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Akshay Kumar

Akshay Kumar

In the last decade, the Indian market has seen a sudden boom in the hospitality segment. Many new chains have entered this market successfully. Moreover, this segment has also attracted a lot of real estate players. A lot of these real estate players entered the space with luxury and upscale projects, but most of them had to either sell or close shops. One major question prevails; can hospitality business fetch similar growth as real estate? According to some experts, ‘No’, hospitality industry requires serious players and more dedicated hospitality experts to run the business. Over the years even the lending pattern by the banks and financial institutions has changed. Banks have now become more cautious while lending. But still a lot has to change in the lending business. In more established markets like the US, hotels pool in funds for much longer periods with a lower rate of interest whereas in India banks lend at much higher rate for a shorter period.

One of the key sessions in HICSA discussed about the lending pattern of the banks. The session titled, ‘The Great Indian Hotel Debt’, was moderated by one of the leading industry expert Kartick Maheshwari, Partner, Khaitan & Co. The session included eminent speakers which included; Anoop Bali, Chief General Manager and CFO, Tourism Finance Corporation of India; Ashwin Mehta, Managing Director, Pankti Management Consultancy; Conrad D’Souza, Member of Executive Management and Chief Investor Relations Officer, HDFC; Nitin Arora, Sr. Vice President CCG, Axis Bank; Punit Malik, Group President and MD Corporate Finance, Yes Bank

Speaking about the current scenario of the hospitality lendings and the latest trends, D’Souza said, “In the early 2000’s, developers saw hotel business as real estate. But in 2008-09, a lot of developers saw challenges when it came to completion of projects and getting operators. That made the ARR’s decline. Now that phase has gone, we are now in an inflexion point. People will see more consolidations happening now. The big challenge now is to get long term capitals. We need lenders with more patience.”

Speaking about the focus favourable choice from a banker’s perspective Arora said, “Budget and Midscale segment are always favourable for us. Also the location of the project matters a lot. When it comes to chains or standalone hotels, we generally prefer chains. As they have a much bigger presence and their brandings are more. Also most of the bookings happen online for branded properties and the fetch more value than the independent hotels.”

Bali said that never compare the hospitality segment with real estate. He further added, “Stress happens while lending to luxury and upscale brands. Midscale segment is stable. After 2010, the supply has become more than demand. Hotels could not get good occupancy. Promoters had challenges due to this instability. A lot of the hotels that were opened during this boom have shut or changed hands. Only the serious players are still there and they will continue to be in the industry. Do not compare the hospitality business to real estate business. A lot of real estate players have invested into this business but they couldn’t take off.”

Mehta who is from a consultancy had a different opinion and he feels that the hotel investment faces a huge challenge of undercapitalisation. He said, “Hospitality is a capital intensive industry. In India we are capital short. Most of the projects are under-invested and bankers have to pump in more. Undercapitalisation is a huge challenge in this market. Short tenure capital is again a challenge. Now bankers have started lending for 10 to 15 years tenure, which is a good sign.”

Further the panellists discussed about trends in investment. Also are banks looking at lending for new projects at the moment?

Arora said, “We have done a couple of Greenfield and brownfield projects, as a bank we fund both. But we lend by strong promoters and conservatory numbers and backed by debt equity and the competition. My personal opinion is refinancing an existing hotel as there is an asset here. Hospitality is a good business for banks. It is an interesting space, but we invest with precaution.”

Malik feels that investment in Tier I markets are far safer than investing into smaller cities, as the dynamics changes rapidly. He said, “Last few years there have been a lot of Greenfield projects. Now I am not seeing any new hotels coming soon. We also do a lot of refinancing and have learnt a lot from the past. We usually prefer to invest in Tier I cities as we have not had any good experience at the Tier II cities. In these smaller cities the dynamics changes rapidly. Also, we prefer experienced operators. We are open to support new projects in future.”

Contradiction Malik’s opinion on the smaller cities, Bali said, “There are two types of promoters; hospitality people and the real estate players who thought of making money. Real estate players went into the luxury space and mixed development projects. We have started funding more budget hotels in the Tier II and III markets and have never faced any issue. Typically the Indian market depends on the domestic customers. Future of Indian hospitality will be good as there will be more competition.”

Last year the Government of India passed the Bankruptcy and insolvency act 2016. This code acts as a new security for the investors.

