No surprise then that In May of this year domestic airlines on the subcontinent reported a 16.53% growth in passenger numbers compared to the same month in 2017, with the Directorate General of Civil Aviation confirming that Indian carriers had transited no less than 11.9 million passengers during that single month. Across the board scheduled carriers flew to an impressive 80% occupancy with Spicejet leading the way at a 94.8% load factor.

These are hugely significant trends for the future of India’s economy, with the hospitality sector having already accounted for more than $230 Billion of the subcontinent’s GDP in 2017 (up from $209 Billion the previous year) and no suggestion that current unprecedented rates of growth in the sector are likely to slow anytime soon.

This pattern of exponential growth shouldn’t come as a surprise to anyone: India has 36 world heritage sites, 103 National Parks (with the Taj Mahal thrown in for good measure) as well as Goa’s beaches, the foothills of the Himalayas and an astonishing breadth of wildlife from tigers and elephants to snow leopards. All of that is bound to attract tourists in large numbers, but such rapid tourist growth can of course bring its own problems, as anyone struggling through St Mark’s Square in mid August can testify. Growth of the wrong kind can threaten the fragile ecostructure of the very locations proving to be so popular with tourists, to such an extent that some of India’s tiger reserves no longer have any tigers to see.

More than 30,000 plastic bottles are left behind each summer by tourists in the high altitude Himalayan Ladakh desert of Jammu and Kashmir and on Mount Everest itself eight to ten tons of waste are left behind on the mountain every year: everything from empty oxygen bottles to rucksacks, tents and discarded climbing equipment.

So there is a balance to be struck: recognising the importance the hospitality sector now has for the subcontinent’s economy, but at the same time striving to support unprecedented growth within the sector in a manner that is sensitive to the needs of India’s precious ecosystem. This is the principal reason for the success of Eco Hospitality as a key driver of India’s mid market hospitality sector: not just because it is the only model striving to get this critical balance right, but because the majority of those travelling on the subcontinent now recognise the risks greater tourist numbers are posing to the natural habitat and are actively seeking out accommodation that supports its preservation.

Red Ribbon Asset Management is the founder of Eco Hotels, the world’s first carbon neutral mid market hotel brand, offering “green hospitality” as part of a progressive roll out across India which is intended to take full advantage of current market opportunities on the subcontinent. The brand offers sustainable living without compromising on standards of hospitality and is designed to cater to commercial and recreational travelers alike.

Red Ribbon CEO, Suchit Punnose said:

No surprise indeed that tourists are flocking in unprecedented numbers to the natural beauties and historic splendorous of the subcontinent, but it is still striking to learn just how significant a part internal tourism is playing in buoying up India’s resurgent hotel and hospitality sector. It’s certainly an area which can’t be overlooked in seeking out the best investment opportunities over the coming years and that’s why I’m proud Red Ribbon has played such a significant role in the creation and deployment of the Eco Hotels Project across the subcontinent.

As the article points out, tourists and business travelers alike are looking increasingly for hotel accommodation that is compliant with requirements of eco sustainability, and as the world’s first carbon neutral hotel brand, Eco Hotels are spearheading the need to meet that demand. It not only makes good sense for the environment, it makes good business sense too.

BSE Market Report - Red Ribbon Asset Management Plc

BSE Market Report: A Good Week for Tech Stocks, Hotels and Bears

By | India, News | No Comments

Beware the Chef who won’t eat his (or her) own food, but fear the food even more: on which basis the Bombay Stock Exchange (BSE) was certainly cooking this week. Tata Consultancy Services announced a second stock re-purchase in as many years, equivalent to some 2% of its overall share value, and India’s largest software exporter is now offering shareholders a premium of 15% on their holdings. So it was something of a statement of the obvious last week for its Chairman to characterise the move as “shareholder friendly in terms of dividends”. The Pope is still Catholic and Bears search for bosky restrooms.

But perhaps more importantly for the Bombay Stock Exchange at large, the move by Tata Consultancy is expected to prompt other listed companies to follow suit, with Cognizant already announcing last Friday that it is going forward with its own $600 Million accelerated share re-purchase programme, committing it to £2.7 Billion in repurchases by the end of next year.

These are not just isolated instances. The Indian Tech sector is white hot at the moment, with influential market commentator Amitad forecasting annual e-commerce revenue to rise by a staggering 20.2% by 2022, that’s $52 Billion or more than double the equivalent 2017 figure. Amitad’s Report also noted that 37% of the subcontinent’s population are now regular Internet users and 14% of them make regular on-line purchases, a figure, which is likely to grow exponentially over the next few years. Online consumers in India will constitute 90% of the population by 2020, and the subcontinent is already the second largest Internet user in the world, bigger than the United States … So Flipkart will be happy as well.

And it isn’t just IT and Tech Sectors that are looking strong at the moment. Taking advantage of an already resurgent Hospitality segment, FabHotels announced plans last week to open up new Hotels in fifteen additional cities across India (more than 1,000 units altogether). The company raised $25 million in 2017 through a Series B investment round led by Goldman Sachs and a spokesman for the company summed up its continued optimism this week:  “It is a sunrise moment for the Hospitality Sector. The mid market segment is driving the industry forward and more and more hotels will align with these new-age brands and improve consumer experience”.

The move follows the continuing success of EcoHotels, the World’s first carbon neutral hotel brand, which is also picking up business on the subcontinent at the expense of more traditional, chain operations.

Red Ribbon Asset Management Plc is the founder of Ecolodge, a key brand within the Eco Hotels Group, which has an ambitious program of developing a £1 Billion premium value hotel network, supporting sustainable living without compromising on standards of service delivery. Eco Hotels is modelled to operate from a low cost and high return platform, working to deliver above market rate returns for investors.

Red Ribbon has been specialising in India’s Markets since the company was founded more than a decade ago, bringing an unparalleled expertise to its investment policies on the subcontinent with specialist sectoral advisers working from it’s Head Office in London in conjunction with more than a hundred local experts on the ground in the subcontinent itself. And by drawing on that body of expertise The Red Ribbon Private Equity Fund now offers an opportunity to secure above market rate returns in this, the fastest growing large economy in the World.

Red Ribbon CEO, Suchit Punnose said:

It’s impossible to overstate the importance of India’s Technology Sector at the moment. In conjunction the subcontinent’s burgeoning, increasingly urbanised and much more sophisticated population, India’s technology revolution is going to be a key driver for future economic growth. As the article says, Flipkart will certainly be happy!

But we mustn’t forget that economic growth is continuing in other critical areas of India’s as well, and these same demographic trends are currently delivering unprecedented growth in the hotel and hospitality sector as well: and the mid market hotel sector in particular is showing strong potential for sustained growth.

I’m particularly interested in that because of Red Ribbon’s founding participation in the Ecolodge Brand, where sustainability and environmentally friendly factors offer unique attractions in today’s market. And like FabHotels’ Chairman, I certainly believe that those hotels which are aligned most closely to what he calls “new age brands” will ultimately deliver the best returns in the long run.

Red Ribbon

At Red Ribbon we understand that the transition towards a resilient global economy will be led by well-governed businesses in mainstream markets, striving to reduce the environmental impact of their production processes on society at large and on the environment as well.

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