Bangalore: Raymond Bickson, managing director and chief executive officer of the Indian Hotels Co. Ltd, was recently in Bangalore for the launch of its eighth property in the city.
Bickson was in the city almost a year after the unveiling of a Vivanta by Taj property in Whitefield, a Bangalore suburb. Around that time, he was spearheading the launch of the Vivanta by Taj brand. Some of the existing Taj properties were re-branded Vivanta, positioned as an “upper upscale” category, a step below the Taj “luxury” hotels.
Indian Hotels currently owns four brands in India—Taj, Vivanta by Taj, Gateway and Ginger—and runs 93 hotels in the country and 16 overseas. Hawaii-born Bickson, 53, who has about 35 years of experience in the hotel industry both in Europe and North America, joined the Taj group in 2003 from the Mark Hotel, New York.
Global presence: Bickson says the strategy of the company is to be present in the large top 25 markets, headed by North America and the UK in the second position.Aniruddha Chowdhury/Mint
He said in an interview that the Taj branding exercise was aimed at creating an identity and target customer profile for each of the categories.
During Bickson’s tenure, the group has returned to international markets, suffered a terrorist attack on the Taj Mahal Palace hotel in Mumbai and faced competition from overseas hospitality brands that have recently entered India. Edited excerpts:
How does a homegrown brand tackle competition from international hotels chains, most of them in the mid-market space (average room tariff of Rs4,000-5,500 a night), entering India?
There are as many as 47 international brands which are entering India and, as a domestic brand, we need to be on top of the game and protect our market share.
We are looking at growing organically and adding one new hotel every six weeks across our brands.
India has a total of 100,000 hotel rooms, but the demand is much higher at about 400,000-500,000 rooms, and domestic players are not enough to meet that sort of demand. It also helps that as part of the brand architecture roll-out, which is based on categories such as luxury, upper upscale, upscale and economy, we have brands catering to consumers in each of them. With this, Taj hotels is well poised to defend its market leadership position in India in an increasingly competitive landscape.
What is the market share of Indian Hotels in India?
It is approximately 20% of the organized sector in India and is across the brands.
What has prompted the group to set up hotels in international markets? What will the strategy be, going forward?
We got into overseas markets in order to strengthen our domestic brand and to protect our market share. After exiting the international market in 1999, we re-entered in 2005 with a new property in New York. This was followed by another one in Boston. We have 16 international properties now, including one that we opened in Cape Town and we are in the process (of opening) another one in Marrakech.
We also want to be in China. The strategy is to be present in the large top 25 markets, headed by North America and the UK in the second position. We are also looking to be present in markets that include emerging economies and where the Tata group has a presence, and where our business comes from. India has about 8-9 million outbound Indians every year, more than the number of foreigners coming in and that is going to grow.
What is the road map for Indian Hotels over the next five years?
We believe there is a gap to fill between our Ginger and Gateway brands, our economy and upscale brands, respectively, and so we will enter this segment with a new mid-scale brand in the next two years. I also see maximum growth happening in the Vivanta by Taj, Gateway and Ginger segments in India.
For the next three years, we intend to have 175 hotels with 20,000 rooms in India and outside. About $3 billion (Rs14,250 crore today) will be invested in the construction of the new properties that are under way, while we would run many of them on management contracts.
What has been the impact of economic uncertainty on your business? Will we see a tariff rise this year given the current challenges in the sector?
Starting September, we are increasing the tariff 7-15%, depending on the market, which will take care of inflationary costs. I don’t think the Indian hospitality sector is impacted with a slowdown...it’s (currently) at 2008 levels. (While) 2007 was the best year in terms of occupancy levels...from October to March, we are seeing good occupancy levels at 65-70%.
But there are other challenges. Infrastructure growth such as road transport and overall accessibility need to match up with the demand in the hospitality sector.
Acquiring land and approvals is another challenge. In Singapore, you need 11 approvals to set up a hotel, in India you would need 120!
The Taj group’s signature restaurants include Blue Ginger, Wasabi and the Masala series. Anything planned in the food and beverage (F&B) business?
We have as many as 400 restaurants across cities with some prominent brands and chefs and about 40-50% of our revenues come from the F&B business.
Interestingly, nearly 95% of our revenues in the F&B business come from local residents, literally from the neighbourhood. But we are now revisiting some of our brands to see which are the concepts that work here and also concepts that can travel. Internationally, for example, Bombay Brasserie, which is the popular restaurant in London, has now been opened in the Taj Cape Town property and is doing well.
What are your observations on the customer profile over the last few years?
I tell people outside India that the rising middle class here is equipped with a driver and domestic help, and is very demanding and even spoilt. Indian customers are also food savvy and know their food well. Even when the (no-frills) Ginger hotels were first opened, it initially met with some resistance because it was modelled on self-service, but people got used to it.
How has life changed after the 2008 terrorist attack?
Things change and you become security conscious, and it becomes a part of life. Approximately 350 Taj staffers underwent counselling sessions after the incident. We have a security company today which is very successful and trains our staff.