When asked about will this code help in recovery of debts Bali said, “With the new code coming in, institutions have been given strength to recover debts. Now suppose we file a case with NCLT, insolvency professionals will move in and resolve the issue in 180 days with an extension of 90 days. Creditors can now set conditions and only the Supreme Court can put a stay order. Promoters will be now willing to settle the debts to bank on time, which is a good step. But still the code is in a very nascent stage. It is based on the US and UK’s insolvency code. This will surely help us to recover from bad assets. Even promoters and unsecured creditors can approach and file a case, he added.

Genting Dream is all set to be home ported year-round in Singapore from December 3, 2017. This 18 deck cruise can accommodate upto 3,400 guests and is specifically customised for the Asian market. India has emerged as one of the focus source market for this vessel. Last year, on a relocation journey the cruise was docked in Mumbai and had welcomed around 2000 guests from this market.

Speaking about the development of India market, Thatcher Brown, President, Dream Cruises said, “India has always been a key focus market for us. We do a lot of callings to Mumbai. Right now there is no plan to homeport in Mumbai. But in our major plans, we want to develop the fly cruising segment from India to Singapore.”

Speaking about the deployment in Singapore, GB Srithar, Regional Director, South Asia, Middle East and Africa (SAMEA), Singapore Tourism Board said, “We are extremely happy about the development. We along with Genting are committed to development of the cruising sector in the South East Asian region. As of now our key priority is to make cruising a popular product as a holiday option. In the cruise tourism segment we witnessed a 16 per cent growth in 2016.” 

Dream Cruises, Genting Dream has recently launched a two night weekend sailing from Hong Kong. Weekend cruising is a new concept which has now started picking up in the India market. The year 2016 and 2017 has witnessed a lot of long weekends which is further giving a boost to this segment.

Speaking about the growth of weekend cruising from India Naresh Rawal, VP Sales - India, South Asia, Russia, Middle East and South Africa, Star Cruises said, “At Genting Cruise Lines we are optimistic of this steady growth as cruising today is fast reaching the wider leisure market in India, especially with the emergence of new visible trends in the local cruise tourism market. Indian vacationers no longer take long annual holidays they prefer two or three short holidays throughout the year and when the short holidays  is clubbed with a two Nights weekend cruise, the vacation package is an absolute value for money deal. Year on year we are finding an increase in the number of guest travelling on weekend cruise and feel that the segment already made its Niche.”

He further added, “Genting Dream, the first –ever Asian luxury cruise lines has been considered as a very successful and positive deployment. The feedback has been very assertive. We have received great support from travel trade. Look forward to the continuous support with more and more guest coming onboard the cruise experiencing a perfect blend of the premium luxury with our warm hospitality.”

Recently Genting Cruise Lines, hosted its first ‘Travel Agent and Media Partner Forum’ onboard Genting Dream. Genting Cruise Lines welcomed more than 350 senior executives, travel agents and media partners from 11 countries around the world including Australia, China, India, Indonesia, Japan, Korea, Malaysia, Philippines, Singapore, Thailand and Vietnam. During the three-day event, participants learned about Genting Cruise Lines' latest cruise product updates, such as SuperStar Virgo’s inaugural homeport deployment in Shanghai – the “Golden Sea Route” cruises to Osaka, Tokyo, Mt. Fuji and Kagoshima; SuperStar Gemini’s inaugural homeport deployment in Bangkok to Sihanoukville, Koh Kong Island and Ko Samui; as well as the Okinawa Festival to take place on Genting Dream, throughout her summer deployment from dual homeports of Hong Kong and Nansha to Okinawa.

Michael Goh, ‎Senior Vice President- Sales, Star Cruises said, “India is a great market for us. We see double digit growth from this market year on year. Consumers from India are looking for more and more events on the cruises. Also we have seen a growth in the family and friends holiday. We are familiar with what the Indian travellers want.”

Speaking about the current trends from the India market Rawal said, “Cruising is one of the most developing forms of holiday from the Asian Subcontinent. More and more Indians are adopting themselves to take a cruise holiday. Today a cruise ship can cater to all kinds of holiday maker which may be from Families with children, Senior citizens, honeymooners and the MICE market which is the most evolving segment. More and more people are choosing cruises because it is an all-inclusive package which not only takes care of the stay but also includes meals, entertainment and covering various destinations at the same price. It is hard to plan a land based holiday which has a mixture of all of these at an affordable price. I see a paradigm shift today cruise passengers have evolved from the regular 2 Nights itinerary to longer 7 nights itinerary and are now with high demand for Balconies and Suites cabins.”

