Indian Hospitality Industry 20

 

I grew up in Delhi knowing just three hotels! Oberoi Maidens, The Imperial Hotel and The Ashok Hotel. In 1966-67 I left India for Beirut for higher studies. I returned to Delhi in 1974, only to see that things were just about the same or let’s say, they were marginally different, though we had new entrants in the hospitality industry, but all were under Government management, and were owned by ITDC, a public sector company, which also had five new hotels in Delhi - Ashok, Akbar, Lodhi, Janpath and Ranjeet and many more were coming up all over India, at that time in private sector we had, The Oberoi in north and Taj in west. Only International connection was the Intercontinental Hotels. As for me, the real modernization and professionalism in the hotel industry came to India with the entry of the InterContinental of the IHG Chain franchising two hotels, Oberoi InterContinental Delhi and Taj InterContinental in Mumbai. It might surprise a lot of young professionals to know that most of the system manuals existing today are built on original InterContinental Hotel Manuals.

Lots of water has flown under the bridge since then, today from individually managed hotels in India, the hospitality sector is   now a chain driven business. We have over fifty hospitality chains operating in India at present – including both Indian and International. Prominent Indian Brands are Taj, The Oberoi, ITC Hotels, ITDC, Clarks, Leela, Lalit, Park Hotel, Lemon Tree and Sarovar. Leading International Hotel companies operating in India are Marriot, Hyatt, IHG, Radisson and Hilton. In this blog I would like to discuss my take on each of these chains - their strengths & weaknesses, their positioning and what their future is in the Indian subcontinent.

From seventies till nineties Indian brands like Taj, The Oberoi, ITDC and ITC Hotels ruled the Indian hotel Industry, where people like Ajit Kelkar, Biki Oberoi, S.N.Gadhoke were the Demi Gods of hotel Industry, followed by Captain C P Krishnan Nair  founder of Leela Group and Lalit Suri of Lalit Hotels. They were the Kings of Hotel Industry. They created excellence in the Indian Hotel Industry. This trend continued till the late nineties. First the ITDC Hotels were the largest Hotel Chain in India with five prominent Hotels in Delhi and 17 Hotels all over India. By 2000 they had over 35 properties. Unfortunately the downslide of ITDC started when more and more operators slowly established themselves and introduced better management concepts and understanding. Thereafter the dominance of bureaucracy became a major factor for the collapse of ITDC along with corruption, mismanagement and careless attitude. Consequently the government sold most of the properties to private companies and today - as expected- nearly all the properties are rolling in money. ITDC hotels kept few Hotels with themselves including India’s best designed Hotel The Ashok and a few others. It would not be wrong to say as I mentioned earlier, the only reason The Ashok hotel is still with them is only for  the purpose of ‘milking the cow’ as much as they can. I guess, the truth is that ITDC doesn’t really want to stay alive anymore.

Now let’s talk of other renowned Indian Hotel Chains, namely The Oberoi, Taj Hotel Group and Welcome Hotels by ITC. All of these had one thing in common for their survival, that each one of them  had a God Father – for Oberoi Hotels with MS Oberoi and Biki Oberoi gone, their survival now depends on the Mukesh Ambani Group. Despite all the celebrity status, the owners of some of the best Hotels in the world, depend totally on their Sugar Daddy for financial backing. Same is the situation with Taj Group or ITC Hotels, where the quality of their  services have gone down, and the quality of food - which was their main strength- has also been compromised in most properties, including in their flagship hotels. My view is, that people at the helm of the prime Hotel chains could not preempt  the rapid expansion of the International chains as a serious forthcoming competition and they let the international brands define the qualitative difference, not only in the standard of services and concepts but  they allowed the quality to slowly and steadily go down in all the areas. To come up in numbers these leading brands came up with dozens of new brand names and signed-up hotels which they didn’t have  the capacity to neither manage nor market the facilities to fill the rooms, as a result they were ostracized by the hotel clients. For years due to poor performance, most of their B grade/town hotel properties were not doing well enough. At that stage either a strong financial might of their Godfather, or a parent company they served for their existence, could have saved them, but could not, because of the fact that they had lost their reputation which stood in the way of most of these prime properties. Fortunately post COVID boom has come to their rescue, but the fact remains that today all these internationals chains are way ahead  in every facet of excellence in the hospitably sector.

Today’s natural leaders are International Hotel Management Brands like Marriot, Hilton, Hyatt Group, Intercontinental Hotels and Radisson Hotels. They are ruling the industry because of the hard work, innovation, good management, research, investment in Marketing the property to ensure high profitability among the these Hotels. Their agreements are tough and  one sided and are on ‘take it or leave it basis’, despite their rigid conditions they remain the most preferred brands, because they control 65/70% of hotel rooms in the country today. I feel they are doing well because they mean business, they don’t sign where they can’t make money and they deliver most of the time. After long research, I would like to extend my views on each one of them below.

