By Nirupa Shankar THE BANGALORE market less than 10 years ago had only 2500 branded rooms. To give you a clearer picture, one hotel in Vegas, the MGM Grand with 3000 rooms, had more rooms than the entire city of Bangalore. Currently, we have between 9,500 to 10,000 branded rooms in the city. So it’s quadrupled in the last decade. Demand for occupancy has nearly kept up with this growth, the drop is merely between 2 and 3 per cent. The city averages occupancy of around 60 per cent, which is around the national average. What has really been hit are the ARRs. I remembering interning at the Leela Palace in Bangalore, during the glory days of charging Rs 20000 a night. Now the rates have halved. If you look at the next five years, I think room numbers will go up another 5,000 odd units. Everybody talks about hospitality being in a slump. Then, why is everybody still building? I think the reason people are building is that they are expecting a massive upsurge in demand thanks to domestic tourism, in another 5 to 8 years, I think sometime post 2020 or 2022. It seems now is the right time to build. I seriously believe that the slump is when you should build, so that you’re ready for the good times. I think Brigade is one of the few happy owners that operators like to interact with, because we were extremely careful about the capital investment that goes into the hotel. You can go really wrong while building the hotel by over specking the hotel and not controlling cost. No matter what you put into your hotel, the market will tell you what you charge and what you can't. A big brand may be able to charge a $1000 abroad but here in Bangalore, that is certainly not the case. Personally, when we look at a feasibility study, the thumb rule that works is very simple. Whatever your expected room rate is, your cost per key should be a thousand times that. Suppose your cost per key is around Rs 60,00,000, you should expect a rate of Rs 6000. If you follow that thumb rule by and large you will be safe. This has really helped us keep our costs in mind. If I am entering a market, say Kochi, I know that the average room rate is around Rs 3800 to Rs 5000 in the market, ideally you should have not paid more than Rs 50 lakhs per room. But that's not the case. It is usually double. But then, you come to the different reasons people build hotels., when costs sometimes seem justifiable. If you follow the rule though, it will help you service your debt, which is the most important thing because you want the hotel to be self-sufficient. Granted in hotels, you don't make money, but for seven years or in the first ten years you will recover the cost. Operators will tell you getting a super deluxe brand can cost you Rs 1.5 crores to Rs 1.25 crores per key, but in which market are you going to get Rs 15000 a room night? You guarantee me Rs 15,000, and I will spend Rs 1.5 crore a key. We have to push back now and that is what a lot of owners are doing, pushing back on the specs. As real estate developers, our current portfolio of two existing hotels (The Sheraton and the Grande Mercure at Koromangala) are doing very well. We have eight more hotels under construction. For a five star deluxe property you pay Rs 1 crore and above per key; for a five star its between Rs 80 lakh and a crore; 4 star should cost around Rs 60 to 80 lakh while a three star should not be more than Rs 35 to 45 lakhs’and I haven’t even factored in the cost of land. Land cost is a different beast. Typically, hotels do better when the land is on a long lease. Land is important part for developers. You have to source it, make sure its not too expensive’some experts say the value should not be more than 20 per cent of the cost, but the lower the better. Brigade as a whole has 8 ongoing hospitality projects. Four are under construction across South India. This year we will be opening two hotels. The Holiday Inn in Chennai and the Grand Mercure in Mysore. Another mid-market branded hotel is planned for Mysore and three mid-market hotels in Bangalore. We also have a five star property coming up in Kochi, right next to the World Trade Centre. The Author is Director, Brigade Hospitality. As told to Bikramjit Ray.