Beginning as a world-class theme park, Adlabs Imagica has today transformed itself as a destination in itself. With the addition of a Water Park, Novotel Imagica, and lately the Snow Park, the destination has already welcomed around 45,00,000 travellers since inception.

Speaking about the Park Pooja Shetty, Joint MD, Adlabs Imagica said, “We have built Imagica to bring a real world-class family entertainment to India. Some of the parks that we have are much smaller in size, even from an investment perspective. We are trying to create an entertainment destination in India, with many parks and option to stay as well. Since we have opened, we have already welcomed 45, 00,000 people. We have received around 33 per cent of our total visitors from outside our catchment area that is Mumbai and Pune. We are very encouraged by this as people are travelling and making effort to come and experience our park.”

Adlabs Imagica has now also gone a step ahead to promote the destination. They have now tied-up with MTDC to create a day package to Imagica which can add a great boost to their footfall. Also, the destination is now planning to target travellers from across the Indian Subcontinent.

Shetty said, “From an expansion perspective, we have had advanced conversations with MTDC. They have the Mumbai Darshan package and it is very popular. The second level of package which they will have is the Imagica day package. So we are very excited about the association which will happen within a month. It will be a big push for us. When it comes to promotion, we cover all of the main 10-12 cities in our non catchment areas in India. We will now also expand to promote ourselves in Nepal, Bangladesh, and Sri Lanka and open up these markets as well. As any international travel outside to any other destination for travellers in those countries will cost them five to six times. So from cost value perspective and a holiday perspective it’s a much more affordable option, and it’s a world class option.”

One of the major segments for the park is the students segment. The park also has facilities wherein students can come for educational purpose and learn about the physics of the rides.

Shetty said, “We have seen a lot of school kids come to our park. On an average every year we welcome 1, 50,000 kids. Some come for plain excursion and rest for an edutainment experience. So we have created a format where some of our seniors will explain the physics and the technology to the students and they can also enjoy the rides.”

With the growing demand for the park, Novotel Imagica has witnessed occupancies as high as 85 per cent. To further accommodate travellers the Park has tied-up with various hotels in the vicinity. Also they have partnered with Ola to provide better connectivity.

Speaking about the development Shetty added, “We have guests come and stay for minimum one or two nights. We have made several packages around that. Our team has tied up with additional 1200 hotel in the area, so that if Novotel Imagica cannot cater to more guests, we can accommodate our customers there. From an expansion point of view we would like to have more rooms, as currently the hotel is running at 80-85 per cent occupancy and we feel that more families should come and enjoy the destination. We have a whole gamut of options.”

The destination has also witnessed an increase in the MICE segment.

The year 2016-17 has been quite a happening year for the state as well as for Manipur Tourism. Despite the unstable conditions that prevailed in the state throughout the year, Manipur witnessed continued visitor arrivals from across the country as well as from other countries. The domestic tourist inflow was 121,088 and the foreign tourist inflow was 2,444 between Apr. 2016-Jan. 2017 and we are expecting a marked increase in the arrival figures this year.

Manipur Tourism, of late, is focusing on marketing and promotion of tourism destinations. What is your promotional plan for 2017 and what will be the focus area?

We consider marketing and publicity as one of our primary mandates in our effort to develop and promote tourism in the state. Currently, we are concentrating on increasing the awareness levels of our tourist                destinations through promotional campaigns targeted at specific markets. We will focus our promotional activities on advertisements, destination information dissemination, and participation at travel related events across India and public relations activities for this year.

Which are the destinations and circuits that you have identified to promote in 2017 aggressively?

Manipur offers everything from high bluish-green mountains offering trekking routes to mysterious caves and virgin forests. Keeping in mind these varied attractions; we are not focusing our efforts at a particular destination. Our promotional campaign will be spread across a number of tourist spots in the state in a way that will help advance the overall growth of tourism in the state. Indeed, the need of the hour is to increase the exposure of the state as a must visit destination to inbound travelers from other states through a number of events and coordinated marketing efforts.

Sangai Festival has already been quite popular and drawing a lot of domestic and foreign tourists. You are now launching the Shirui Festival. What are the main features of this festival? How is the preparation?

Ukhrul is a beautiful hill district and home to our endangered state flower ‘The Shirui Lily’. The Department recognizes the importance of Shirui Lily as the State Flower of Manipur and the event is a part of its efforts to develop and implement sustainable and responsible tourism in the state and save the endangered Shirui Lily. The festival will be a stage for the state to highlight its rich cultural heritage and diverse tourist attractions besides promoting state unity. It will have an array of displays and exciting performances starting from the live music, cultural shows, beauty pageants, exhibits, folk songs, traditional dances and indigenous games and sports to indigenous competitions like the Shirui Lily Grand Prix this year.

