Leela-Kempinski split: Are global hotel chains giving up on India?

Luxury hotel chain, 'Leela Palaces, Hotels and Resorts', on Monday, said that it has decided to discontinue its 25-year-old branding alliance with the German hotel group Kempinski.

This is the fourth such break up in the last year.

In Septemebr, Pallazzio Hotels, which owns the 390-room property in Mumbai's luxury Palladium Mall, ended its alliance with Shangri-La, while Swissotel Hotels & Resorts, the Zurich-based hospitality chain, pulled out of its five-star deluxe resort at Calangute in Goa within six months of launching the property.

Even Shiva Satya Hotels and Intercontinental called off their alliance for a five-star hotel in Ahmedabad.

According to a Times of India report, the trend signals the growing disconnect between hotel owners and hotel managers over the running of operations and expected returns on investment.

[caption id="attachment_1159831" align="alignleft" width="380"] Are global hotel chains giving up on India?[/caption]

The split with Keminsiki will allow The Leela to further consolidate its sales and marketing network, facilitating Kempinski Hotels' direct penetration into the Indian market.

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Commenting on the decision, Leela founder and chairman emeritus Capt CP Krishnan Nair said "the strong cooperation enjoyed by the two luxury brands over more than two decades has immensely benefited both The Leela and Kempinski, and helped significantly increase brand awareness globally and in the domestic market."

Kempinski opened its first India hotel in Delhi this February, in the luxury segment.

The 480-room Kempinski Ambience Delhi is located in the eastern part of the city, close to Shahdara.

The debt-laden Leela, which is also India's fourth largest hotel chain, owns and operates eight luxury properties spanning Mumbai, New Delhi, Bangalore, Chennai, Udaipur, Goa, Kovalam (Kerala, which is being managed by it) and Gurgaon.The group is developing properties at Jaipur, a 60-room Palace property, Bhartiya City near the Bangalore airport, an Agra hotel that has every room facing the Taj, Noida near Delhi and Lake Ashtamudi in Kerala.