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By Bikramjit Ray BW HOTELIER caught up with Enam Ali, (see photo) British businessman of Bangladeshi descent and the founder of the British Curry Awards in 2005. Ali is also a restauranteur extraordinaire who has also advised the UK government when he was a member of the Home Office Hospitality sector advisory panel in 2008. We began by asking Ali how he began in the restaurant trade. Ali, began by explaining that he wanted to become a lawyer and arrived in the UK in 1974 with that purpose, but through various circumstances, he found himself finishing a hospitality management course in Bournemouth. ’I thought I would finish my course and go back to Bangladesh to become a big hotelier,’ he told BW Hotelier. In fact, he returned home in 1979 to do precisely that. ’I found, Bangladesh wasn’t really for me,’ he said, returning to the UK to become part of his family’s restaurant business--they ran 11 restaurants’where Ali ’managed some key areas and developing the business.’ ’Then I thought of starting my own restaurant and this is how the journey began. I love my profession. My real challenge is to be the chain maker, not the chain manager,’ he told us. What really drove him was doing things which other people cannot do. For Ali, the biggest challenge was to work with politicians to make them understand what the restaurant industry in Britain needed and addressing concerns over the laws which govern it. ’My visit to India is to see how you are doing in terms of restaurant development, to see the challenges of the industry here’, he said explaining his visit adding that the main reason he was in India was to ask for help in terms of skill development. ’I suggested to the government policy makers (in UK), to understand our problems and organise, without taxpayer burden. I want to take the huge skills available in India, on a temporary basis with British government approval, to upskilling our guys in UK. It would be a great help to keep the British high street spicy,’ he said, adding that he wanted to speak to officials in India about where to find the right skilled persons. The biggest challenge in the UK, he told us was the drain in the kitchen. ’There is no problem with front of the house, we can train anyone to do that, but the cooks and chefs who work in the kitchen are irreplaceable,’ he said, simply because many are families involved in the business where the younger generations want something different. Ali was enthusiastic after speaking with restauranteurs and the NRAI during the Indian Restaurant Congress in New Delhi, where BW Hotelier interviewed him. The author is Executive Editor at BW Hotelier.
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By BW Hotelier MERCURE HOTELS LAVASA, has been awarded the ’Best Mid-Market Hotel’ at the India Hospitality Awards - West and South which took place at the Crowne Plaza, Kochi. Manish Dayya, Area General Manager for AccorHotels’ Lavasa Hotels and Convention Centre, said ’The award is a source of great honor and pride to us, and we are glad to acknowledge this recognition. I want to thank all my fellow colleagues at Mercure Lavasa for their dedicated support and outstanding performance which has helped us achieve this benchmark by providing the best quality of services to our guests.’ As one of the thirty-one winners, Lavasa, which possesses the highly equipped MICE venue Lavasa International Convention Centre, has been recognized as the ’Best MICE Destination’. The awards were given away to the shortlisted nominees after a detailed scrutiny by the jury clubbed with votes earned through an online poll.
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By BW Hotelier THE 112-ROOM Renaissance Lucknow Hotel has appointed its leadership team led by Rahul Maini, as General Manager of the hotel (see photo left). Maini, a graduate from IHM, Ahmedabad, brings with him an extensive global hospitality experience, having worked in many cities around the world. His association with Marriott started in 2001 where he was the Food & Beverage executive at the Marriott Executive Apartments and Renaissance in Powai, Mumbai. Following his three year stint at the hotel, Rahul moved to the Taj Group where he worked in the F&B function at various hotels including the iconic Taj Lake Palace Udaipur. After spending over seven years at the Taj Group, Maini returned to the Marriott group to join the Courtyard by Marriott in Ahmedabad as Director of Operations in 2011. He has recently taken over as the General Manager at the Renaissance Lucknow hotel. The Renaissance Lucknow hotel as also appointed Praveen Sharma as Director of Sales & Marketing (see photo right). Sharma started his career at a travel company as a Sales Executive. Following this stint, Sharma held various positions in the hospitality and MICE industry, before joining the Marriott group in 2009. His first role at the Marriott Group was as part of the Global Sales team based in New Delhi. In 2012, Sharma joined the Courtyard by Marriott, Bhopal as Director of Sales before joining the Renaissance Lucknow Hotel in April this year. Sharma comes with over 16 years of experience and his expertise lies in development, strategic planning, customer relationship engagement, and pre opening with a complete understanding of the hospitality markets like Bhopal, Lucknow and Delhi.