Unlike previous editions, this year’s Shirui Lily Festival is being organised at the state level under the sponsorship of the Manipur Tourism for the first time. We are currently finalising the preparations for the festival and we expect the festival to assume greater significance in the coming years by drawing participation of various Indian states, foreign traders and cultural troupes.

Which are your main source markets in India and abroad?

The eastern and southern part of India contributes the highest number of visitor arrivals to our state. However, we also draw a lot of visitors from other parts of India. Our annual calendar festivals like the Manipur Sangai Festival attract a lot of travelers from across the world. Apart from occasional visits from adventure lovers from across the world there are a number of visitors who come for knowledge tourism.

What initiatives are you taking to draw private investments to develop tourism related infrastructure?

We are looking at private sector from a long term perspective. We are taking up initiatives to involve them in creating the required facilities to support tourism activities in the state which includes accommodation, integrated tourist hubs, golf courses etc. We expect them to assume collective responsibility for the growth of tourism in the state.

The United Nations World Tourism Organisation (UNWTO) has signed a memorandum of understanding (MoU) with Qatar for the World Tourism Day 2017. UNWTO celebrates September 27 as the World Tourism Day. The MoU was signed today by Taleb Rifai, Secretary General, UNWTO and Hassan Al- Ibrahim, Chief Tourism Development Officer, Qatar Tourism Authority. World Tourism Day 2017 will be celebrated under the theme of “Sustainable Tourism – a tool for development”.

Rifai said, "We are extremely happy to celebrate the World Tourism Day this year in a Arab Nation. Qatar has been selected as the destination to host the celebration. I am looking forward to celebrating World Tourism Day in collaboration with Qatar which is a very prominent and emerging tourism destination."

Last year, the celebration was hosted by Thailand. Qatar is now one of the emerging destinations for tourism. The destination is also the host nation for major events like the Football World Cup in 2022, which will be a huge boost for tourism in the region.

Al- Ibrahim said, "Qatar considers tourism as a priority sector as our leaders are very serious about this segment. Tourism is still at a nascent stage in our region and is slowly becoming a key segment in our economy. We already have a lot of players who are keen to invest in our nation. Qatar is proud to be the host for the World Tourism Day 2017. We are very bullish to expand tourism but in a sustainable manner. Also with the football world cup coming, we are sure that tourism will become a major revenue source for our people."

With the recent acquisition of the Sarovar Hotels, Louvre Group of Hotel has now taken a giant stride in the mid market segment in India. Now, with close to 100 hotels in India, Vimal Singh, Managing Director, Louvre Group of Hotels (South East Asia) speaks about the way forward in this market.

 

How will the recent acquisition of Sarovar Hotels impact the Indian mid-market hotel industry?

The acquisition of Sarovar Hotels is going to create a large international platform for mid market hotels in India. It provides a large distribution channel for existing Sarovar Hotels. Mid market is a high growth market segment and since we have over 100 hotels in this segment, we will have major impact on the global distribution system, sales and marketing and reservations pipeline.

This portfolio acquisition of a management company could be the turning point for the Indian hospitality industry. What is your take on this?

International chains have already consolidated their local positions by acquiring India based master franchise to acquire the balance off share to make it a wholly subsidiary of a parent company.  In the international market acquisition of a management company is not unusual. However, we acquired an Indian domestic brand to create larger foot prints, unlike the other hospitality brands.

How do you want to bring alignment between these two groups?

We are currently working on bringing synergies between both the brands and we see tremendous opportunities in distribution, reservations, sales and marketing and all back end operations.

What is the overall expansion plan of Louvre and Sarovar in India?

We are looking at mutual growth for both Louvre Hotels and Sarovar. We will continue to nurture and provide support to each other and take the experience and the depth of both the organization to expand the brand within the region and globally. For instance, Sarovar has hotels in Africa and we are going to use that platform to grow our brand in African region and similarly Sarovar will be using Louvre platform to grow the brand presence in various international markets.

Apart from Golden Tulip, Louvre Hotel Group has five other established brands globally, any plans to introduce these brands in India market?

Louvre is planning to introduce the 3 more brands in India – Première Classe, a limited-service budget hotel that focuses on comfort, connectivity and convenience Campanile and Kyriad are the other mid-market brand that we will bring to the region soon.

In the recent years there have been a lot of acquisitions in the hospitality industry, is this the way forward?

