Toyota's hospitality biz makes India debut

Toyota Enterprises, the non-automotive arm of Toyota Group, has entered into a joint venture with the Bangalore-based Hyagreev Hotels, which runs The Chancery Hotel in Bangalore. Toyota Enterprises operates a chain of hotels in Japan, and this is its first project away from home.

The Japanese company has entered the deal through its India subsidiary Toyota Enterprises India Pvt Ltd. The new company, TEP India, aims to cater to Japanese businesses based in Bangalore.

As part of the JV, TEP India will take over 52 rooms out of the existing 120 at The Chancery Hotel for a period of seven years for management, marketing and maintenance through a minimum guarantee agreement. The JV is set to come into force from January 2013 once the guest rooms are done.

Commenting on the company's entry into the Indian market, Kazuyuki Kawai, president of Toyota Enterprise, said: "Bangalore has a large presence of Japanese companies and there is an increasing demand for accommodation facilities where the Japanese can stay. The Chancery Hotel will be responsible for the implementation of optimal

hotel operation based on TEP India's planning and marketing to create an ideal hospitality environment."

Said Changama Raju, chairman of The Chancery Hotel, Bangalore: "A portion of the hotel will incorporate the Japanese guest room standards by meeting their cultural requirements."

An industry analyst said the tie-up should help Japanese firms like Toyota cut the cost of boarding and lodging as now they are forced to stay at places charging much higher rates when the Japanese firms are looking for places with Japanese ambience and cuisine for their senior executives. It is understood that there is a market potential for around 1,800 rooms on a annual basis in Bangalore catering to the Japanese audience.

If the Bangalore foray succeeds, Hyagreev may go in for such an agreement with Toyota Enterprises for a hotel that may come up on the Bangalore-Chennai highway as there are many Japanese companies that have set up shop in and around Chennai. In addition to that, the group may also set up a hotel in the Nellore-Chittoor district where it may have a tie-up with Toyota Enterprises, said a director of Hyagreev.

Toyota Enterprises, during fiscal 2011, had revenues of 27 billion yen ($345 million).