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Business News/ Companies / People/  ‘It will take time for foreign tourists to start coming back’

‘It will take time for foreign tourists to start coming back’

The encouraging thing has been that in the past few weeks, we are starting to see select segments of travel bounce back, says Sanjiv Kapoor, President, Oberoi Hotels

Sanjiv Kapoor, President, Oberoi Hotels.Premium
Sanjiv Kapoor, President, Oberoi Hotels.

Airline industry veteran Sanjiv Kapoor has hit the ground running as the new president of the Oberoi Hotels & Resorts group, since both airlines and hotels deal in perishable commodities—plane seats and rooms—and the basic revenue management principles are the same. Kapoor, a former executive at SpiceJet Ltd and Vistara (Tata SIA Airlines Ltd) who took charge at the hospitality chain on 1 June, spoke of the pandemic’s severe blow to the travel and tourism industry, the emergence of green shoots and the need the to create new hotel brands within the company for the younger consumer. Edited excerpts:

What is your assessment of the impact of covid on the hospitality industry and the Oberoi Group?

It’s the worst crisis the travel industry globally has seen ever. It has been a completely unimaginable challenge because the first thing most countries in the world and, especially, India, did was lock down to contain the virus. There was no choice, but the travel industry did really suffer from that.

Wave one was tough because there was a complete lockdown for months. Then things started to come back and wave two was a shock because we thought the worst was over. We got back into pretty much a complete lockdown again even though the term was not used.

The encouraging thing has been that in the last two or three weeks, we are starting to see select segments of travel bounce back quite strongly. There’s a strong pent-up demand and a need to get away from the stress of lockdowns and the crisis.

For Indian travellers, especially for our segment which is more of premium and luxury segment, for well-heeled Indian travellers used to travelling abroad… that option is not there because borders are largely shut. So, they are travelling within India—which is powering the recovery of the demand. The recovery is being felt in the more high-end luxury segment. Our most exclusive resorts are the ones that are recovering the fastest. By definition, getaway travel means that it is leisure and it is more towards weekends. So, our resort properties up in Shimla, but also Vilas properties in Rajasthan and elsewhere are seeing a very good demand. It’s hard to get a room there during weekends.

Some amount of corporate travel has started to come back… there are some green shoots. People are keen on staycations or work from anywhere, so we are starting to see some of that also pick up during weekdays.

Have you been able to hold on to prices?

Among the city properties and among all hotels, if one goes to MakeMyTrip or and searches for city five-star hotels in Delhi, Mumbai or Bengaluru, the prices are extremely low right now. There is so much capacity built in these markets but corporate travel, the bread and butter for city hotels, has hardly come back. With high fixed cost and so much capacity, any revenue is better than no revenue and that’s why hotels are starting to discount heavily.

We are a premium brand and typically, we are not at the same discounted levels as others. Suffice it to say, we are all at a price point which is much lower than we would have been normally.

In our leisure properties though, especially our high-end properties, the weekend prices are just as good as they have been in the past. Weekday has come down a bit. We won’t discount beyond a point… I don’t think discounting will stimulate travel. People will travel if they feel safe. They are not going to sacrifice safety for a cheaper deal.

With more wealthy Indians unable to holiday abroad, will your guest profile change permanently?

In 2019, which was the last normal year because 2020 was impacted by covid, one-third of our overall guests were foreigners, but in our super luxury Vilas properties, more than half were foreigners. Today, in 2021, there are zero foreigners. Yet, the properties are full. Obviously, we have grown the Indian segment tremendously. That’s because the well-heeled have not been able to go abroad.

Having said that, once the borders start opening up, I expect some of these Indian travellers to go because there is pent-up demand to go abroad. And it may not be as quickly made up by incoming foreigners. So, when borders open up, we may see a net outflow of HNI without a corresponding increase in inflow of foreign travellers simply because, unfortunately given the wave two, how severe it was and how it was covered globally, it will take a little bit of more time for traditional foreign tourists to start coming. Corporate travel should start coming back before that.

You have different brands—Oberoi, the Vilas properties and Trident. Do you see the mix change as there is more leisure travel now?

I don’t think I am ready to comment whether the mix of properties will change. Of course, in the pandemic, the city business properties have suffered more… but I don’t think you can plan for long-term strategy basis a once-in-a-100-years event. We have seen our super premium properties do better but that doesn’t mean that’s always going to be the case. On how these properties are positioned, we have what I refer to as our seven-star properties which are our Vilas properties; they are in a league of their own and are in the top 10 hotels in the world list. Oberoi is the five-star luxury city properties in the metros. Trident is a notch below in both in price point and positioning, it is not five-star luxury, but it is five-star. What you are likely to see though is that we will likely start sharpening the positioning of these properties, differentiating them more clearly so that people understand exactly what they get when they go to a Vila as opposed to an Oberoi or to a Trident.

We will also be looking at potential new segments. The whole lifestyle segment among the younger people especially. There is reluctance among them to be associated with any known brands because they want to be supercool and exclusive. Globally, we have seen that major hotel brands have taken up lifestyle brands which nobody knows is owned by them because that would be a negative. So, it is a completely independent entity in terms of branding, positioning, pricing, experience… We certainly study those kinds of trends carefully and see what makes sense for us in terms of expanding our brands portfolio or creating new brands.

So, it could be a completely new brand?

It could be. What we’ve started to do is look at changing demographics, new segments, where the demand is, what the trends are and making sure that we are keeping pace with them.

Will you launch new properties or convert some of the old ones?

It is too early to talk about those details but we certainly will continually be looking at the product portfolio, and seeing what needs to change, be added, tweaked etc. Honestly, it’s not that the process started just now, but we are sharpening and accelerating it right now.

What does the younger consumer want?

There is a segment emerging – even people in their first jobs, the 20-somethings -- for them, lobbies are like social, networking hubs, highly wired, digitalized, with mood lighting, music playing soft rock. And the rooms are very functional. They are not uncomfortable but some of these hotels don’t even have room service as the customers want to get out of the room and socialize. So, there are new brands emerging globally which are focusing on social interaction, public areas, creating a clubby atmosphere, while they are simplifying the room experience because that traveller does not want to have a meal in the room.

What could aid faster recovery of the sector?

I think freedom of travel without restrictions for the fully vaccinated is something that would certainly help. While in India, 5-6% of the population is fully vaccinated which seems like a low number, I would guesstimate that 5-6% of the fully vaccinated probably represent 30-50% of the segment that travels by air and stays in star hotels. So, for us, that 5-6% is half our business volume. This segment has been vaccinated faster because vaccination has been done at a faster pace in metros and corporates also actively vaccinated their workforce.

Around the world, we are seeing more and more countries are opening up travel without restrictions for fully vaccinated who can prove their vaccination status. In India, we already have that technology because Aarogya Setu app shows one’s vaccination status.

Some states like Assam have allowed fully vaccinated tourists to visit without any test or quarantine. That should be done nationwide. Even inbound international tourists can be allowed to visit India given they can prove that they have taken either WHO or Indian government approved vaccines. Switzerland and Iceland have announced that Indians who have taken WHO-approved vaccines (Covishield) can enter their country without any testing, quarantine or restriction. For domestic travellers, there is already an app (CoWIN) that tracks vaccine status and for inbound tourists checks and controls can be set up probably before boarding at the airport. If this is done, it would prove to be a huge step towards recovery in our segment.

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Updated: 05 Jul 2021, 01:14 AM IST
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