Hospitality as an industry has been changing by day. The hotel companies are getting larger through mergers and they are driven by developing greater distribution platform, brand loyalty and customer acquisition so they can offer a wide range of brands and prices to the customers. Louvre Hotels Group is a subsidiary of Jin Jiang International Holdings Co., Ltd. and with the acquisition of Sarovar Hotels; currently we have over 100 million Loyalty members which is a huge pipeline for our business both globally and in the region.

British Airways has deployed the Boeing 787-9 Dreamliner between London and Mumbai route. Earlier the carrier used to fly a Boeing 777. With this new deployment the Airline has invested more in the premium products between London and Mumbai. The new aircraft features a brand new First cabin.

Speaking about the new deployment Robert Williams, Head of Sales - Asia Pacific and the Middle East, British Airways said, “India is a very important market for us, we are investing a lot in this market. Earlier we had introduced a Boeing 787-9 Dreamliner between New Delhi- London which has been successful. We have been hearing a lot of positive feedback from our Delhi travellers who have flown the 787-9. The new aircraft will feature a total of eight first class seats, 42 ClubWorld seats, 39 World Traveller Plus premium economy seats, 172 economy seats. So the new aircraft is longer than the B787-8, we have invested in first class cabin. It’s an improved customer proposition.”

Speaking about the demand for premium products from the India market Williams said that British Airways aircrafts have a significant number of premium cabin seats. We still maintain a first class in many of our aircrafts. There is a huge demand for premium cabin seats from India to London, hence we have invested.

Recently, the US government has announced restrictions on the type of electronic items that may be carried onboard flights to the US from certain Middle-Eastern airports, majority of Indian travellers flying to US transit through these Airports.

Williams said, “We are not affected by the policy. Customers travelling from India and US will not be affected if travelling with British Airways. Travellers can carry all their devices without checking it in and carry in our flights. We have a strong network and connection to the US.”

From next year British Airways will induct A350s in their fleets. William said that they are in the middle of huge investment in fleets for Short haul and long haul fleets.

The airline currently operates 49 flights a week from Delhi, Mumbai, Chennai, Bengaluru and Hyderabad to London. All flights land at the London Heathrow Terminal 5.

Air India has agreed to the proposal from TAAI, after recent meeting, that they must remunerate all IATA agencies irrespective of their size, for the sale of all Domestic & International Passages.

The emphasis was to connect Air India with more IATA agencies in India and have them ticket directly. Sunil Kumar, President, TAAI said, “What's the point that our National Carrier is not actively sold directly by a large percentage of IATA agencies in India? Currently most agencies are compelled to pick up tickets from an intermediary and not an Airline and the current initiative by Air India will be of great significance to change this trend.”

This decision by Air India is reflective of the National Airline's prominence in India, which is so important for every Airline in its own country. The additional two per cent to every IATA agency without any target is an excellent move to offer Air India, the ‘market leadership’ in India. In most countries of the world, the national carrier has a huge prominence and there's great loyalty exhibited from the Travel Agencies and passengers.

 

 Kumar added, “This move can be a game-changer and offer to Air India an opportunity to win over the market.  We appreciate and acknowledge this initiative from Air India and thank them to have considered this proposal from TAAI.”

 

2016: A better year for the industry

While inbound arrivals to India witnessed a growth over 10 per cent in 2016, domestic and outbound segments have also registered a higher growth compared to 2015

The year 2016 seems to be a better year for the Indian tourism industry compared to 2015. The Foreign Tourist Arrivals (FTAs) during the period January - October, 2016 were 6.96 million with a growth of 10.5 per cent as compared to the FTAs of 6.29 million with a growth of 4.5 per cent in the corresponding period last year. Speaking at the WTM 2016, Mahesh Sharma, Union Tourism Minister (I/C), said that the Indian tourism outlook is certainly very promising with an upswing in the growth of FTAs in India in the recent years. The Minister said that India has set a target to achieve one per cent of international tourist arrivals through a multi-pronged approach, including proactive marketing strategies in partnership with the tourism stakeholders.

By end of the year 2016, India is expected to receive a record nine million foreign tourists in the current calendar year. "We may reach around nine million this year. A key factor behind the growth is the e-visa regime. It has now come into full implementation. It is a fact that it was announced in the end of 2014 but it could not have an effect in 2015 as initially it was done for 113 countries. Now, we have over 150 countries. Moreover, there is always a reaction time between launch and use,” Vinod Zutshi, Secretary, Ministry of Tourism, said at various industry forums.

