IHCL will launch a new brand 'Selection' in April, says Puneet Chhatwal

Puneet Chhatwal, MD and CEO, Indian Hotels Company Ltd (IHCL), speaks about the financial performance of the company, brand positioning, Ginger hotels, expansion and competition, among others during an interview with Swati Khandelwal of Zee Business.

Let us know about the important changes that were implemented since you took charge at Indian Hotels?

A person alone cannot bring such an improvement in performance. So our management team has worked very well for the purpose. It has been almost a year-and-a-half when the team and industry experts, had a three-day long strategy meeting in Goa. It was the place, where the Aspiration 2022 was prepared. The file defines the ways to work. Later, the document was presented in front of the Board and was approved in February 2018 after which we haven't shifted our focus from it. There are certain criteria for success like our operational performance has helped us in gaining market share. In addition, waste reduction and cost optimisation helped us in increasing our profitability. We have signed about 20 hotels in the process. We also worked a lot, created new brands and closed extra expenses that were spent on silos. Lastly, Aspiration 2022 is just 20% of the journey that we had in the last five years. That is why the coming year or two would be very important for us. We have confidence in the abilities of our team, brands, and existing fundamentals of the industry and they are suggesting that we will continue to grow in this journey.

I would like to know about the way you strategised the positioning of your brands?

It is simple, and this is a place where I had some involvement and there is a reason behind it. I was lucky to spend 30 years of my life in Europe and see how the management works there. Interestingly, 15 of these 30 years were spent working with an American company. And, American companies are very strong in terms of brand. On the other side, our country, post independence never had such brands that turned up to be global. That is why people in India have a theoretical and superficial knowledge of brands. I don't want to say that no one has the knowledge, but the numbers are low. There is a trend in emerging markets where they follow the best brand. This is something that I saw here on my arrival, i.e., either they are Taj or little-bit Taj, for example, Vivanta by Taj, Taj Gateway Hotel and Taj Khazana among others. Thus, Taj was everywhere. What we did is that we allowed Taj to be Taj and removed its name from other things. So, it helped in ending the confusion. Besides, we openly said that we want to take part in every segment as it is available with other companies such as Tata Motors and Titan. They are in all segments from the lowest to the highest luxury segment. Thus, we want the same with Indian Hotels because India is a country of 1.3 billion people of different sections, which means you can get business from all these sections and we need that share too.

Won't this dilute your strategy of having a focus on the big ones? You also announced the Ginger brand to cater to the segment.

There are times when the time as well as the economy is not standing by your side and it is easy to talk about the past and suggest the ways that would have benefitted. But it was a great idea. 800 million people are your captive clientele and Ginger is needed to serve them. That is the captive clientele of Ginger brand, but they are not a captive clientele for the Taj brand. That is why I feel that the idea of Ginger was a brilliant one and now, we have given a fancy touch to it by changing its logo and design.

Tell us about something that didn't work for the brand, if you are saying that it was a great idea and I don't think that just the logo and website change can be a reason?

Maybe it's simplicity is a reason. It was not quite aspirational and that's why that we have changed its position and have started to define it as lean luxe instead of budget and economy. This means these are luxury hotels that are lean and mean in nature, that is cost-effective, where one can get almost everything like the atmosphere in the lobby music, guitar, play stations, opportunity to play soccer as well as rooms for your child.

You have said that you want to cater to each segment and it has potential. Then what is Taj? Is IHCL is planning to create more brands?

Taj is an absolute luxury and is at the top. It surpasses that bracket of being top when you will get into Umaid Bhawan Palaces like Lake Palace, Umaid Bhawan Place, Rambagh Palace and Jai Mahal Palace. These palaces are not a five-star hotel, but it is 7-star, 8-star, 9-star and 10-star hotels. It provides a different experience from arrival experience to old-world charm and the style of eating at Baradari along with local dances and music goes beyond five stars. So I think that we have Taj Palaces and Safaris which are at the top and it is followed by Taj Business and Resorts, which stands at the five-star level and Vivanta comes at the upscale level and then comes Ginger. Besides, we have also created a new brand, Selection, which will be launched in April 2019. It is not a brand but is a collection of brand names. So, we have signed a contract for Cidade de Goa and it will stand by its original name. Similarly, Ambassador Hotel Delhi will remain Ambassador and Connaught, we have bagged the contract to operate it, will remain the same. Savoy in Ooty will remain the same. It has been named as Selection because it is a selection of names or collection of the names.

Let us know about the future trends of the occupancy level for FY20?

There is a growth in demand in the upper-upscale and luxury segment and there is a growth in occupancy as well as the rates. And, this is something that we have seen till date. Presence of strong hotels in our portfolio has helped it in being ahead of the market.

The trend will continue?

It is so, to date. It may change if something unfortunate happens in the world, which is beyond our control.

Let us know us about the performance of the international business?

The natural expansion comes from the Middle East and South East Asia. We have a single hotel in Southeast Asia in Langkawi, Malaysia. Our focus for initial 18 months of the Aspiration 2022 was limited to the Indian subcontinent. Thus, we have six months in our hand. However, we have signed one hotel in Dubai, which is the fourth property in the country. Apart from this, we have signed one hotel in London (Heathrow) and Mecca each and Vivanta in Kathmandu. Thus, it will continue, but the main force can be seen only when we are very sure that our Aspiration 2022 is on track and is not crawling but running like Rajdhani Express.

In which segments acquisitions will be done?

In every segment but the question is where it is sensible. When it comes to India, then the land price for good properties are as good as 50% of the total cost and sometimes cash on cash doesn't make any sense and this is a hindrance. This is a reason why we will have to look towards the opportunities.

This means nothing is on the table at present?

Yes, we don't have anything for the next two months, but we are working on a fund structure with someone. It will ease the process of acquisitions for us.