Mumbai // The Abu Dhabi-based hotel chain Rotana is finding it challenging to secure its first deal in India as development of projects in the country has been hit by a slowdown in the economy.

Rotana opened an office in Gurgaon, a satellite city of New Delhi, almost two years ago, with the view of managing 20 hotels in India in the next decade. It has yet to announce a first project in India as a couple it was working on fell through.

“The macroeconomic situation in the last 18 to 24 months has not been very strong,” said Aman Aditya Sachdev, Rotana’s senior vice president for South Asia and South-East Asia.

“Hotel development per se in India has taken a bit of a step back. All the large volume of development which was announced about seven to eight years ago, a lot of that has come to bear now. Going forward, the number of deals available in the market are far and few.

“ There has been a bit of negative sentiment in the market for various reasons. When the economy starts to slow down, hotels or hospitality is always at the forefront. It has led to a lot of developers suddenly wondering: is it the right business for them?”

As a management company, Rotana operates only hotel properties, while a developer takes on the task of building the hotel and it owns the physical asset.

India’s economic growth hit a decade low of 4.5 per cent in the financial year ended March 2013, and the country has struggled with high inflation levels and a weak rupee.

Data from the hospitality consultancy HVS shows hotel occupancy levels in India fell to 58 per cent between 2012 and 2013 compared to 69 per cent five years earlier, while average rates fell to 5,803 rupees (Dh353) from 7,989 rupees. The number of branded hotel rooms in the country more than doubled in the same period to 93,479.

Mr Sachdev said that Rotana is still committed to India and that its hotel sector has enormous potential in the long term, with the need for many more hotel rooms in the future to cater for growing wealth among the middle class and a rising appetite for travel.

“We always expected that India would be a challenging place to break into,” said Mr Sachdev. “Our intent sill remains that we will have about 20 operating hotels over the next eight to 10 years.”

Jumeirah Group, the Dubai luxury hospitality company which manages Burj Al Arab, announced its first property in India in 2012 – a hotel in Mumbai that is scheduled to open in 2018.

“We’re particularly interested in developing as energetically and as aggressively as we can within India,” said Gerald Lawless, the president and group chief executive of Jumeirah Group, speaking at the Hotel Investment Conference South Asia, in Mumbai on Wednesday.

Mr Lawless said that the company also had an agreement for a property in Goa, which has yet to be formally announced.

Rotana is currently working on trying to secure a couple of management agreements in Mumbai, Mr Sachdev said. He said he hoped that at least one of these agreements would be signed in the coming months.

“The Delhi region is still very much on our agenda and we are in discussions,” he said.

Rotana has also started looking for opportunities to open hotels in countries including Sri Lanka, Indonesia and Malaysia, Mr Sachdev said.

business@thenational.ae