Mumbai: Plagued with a shortage of hotel rooms, companies in India have figured out ways to get around the problem.
Tech giants such as Infosys Technologies Ltd and Wipro Ltd are literally building in-house hotels and hostels across the country and others such as Citibank have gone the rented guest house route.
Now, the US-headquartered bank, which employs 22,000 people in India, is taking it one step further: It is considering outsourcing the management of its 35-40 guest houses across the country.
TravelOrg Holidays Pvt. Ltd, a travel solutions provider, has proposed taking over the management of all the guest houses operated by Citibank for a flat fee or run these on its own, guaranteeing Citigroup that it will get 40% of total available room nights for free.
This approach differs from contracting staff on hire for facilities management and is closer to management contracts that hotel owners give to companies such as Taj or Marriott.
“Companies whose core business is other than travel don’t want to get into the business of managing logistics, supplies, consumables, and supervision and upkeep of guest houses,” says Venkatesh K., CEO of TravelOrg. “Firms, however, do want to leverage the benefit of making available three- to five-star quality comfort to their employees travelling on work while leveraging the huge cost savings that a well managed guest house would offer, over hotel rooms,” he adds.
Indeed, not only are rooms in cities such as Bangalore and Mumbai hard to get at short notice, but also average room rates have shot through the roof. Budget hotels, which charged around Rs1,000-1,500 per night, are charging anywhere between Rs2,000 and Rs4,500. Five-star hotels in big cities, which charged between Rs4,500 and Rs6,000 per night, are commanding anywhere between Rs9,000 and Rs16,000.
Citigroup operates several businesses in India and has guest houses in 35-40 locations in the country that are overseen by caretakers and fall under the ambit of its Citi Realty Services, said a senior Citi official.
“One option being considered is to outsource staffing of all guest houses to a single entity; the other option is to let another professional firm take over management of the guest houses in toto,” said this Citi official, who cannot be named as per company policy.
TravelOrg has offered to bear all costs such as the lease payments and salaries of employees, maintenance, and upkeep and upgradation of the facilities from Citi if it takes over the management. “All the bank would need to do is to give us a four-day advance notice for a reservation. We will have the ability to sell the balance room nights using our network, which will help us recover the costs and turn a profit,” says Venkatesh.
In return for handing over the leased properties, TravelOrg, which runs a chain of Signature Crest serviced apartments, is also throwing in the option for Citi to be able to use the 40% room nights not just across its own guest-houses, but across the entire range of its branded serviced apartments in 21 locations countrywide.
Each of these serviced apartments, says Venkatesh, have been outfitted to three- to five-star standards and has a resident cook who prepares dishes as per the guests preferences, at the time of their choice.
With Signature Crest expanding to 40 locations in India and overseas in the next one year, the ability to use the free room nights across a wider cross section of locations and facilities is an option the bank is seriously considering, say Citi officials.
Citi would also start incurring costs if it needed rooms for more than 40% of the available room nights, but the travel firm says it’s willing to negotiate a bulk price.
Venkatesh says the Citi deal may take another quarter to close, adding, “Many more firms are negotiating with us for similar deals.”