The increase in inbound arrivals is the result of various proactive programmes implemented by the Ministry of Tourism (MoT) during the year. The expansion of e Tourist Visa from 113 countries to close to 160 countries, launch of 24x7 toll free tourist infoline, setting up of Task Force for promoting cruise tourism, Bharat Parv, hosting of BRICS Convention on Tourism, Incredible India Tourism Investors Summit, New Civil Aviation Policy and overall emphasis on infrastructure development across the country. Overall, the Ministry of Tourism and the industry have done all they can to keep the tourism numbers up through the year, making strong trends for 2016.

 

Emerging Scenario:

SP Jain, Managing Director, Pride Hotels, opines that the hospitality sector is showing positive growth after the recession period of 3-4 years. “We are expecting that the hospitality sector will grow with an average rate of 10-12 per cent within next 4-5 years. This is happening due to multiple reason mainly improvement in the domestic tourist and e-TV for foreign tourist and secondly the supply of new hotels has come down in comparison to earlier,” Jain adds. Echoing similar sentiments is Pradeep Kalra, Senior VP – Sales & Marketing, Sarovar Hotels. According to Kalra, the industry has experienced reasonable growth in recent years. “Going forward, the potential is immense that will enable good scope to expand with rising purchasing power, improved connectivity and initiatives taken by the Government. Fragmentation and consolidation will be key drivers of change in the industry. Domestic travellers will continue to lead the demand and with the decrease in supply, we expect upsurge in rates in the coming months,” Kalra adds. SN Srivastava, President and Co-founder, Clarks Inn Group of Hotels, says that growth in businesses and, travel and tourism is largely responsible for demand of hotel rooms and not much has changed on this front in the last few years. “Growth in domestic corporate and business travel as well as leisure markets have been strong and driving growth, both in new development and hotel business,” Srivstava says and adds that the country is on the cusp of becoming an economic superpower. However, he believes that demonetisation will have an impact on new development in the short term but that also means better revenue if new supplies are delayed.

Karan Anand—Head, Relationships, Cox & Kings, captures the emerging scenario in terms of inbound, domestic and outbound. According to Anand, the government has taken a proactive interest in the promotion of inbound tourism. “This year, the Investor Summit and the partnership with WTM were promoted extensively by the government and this indicates that they are very serious about tourism development and promotion,” he says. In the domestic tourism space, Anand opines that the government’s regional connectivity plan, if implemented efficiently, can open up huge possibilities. “Outbound is a segment which continues to grow and the challenge before us is to service the clientele. A very positive development in the last one year is the direct connectivity between secondary airports such as Jaipur, Lucknow, and Chandigarh to destinations in Thailand, Dubai and Singapore,” he adds.

Mahesh Iyer, Chief Operating Officer, Thomas Cook (India), says that the Indian travel and tourism industry has entered into an exciting era. “Young India is powering today’s travel growth story and at Thomas Cook we’ve witnessed a growing emergence of millennial travellers. Immersive travel is one of the major market trends as Indian travellers exhibiting a strong desire to experience the unique and off-beat, with engaging and enriching experiences. Moreover, middle India’s tier –II &III markets have been a strong powerhouse for us this year too and the brag worthiness of travel, coupled with rising disposable income were key drivers,” Iyer adds.

Sunirmol Ghosh, Director, Indo Asia Leisure Services, also see the emerging scenario from inbound, domestic and outbound perspectives. “Inbound has seen a very dismal scenario and I will say this is an amalgamation of the wrong and not well thought over policies of the MoT. The private enterprise has kept no stones un-turned to rev up the business but the pull strategy is almost non-existent. The decision makers at MoT have yet not understood that the foreign tourist will not buy what the country is doing for itself. Their decision making will be influenced by the media and TV reports and advertisement. Its a pity that in spite of the big talks the international marketing thrust has yet not been released in its full blown style and size. An half-hearted approach is what is failing us,” he opines. However, according to Ghosh, the domestic tourism is keeping the smiles on the face of the hoteliers in every segment. Everyone has enough business from this segment. “The outbound market has been growing with leaps and bound,” he informs.

 

Better performance for hotels

Rishi Puri, VP, Lords Hotels & Resorts, informs that his Group added four properties taking the hotel count to 26. “2016 began with the launch of a new property in Jammu followed by three new properties in Agra, Bangalore and Thrissur. Presently, our emphasis is on consolidation and improving existing operations but we will also, even if passively, be looking for good opportunities to expand our footprint across the country and abroad. We will shortly open another hotel property in Bharuch which will make it fifteen properties for Lords Hotels & Resorts in Gujarat alone,” Puri adds.