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By BW Hotelier THE RESORT, Madh-Marve, Malad has announced the appointment of Satyajit Kotwal as its new General Manager. Prior to this, Kotwal was the Hotel Manager at Keys Hotel Temple Tree, Shirdi. In his new role and capacity at The Resort, Kotwal will be overseeing the hotel’s operations. Kotwal brings to the table a rich and diverse experience of over 10 years in the Hotel Operations, Human Resources, and Training sector. Armed with a degree in hospitality from the Institute of Hotel Management and Catering Technology, Mumbai, Kotwal has worked with some the leading hotels in the country in various capacities. He has also been associated with several cookery shows which have been featured in Zee Marathi and Mi Marathi channels. He shared his love for gastronomy with others when he wrote a cookbook titled The Perfect Indian Khana -- a collection of innovative recipes. Kotwal’s expertise and knowledge on hotel operations, positioning and financial as well as strategic focus will play a vital role in further developing The Resort’s position as the first choice for anyone seeking a luxury beach resort for Meetings, incentives, conferencing, exhibitions (MICE).
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By BW Hotelier VALUE INNS and Hotels India, has announced the appointment of Gaurav Sarin as Executive Vice President & COO. Sarin has over 16 years of experience in Sales, Marketing, Business/Franchise Development and Hospitality.- He also has good exposure in Hotel Pre-Openings, Revenue/Yield Management and Digital Marketing across various Hotel properties in India. Welcoming Sarin to the group Rohit Yadav Founder & Chairman, Miraya Investment Holdings Ltd (MIHL) said, ’Our plan is to make Value Inns & Hotels India a 100 hotel chain within the next 5-7 years and we are sure that Gaurav Sarin, with his proven track record in previous companies, will be able to spearhead the growth of our Group in hospitality’. Heading Value Inns & Hotels India, Sarin’s key responsibilities would include focusing on Plan & execute the ’Go-to-Market’ strategy for the Chain, Build the Organizational, Technological & Human resources for enhanced ’Value’ delivery to each VIHI sub-licensee / managed property hotel owner, complete P&L responsibility for India operations, and Expanding the Value Inns Worldwide & Value Hotels Worldwide brand franchise in India. Prior to Value Inns & Hotels India, Sarin was the National Operations Head (officiating) for Best Western India. He has also worked for Sarovar Hotels and Sayaji Hotels. A Master in Management Science, Sarin has maintained his focus on continual learning through regular MDP’s at IIM’s.
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By BW Hotelier INTERCONTINENTAL HOTELS Group (IHG-), announced the appointment of global water-use experts, the Water Footprint Network, to develop a worldwide water stewardship program for IHG. As part of the program, IHG and the Water Footprint Network will develop a deep understanding of IHG’s water usage at a local level, applying best practice techniques and behaviours to manage and reduce its water footprint. The partnership will build on the strong progress IHG is already making to reduce water consumption per occupied room in water-stressed areas, one of the company’s 2013-2017 Corporate Responsibility targets. Paul Snyder, Vice President of Corporate Responsibility ’ Environmental Sustainability, IHG, (see photo) commented: ’We are delighted to add the Water Footprint Network’s expertise to the great work we’re doing towards achieving our reduction targets around water consumption. IHG has a presence in nearly 100 countries, so ensuring we are good water stewards locally generates significant environmental and economic benefits for both IHG and the communities in which we operate.’ Ruth Mathews, Executive Director, Water Footprint Network, commented: ’We are very much looking forward to partnering with IHG to develop its global water stewardship program. IHG’s global scale gives us an opportunity to make both a broad and positive impact, as well as to inspire the millions of people and guests that work and stay in IHG’s hotels.’ IHG helps its hotels to manage freshwater usage through the company’s online environmental sustainability tool, IHG Green Engage system. In addition to water, the system gives hotels the ability to track how much carbon, and energy they are using, as well as to assess how waste is managed. IHG’s global estate of more than 4,900 hotels is enrolled, giving them access to more than 200 specific actions ’ or ’Green Solutions’ ’ designed to reduce hotels’ environmental impact. There are nearly 30 Green Solutions devoted solely to water. These include the ability to track consumption on a monthly basis, as well as guidance on more specific water-saving solutions such as metering, rainwater harvesting, and the installation of devices such as low-flow taps and showerheads. Such solutions helped IHG drive a 4.2 per cent reduction in water use per occupied room in water-stressed areas to the end of 2014.
