Bangalore/Mumbai: When Singapore-based Alila Hotels and Resorts opened its first hotel in India in November—a boutique resort on Goa’s Majorda beach— it decided to launch a cheaper variety of rooms first.
The hotel pushed back the launch of its premium rooms, priced at Rs14,000 a night, to a later date in 2010, but said tourists were lapping up its Rs7,000-a-night rooms.
Many luxury- and mid-segment hotels, launched in the second half of 2009, have had to fight both—a tariff war and the challenges thrown up by an economic downturn.
The 149-room Alila Diwa Goa, for example, has whipped up its own blend of coffee at Rs320 per kg—a mix of Arabica and Robusta beans—far cheaper than the Rs1,200 a kg variety commonly available in most five-star hotels.
“While keeping the quality intact, small changes like these make a lot of difference,” said Saji Joseph, general manager, Alila Diwa Goa.
Last year was a more lacklustre period for the hospitality segment than it was for the residential market, both because of the downturn and the impact of the November 2008 terror attacks on the Taj Mahal Palace and Tower and Oberoi Trident hotels in Mumbai.
Innovative ideas: Accor’s economy brand hotel Ibis opened in Pune in November and is at the forefront of the hotel chain’s expansion plans.
“This year would be one of opportunities because the fundamentals remain strong in India,” said Sudeep Jain, executive vice-president, India, Jones Lang La Salle Meghraj (JLL), a property advisory.
“In 2009, while some quality hotels did open, many projects never (got) launched and some got pushed to this year,” he said.
New hotels from global chains such as Alila and Accor SA, as well as the Oberoi Group’s new 436-room Trident hotel in the Bandra Kurla Complex (BKC) in Mumbai, are adopting several measures to increase efficiency.
The Trident hotel at BKC uses a machine to convert organic kitchen waste to manure within 14 days, the windows in its guest rooms are triple glazed and filled with argon gas to minimize air-conditioning losses, and it uses the steam from the laundry to heat water for the rooms.
“The idea was always to cut waste and not cut cost,” said Rattan Keswani, president, Trident. The hotel in BKC opened to a 80% occupancy rate in December, at the peak of the tourist season, but is expected to close at 50% this month.
A 30 September report by HVS Hospitality Services, a consulting and research firm for the hotel industry, says no city could escape the declining trend in occupancy levels in India, with Mumbai (-18.4%) and Jaipur (-16.1%) being the worst affected till then in 2009.
That’s one area where the new measures could help, by drawing in more guests to the luxury hotels, like Alila has done with its cheaper rooms.
European hotel chain Accor, which launched its Novotel hotel in Juhu in the second half of 2009, is stocking Indian wines because these are at least 20% cheaper than French and Australian wines. Trident, which stocks foreign wines, also offers Indian wine brands such as Sula and Grover.
The economy hotels are trying harder to rein in expenses.
For Ibis, Accor’s economy brand, the firm has engineered a building process to construct the hotels quickly and at minimum costs, said Jean-Michel Casse, senior vice-president, operations (India), Accor.
Ibis launched a hotel in Pune in November and is at the forefront of Accor’s expansion in India, with 14 hotels committed to development.
Large cities such as Mumbai and New Delhi contribute about 80% to the total revenue pool of the hotel industry, but JLL’s Jain says tier II and III cities too would considerably add to volumes.