Inter Continental Hotels are the oldest and also the most successful brand in this country. Since the sixties they have served the in Indian hospitality industry, the truth is that they wrote the first operations manual for the Indian hotels. Even today those manuals have not lost their relevance. One of the major reasons for the success of Taj Group and Oberoi Hotels is the efforts made by Intercontinental Hotels - The  Oberoi Intercontinental and Taj Intercontinental were the first professionally management Hotels in India. Even today the service offered by these two hotels has no parallel.  They were the true Icons. InterContinental Hotels have Holiday Inn, Crown Plaza and a few more as a part of their branding. In India, the man responsible for establishing  these names {Holiday Inn and Crown Plaza} and getting them the right brand positioning and due recognition in India - is none other than Rajiv Sharma who was one of the most successful development managers’ in our country. Today IHG manages over 50 Hotels and have another sixty under construction.

Marriot Hotels today are the largest Hotel Management Company especially after they took over the Starwood Group. Marriot in India have rather a checkered past, they signed up with Ansal’s a real estate company in Saket, which was later taken over by ITC Hotels and they lost out, then they signed with JP Hotels for conversion of all there properties and lost, then they also signed up with another luxury chain called Leela Hotels & Resort and   just one week before the opening lost it yet again, there were many more such misses. I guess that these experiences helped them to lose their arrogance and rethink the India strategy. They worked hard with Rahejas’ in Bombay, who changed their fate with Renaissance Hotel at Powai and JW Marriot at Juhu. The problem was with their development team, I myself experienced their arrogance twice - first with their expat managers’ and second, more importantly with their Indian (Brown Sahab) mangers’. The luck of the Marriot group finally changed when they took over Starwood Hotels, which was a very successful brand in India. After that The Sheraton became the most popular brand with two Flagship Hotels- Maurya Sheraton & Oberoi Sheraton, Westins in Mumbai, NCR and other cities. Marriot is changing for better, now the slant is more Indianized and Humane. I need to present a case study about the earlier arrogant attitude coupled with a feeling of being superior to others. In 1999 I was working as CEO of PKF (Rattan Mama Consultants) and was invited by ITC Hotels to prepare Status Feasibility/viability report about Ansal owned Marriot – Saket Delhi, which was under construction for a long time and as ITC Hotels had purchased the property, they were keen to know the future of the Five Star property as this was  a B - location at that time. My report confirmed their fears, because of which the ITC Board had decided to terminate the management agreement with Marriot. After finishing this meeting with ITC top bosses, I had next meeting with the Representative of Marriot in Hyatt Regency, Business Lounge. I met Steve the newly appointed India Head along with the Vice President-South East. During the meeting I mentioned about ITC hotels purchasing Marriott Saket, their first property in North India and asked what will happen to them, as ITC Manages their Hotels themselves, and then what will happen to the Marriot’s management contract which is operative. Our friend from Singapore laughed and said, “we’re going to teach these Indian jokers, how to manage Hotels”. I gave him a look and said” please don’t under estimate their management skill. He laughed and said you’ll see. They were sacked and in arbitration they pleaded for a compromise. The compromise was, that for next five years the world's best Hotel Management Company had first time, franchised a Hotel which was not managed by them but by ITC Hotels. If they were not full of themselves, I am sure things would have worked out in their favor.

Hyatt Hotels has been a great chain and has had success all the way. After the Asiad, The Asian Hotel was going through really a tough time - rumors were that their property was up for sale and then Hyatt Hotels took over and changed everything. Even today that Hotel has best F&B with two world class restaurants operating for last thirty years and still are the leaders in Food and Beverage concepts, Service standards and its a brand that clearly defines hospitality standards in the Indian Industry. Although, all this has been achieved due to hard work and dedication of the team of Hyatt professionals headed by Peter Fulton, he is the star of Hyatt success in India. Although a few cracks are visible after his retirement, but Hyatt is a very professional company and I am sure they will bounce back soon.

Accor India - In 1997 when I started working as CEO of PKF, I had a visitor from France, this man who was representing Accor India, Rolland, informed me their company had decided to invest 100 crores in establishing Accor brand in India but unfortunately, they were  not been able to get a suitable partner. After he left, my friend Rajiv Sharma took over for a year before joining IHG. Accor’s first experience was with Mahindra Group, but it didn’t work out.  It is also a fact that, although they were in India during the Asian Games with Surya Sofitel in Friends Colony, it took twenty years for them to establish themselves along with a tie-up with the owners of Indigo Airlines. Today they have 56 Hotels operating with nearly 30 hotels in the pipeline. Accor Group unfortunately has not been able to bring any major strength to the table e.g. Marketing strength, F&B operation or excellence in operation. Although they are quite well settled but still remain on rather a weak wicket, I don’t see them growing any faster or establishing some kind of pioneering  position for themselves in Indian Hotel Industry.