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By Sourish Bhattacharyya IN A hard-hitting opening to the Indian Restaurant Congress on Tuesday, August 25, National Restaurant Association of India (NRAI) President Riyaaz Amlani (see photo) identified regulatory restrictions imposed by government, mainly municipal, agencies were the single largest irritant for the Rs 2,47,000-crore restaurant business, which employs the equivalent of the population of Switzerland (4.8 million people) and whose organised one-third contributes Rs 11,500 crore as taxes to state agencies. Amlani, who’s also the Founder-CEO and Managing Director of Impresario Entertainment and Hospitality Pvt. Ltd., likened this regulatory environment to ’the 500-pound gorilla in the room’, impeding the restaurant business more than rising input costs, growing employee attrition and other speed-breakers that come with the territory. ’If the regulatory environment changes, it will have an impact on your bottomline,’ he said at the inaugural session of the annual event organised by Franchise India, adding a dose of dark hilarity to the proceedings by mentioning the innovative heads, such as ’floral expenses’, under which under-the-table payments made to government inspectors have to be accounted for. The restaurant business in the country is ahead of the telecoms sector in size and value, and seven times larger than the hotels sector. Raising the perennially vexatious matter of the 30-odd licences and NOCs that each new restaurant anywhere in the country has to apply for and then keep renewing each year, Amlani said, ’I can retail clothes without a police licence, but I need one to sell food and drinks.’ The problem gets more complicated because of hyper local issues that restaurants have to deal with. The many laws governing the sector, moreover, varies from one state to the other. In Hyderabad, an excise licence costs a whopping Rs 35 lakh, but in Goa it comes for Rs 10,000 a year. Likewise, in most Indian states, the legal drinking age is either 18 or 21, but in Delhi, Punjab and Chandigarh, it is 25. The law in force in Mumbai requires a person consuming alcohol to carry a liquor licence issued by the Excise Department, where you have to admit you are an alcoholic. In New Delhi, the civic body, NDMC, doesn’t approve of alcohol being served in open space because the law doesn’t expressly permit it, although the excise department has no issues with it. ’Government agencies are allowing an archaic law override a huge revenue-generating opportunity,’ Amlani said in a telephone call after the event. If the government agencies clear up the regulatory mess, Amlani estimated the earnings from restaurants of state exchequers across the country will go up from the present level of Rs 11,500 crore to Rs 27,000 crore. ’The present system of licences has to be replaced by a registration system requiring restaurants to update their licences every three or five years, and not every year,’ he said. ’And of course, a single-window clearance system must be in place at once.’ Amlani’s other demands were to keep the Food Safety and Standards Authority of India (FSSAI) out of the restaurant sector’s hair (’it is redundant,’ he said); to end the system of getting an annually renewable licence from the weights and metrology department (’we use weighing scales only when we receive items,’ he reasoned); and to call off the unnecessary Ministry of Tourism verification. ’Restaurants give cities a personality,’ Amlani said, citing how Noma’s rise to international fame had led to a 20 per cent increase in tourist arrivals in Copenhagen. Is anybody listening? Inaugurating the Congress, Ritu Marya, Editor-in-Chief, Franchise India, pointed to the irony of India being the second most populous country and yet the 20th marketplace for food in the world. Is the regulatory environment responsible for this anomaly? Listening to Amlani, it seemed as if that was indeed the case. The author is Consulting Editor at BW Hotelier.-
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