He reveals that Lords Hotels has registered a little over 61 per cent occupancy across the chain through 2016. “It has been a better year with six per cent increase in occupancy against the same period, last year. Although in the months to come there may be stagnation in bookings and the Christmas and New Year celebrations may be a little dampened as a consequence of the demonetisation decision made earlier in November,”Puri says.

Clarks Inn has also witnessed a robust growth in 2016 with the addition of about 16 odd properties to their portfolio that includes eight operational hotels. “We are hopeful of having 100 hotels with over 50 in operations in 2017. With the current development pipeline that we are working on, we are quite positive about achieving this target,” Srivastava says. Clarks Inn currently has a portfolio of 75 hotel properties, including 40 in operation with a footprint that covers 17 states in India and Nepal. “We are yet to have the final year-end figures, but in most of our property revenue has gone up by 7-9 per cent, with a small increase in ARR as well,” Srivastava adds.

For Pride Hotels also, 2016 has been a good year as it has added new property under the Pride Plaza Brand at Aerocity, New Delhi. “We are expecting to increase our turn-over 45 per cent to 50 per cent in comparison to last year due to the addition of Delhi property and improvement of occupancy in other hotels. We are performing around eight per cent to 10 per cent upward in comparison to last year. In the current year occupancy is increasing but the ARR is not increasing so that is the reason the bottom line showing only nominal growth,” he says.

2016 also becomes an eventful year for Sarovar. “Apart from openings in Chennai – Vandalur, Dehradun, Bangalore and Bhavnagar, we opened the first branded hotel in Palampur. We also became one of the early birds to set footprints in South Sudan by taking over the management of the Panorama Sarovar Portico in Juba. In 2017, we will step in to newer destinations such as Jaisalmer, Ranchi, Raipur, Amritsar and New Delhi – Kapashera and open our third hotel in Nairobi in January,” Kalra says.

 

Travel companies also bullish

While hoteliers are satisfied with the performance of their hotels, travel companies are also not lagging behind. For Thomas Cook (India), the hybrid Clicks & Bricks model was a strategy that has worked strongly in their favour in 2016. “We deployed our omni-channel presence to maximum advantage. We strengthened our online presence with a slew of easy to book-buy launches. We were also quick to seize first mover advantage with strong partnerships like Airbnb, Vista Rooms in the accommodation space; Fino PayTech for the Remittances business and agreements with MasterCard for our prepaid cards amongst others,” he informs.

Cox & Kings also sees 2016 as a very productive year as it has seen the growth on the expected lines. “Going into 2017, we are very bullish on the opportunities that lie ahead of us. The year 2016 was a significant year for Cox & Kings in terms of the overall business growth and we grew more than the industry average. There is a significant growth in demand for travel from tier II & III cities,” he says and adds that the company expanded its school tours segment with some distinct offerings. “Besides this, we are promoting various destinations in Maharashtra too through Deccan Odyssey. Several new concepts like ‘weddings on wheels’ were introduced specially for Deccan Odyssey,” Anand reveals.

However, Ghosh candidly admits that they have struggled to keep floating. “We have managed to sail through the crisis when the inbound was down 25 per cent through our huge agents network and regularly opening up new markets for us. Its a pity that the Govt is still sleeping and has no clear cut policy in place to promote Destination India. In 2017, we will be happy to do our numbers as much as last year. We will now even have to take the hit of drop in outbound business due to the demonetisation,” Ghosh adds.

 

Domestic V/s Overseas

According to Ghosh, the domestic market has emerged as a saviour for the tourism industry, followed by outbound and the worse has been the inbound. “Domestic conferences and outbound incentives has become stronger for us even after the demonetisation we do not see any drop in this segment. The contribution of inbound V/s outbound in our overall business is almost 1:1. But in the inbound, we can not take into account the cost of the airfares to India and back. But in the outbound the international airfare is part of the top line,” Ghosh says.

Kalra informs that the mix of business is specific to locations. Bengaluru, Hyderabad, Mumbai and Delhi NCR have strong contributions from overseas markets. “Amongst leisure destinations Agra, Jaipur, Jodhpur, Goa, Pondicherry too are driven by inbound tourism in winter months,” he says.

