Committed to growing outside India, but no desire to be next Marriott, Hyatt: Indian Hotels' Rakesh Sarna

Could you briefly gives us an overview of the company's business and how have things progressed in the year gone by?

Early 2015, we realigned the way we managed our businesses from a brand perspective to a region perspective. We are very pleased to share that we have had a tremendous progress in bringing our synergies. We also continue to be very self-critical and feel our foremost job is to make sure we build a sustainable value for our stakeholders. In the area of growth, we are delivering on our promise made a year ago in terms of divesting certain assets in the spirit of being 'asset right' and in some instances being 'asset light'. Proceeds from these divestments will be used not only to reduce our financial exposures, but also fuel growth.

How are you going about pursuing growth in the coming years?

Our growth agenda remains intact and we remain focused on our number one market for development i.e. India. We feel that the country's gateway cities – Mumbai, Delhi, Goa, Bangalore, Chennai and Hyderabad – are key to any company's quality of earnings going forward. But that doesn't mean we will take our focus away from the other markets like Kerala, North East and the Himalayas. We are going to do that as rightful custodians of Indian hospitality. We have a duty to make sure that this country has the coverage it deserves to expose its beauty to the rest of the world. We will also have to make sure that we never take our eyes off from the area of making money because making money is not a bad thing.

What about expansion in the international markets?

Outside of India, our plans will continue to be the same and enhancing presence in the Gulf Cooperation Council (GCC) countries and mainly places like Abu Dhabi, Muscat, Doha and Dubai will be our area of focus. We'd love to have a Taj branded hotel in Paris and Amsterdam, but frankly speaking that's not really our focus. Another area of focus will be South East Asia; mainly Thailand, Singapore, Vietnam, Cambodia are destinations we are striving to get into. Markets like Singapore, Tokyo and Seoul have very high barriers to entry with very intensive investments and we have no desire to take a financial exposure in areas where there is even an iota of risk.

There were plans to establish presence in China. What's the current status on the developments there?

In terms of our international development plans, China is on the list but not on the top of the list. Right now, GCC and South East Asia are our focus areas and on the top of the list. It's a must for us to be in Mumbai, Delhi and Dubai, but I am not sure that's the case with China. It will be wonderful to be in Beijing but not at the risk of exposing our balance-sheet. It's going to be an opportunistic strategy in China. We are working on a number of deals, but as you very well, management contracts take a lot of time to get there. The projects announced earlier have not fructified into operating hotels due to market challenges. So the earlier developments are on hold for variety of reasons that are out of our control. Having said that, the Taj hotel in Hainan is very active and just few weeks ago we met the owners who were in Mumbai to review the plans as there was a slight setback.

Taj has exited a few properties in the past and now the Boston hotel has been put on the block. Is the brand taking a beating in overseas?

The answer is no. In life you do many deals, some work and some don't. The Marrakech hotel was a good deal but some marriages are not going to work out and it's best to exit to keep our values intact. So there was a value issue with that property and we made the right call. On exiting the Sydney hotel, it was a financial decision which was good decision. So one could look at those two as markets where things didn't go well or one could look at the balance 13 and say all is may be not so wrong. So we are very committed to growing outside the borders of India but we are not going to be the next Marriott or Hyatt and we have no desire to be. We want to be in cities that add value to our guests, balance-sheet and brand equity.

The Marriott-Starwood merger is likely to change industry dynamics big time. Will that make it difficult for others hotel companies including IHCL to seek management contracts?

The combination of Marriott-Starwood will be of existing portfolio. What they will get in the future in terms of deals remains to be seen. That's because owners on both side of the table have certain emotional sentiments which I will leave it to them to share with you. We are not competing with them and to your point, their coming together will change some under-currents because of their loyalty programme and robustness of their distribution channel. But our focus is going to be very laser sharp and on certain segments. We are not looking to sign 500 management contracts in a fiscal, we don't have to build 30 brands and don't have to be in every city of the world. We commend them for that but their coming together does not equal to us going home. There is a segment of hotel owners' community out there that wants to be with smaller group like us because of the personal attention they get or the level of accountability they will get. So it depends on the character of the owner and the confidence of the brand and we believe Taj continues to enjoy a very strong brand equity. Besides, our deal traffic has not slowed down since the (Marriott-Starwood) announcement came in.

Any views on the aggregator segment that's picking pace?

Aggregator is not a bad word. It's just a distribution channel and we have to determine whether the cost of doing that business is worthy of us doing that business or not. We will work with them if it works for us and vice-versa.