Hilton Hotels & Resort, the world’s best Hotel chain unfortunately has a different history in India. First time they came after tying up with Lalit Suri the political millionaire converting very well managed Holiday Inn, in Delhi in 2001/2, which was a total disaster. Holiday Inn under Lalit Suri management was performing better operationally and the service was good. Under Hilton it was a total mismanagement and as a result they were sacked within a year.  After that they signed up with the Oberois’ for their 3Star brand called Trident Hotels and that alliance also didn’t last very long and they parted ways. In 2011 when I was busy completing Piccadily Hotel’s first property in Janakpuri, while scouting for a management cum franchise Hotel Company, we invited Hilton along with others and as the luck would have it, we finalized Hilton Janakpuri as their first Hotel in India. Hilton Janakpuri Hotel was opened with a lot of fanfare and an equally large pre-opening Budget. Being the first Hilton managed Hotel in India, hotel business took of quite well. Furthermore, due to good  all-around publicity, they opened another six Hotels in a row, namely Nehru Place Hotel, Hilton, & Hilton Double Tree at Noida, and Hilton Double Tree and Hilton Garden (Now Hilton Double Tree) in Gurgaon and Hilton Garden at Saket Delhi, all together seven Hotels in NCR. Unfortunately as a Management Company, they failed as mangers, failed as employers and they also failed miserably as a marketing company. For three years they managed but could never achieve even 60% of the budgeted targets. The worst and much more happened, because of which all their promoters came together to form a committee and decide to terminate the tie-up contract. By the time they hired a new and a better Country Head to control the damage, four properties including Janakpuri in Delhi NCR exited from the brand. New Boss tried his best to save these hotels but it was too late for these four properties, but Chennai Hotel was saved. For next few years Hilton survived and grew but not too well. They once again committed a blunder by hiring the Ex Marriot person as their new CEO. Fortunately thanks to their wisdom and luck he was eased out within a year. The good news is that the new CEO Zubin Saxena is a very well-grounded guy with his feet firmly planted on the Indian ground. I really hope that, given an opportunity and power he might change the fortunes of Hilton for the better in India.

The Radisson Success Story- This is a story of this young boy called Kulbhushan, with stars in his eyes. I knew KB Kachru (KB) when he returned from his training stint abroad. He exhibited great ability to deliver from a very young age. His hard work at ITDC Hotels exhibited his class. In 1984 he left ITDC and joined hands with Carlson Group to open TGIF, one of the most successful Restaurant Chains in India. By 1998 he was able to bring a new brand called Radisson Hotel to Delhi airport. Although it was a franchise but he provided more   support than any other chain did in the management contract. He turned this Hotel into a money bag for the promoters. Although he was the Vice President but I have seen KB literally working as sales representative visiting all hotel promoters trying to convince them for a tie-up. All his early tie-ups’ were personally finalized. He built the Indian company from scratch. He worked as though he owned the company. I could never see him gloating, always down to earth, humble and he always kept the door open for promoters and new clients. Today Radisson is the most successful story, built brick by brick and  sheer hard work.There was a time, when many people tried to poison the top management but soon every one realized his gentle capability and the virtue of magical control over his promoters, they gave up. Without him - to me – the company in India will be incomplete. The fact is, Radisson Hotel is a success story because of KB. I would not be wrong to mention that he is the most dynamic leader of the twenty first century. With his contribution, today Radisson is the largest Hotel chains in India, as he single handedly established Radisson chain in India, today he stands shoulder to shoulder with the likes of Industry Greats e.g. MS Oberoi(Founder Of Oberoi Hotels), SN Gadoke (Creator of ITDC Hotels), Ajit Kelkar(Creator of Taj Group) and  of course K B Kachru Creator and today Chairman of Radisson Hotels in India).  

Sarovar & Lemon Tree The Underdogs One of the Most successful domestic brands are two companies started by senior Hotel executives, one from Oberoi and other  one from Taj. 

 Anil Madhok after working for over four decades for Oberoi Hotels, joined hand with his junior college Ajay Bakaya and formed a company called Sarovar Hotels. It was a humble beginning with a Hotel Marine Plaza. As they signed few more hotels, they faced difficulties because of inexperience in the early years, but did not give in. I remember one of their clients, Agra Hotel did not pay them their fee for years, still they supported them, providing total backing till they were strong enough to stand. An excellent company ethics. That is the reason why today they have over 100 properties under their belt. Although today they have sold a part of the stake to Louvre Hotels, but their business ethics have not changed. God bless Sarovar and Ajay Bakaya.

The Lemon Tree Hotels, second most successful chain had comparatively an easier climb. Patanjali G. Kashwani ( Patu) and his friend Late Puneet Bagrodia started this company initially with a Hoyel in Goa .  Puneet parted ways in early 2010 with his hotel in Goa called Wishpering Resort in tow. Later Puneet Bagrodia passed away due to cancer.

 On other side Patu Kaswani who was always a very good manager was able to get more hotels under his belt. He was also smart enough to mobilize International funds for his company. Today Lemon Tree Hotels operate over 100 Hotels and is growing. I feel that the reason for the success of both these Hotels is that they address three- and four-star segment which was totally ignored by the major National/International chains. Both these companies have worked hard to keep their segment of market in their grip. Taj and ITC tried their best but unfortunately could not bring the same results in this segment. In future as they are very focused and tight fisted, they will take advantage of their performance and credibility to get into higher segment successfully.

In the next ten years I see them as leader in their segment both in terms of number of hotels and profitability.  

                                                                 Written by Anil Chak & Virat Varma