Most of the Clarks Inn hotels are located in business hubs largely catering to domestic corporate and business travellers. “Even hill stations where we are expanding our footprints are not much visited by foreign tourists. So it’s a very small percentage really but we are outlining strategies that will help us boost our inbound share,” shares Srivastava

“Our properties in Jaipur, Agra, Jodhpur and Bangalore have maximum foreign check-ins. Also locations including Dahej, Ankleshwar, Rajula and Bhavnagar record high number of foreigners but as business check-ins. It is in the leisure properties that we have witnessed most domestic check-ins including our properties at Thrissur, Saputara, Gir, and Silvassa,” Puri says.

 

Marketing Strategy

For Thomas Cook (India), the marketing delivery for 2016 was both sharp and strategic with their holiday campaigns like “Bachat ka Badsha” to inspire the innate value-seeker psyche of Indians travellers, its quirky and trending #Nomorefakeations; Travel Smart, Drive Easy campaign to drive the significant shift to card payments. “We chose apt media to optimise ROI- so a clever blend of OOH, online, print, TV and radio. 2017 will include unerring focus on innovative and impactful marcom to drive our business objectives,” Iyer says. Ghosh aims to consolidate the company’s business.

“Our strategy for the coming year will be to strengthen our online distribution segment which has seen an exponential growth. Secondly, we are also aggressively focusing on expanding our footprints both in destinations unrepresented so far and overseas particularly Africa,” Kalra says. Clarks Inn is lining up to strengthen their sales and marketing plans. “A strong Media campaign, Print and online for sure, but we are also considering electronic, and Public Relation exercise to reach to various segment of trade and consumers,” Srivastava adds. Lords Hotels, which recently participated in WTM London, plan to participate in the Pacific Asia Travel Mart (PATA) where it will even look at strengthening our network and possible mergers in the APAC regions.

 

Blurb :

"We may reach around 9 million this year.” - Vinod Zutshi

“The hospitality sector will grow with an average rate of 10-12 per cent.” - S P Jain

“We are hopeful of having 100 hotels with over 50 in operations in 2017.” - S N Srivastava

We will now even have to take the hit of drop in outbound business due to the demonetization.” - Sunirmol Ghosh

 

Reinventing opulence

Luxury hotels are constantly striving to improve their services by focusing on changing consumer preferences

With a growing economy and disposable income, emergent middle class, people’s propensity to spend on the vacations to make it memorable, rising consumer brand consciousness along with changing lifestyle and consumer shift towards luxurious living amongst others are propelling the demand for luxury travel globally. Industry trends suggest that an increasing number of people are ready to spend a lot of money for quality and unique experiences. According to a report by ITB Berlin and IPK International, luxury travel has grown twice with a 48 per cent increase in the last five years while other types of international trips grew only by 24 per cent. The report further states that 46 million travellers undertook international luxury trips in 2014 and the market share of these trips increased from 3.9 per cent in 2009 to 4.6 per cent in 2014. This trend is expected to accelerate over the next decade, with a CAGR of 6.2 per cent projected for luxury travel against an overall growth rate of 4.8 per cent.

Realising the pace of growth and a consistently growing market, global hotel chains are trying their level best to tap the potential of this market. The global luxury hotels market stood at US$148.6 bn in 2014 and is predicted to reach US$195.2 bn by 2021. Luxury hotels have consistently been innovating to improve their services to meet the increasing demand for unique customer services. They have upgraded their services and offerings such as complimentary champagne on arrival, spa and massage treatment for guests and special dinner arrangements for customers.

 

Defining Luxury

Luxury means different things to different people and this is especially true today. “Luxury travel is about exceptional experiences. It has less to do with Michelin stars, thread count and other hardware aspects, while leaning more towards unique and memorable experiences. It is an amalgam of privacy and uniqueness. Personalised and intuitive service is the cornerstone of luxury travel ,” opines Raghu Menon, General Manager, The Ritz-Carlton, Bangalore. TJ Joulak, General Manager, W Goa, says that luxury today is shifting rapidly from ‘having’ to ‘being’ from owning a product to experiencing one. “Each person has their own individual definition of luxury. Today, our guests are the true arbiters of what luxury is, which is really important. To me, luxury is still about exclusivity, about attention to detail, sumptuous atmosphere and discerning good taste,” Joulak says and adds that the luxury travellers today are much more knowledgeable, adventurous and their expectations of their experiences have also radically changed. According to Srijan Vadhera, General Manager, Fairmont Jaipur, various lifestyle arenas have evolved to include services and goods, initially categorised as luxurious as an inclusive offering to enhance the overall experiences for customers. “While addressing emerging trends in luxury travel, the hospitality industry is an ideal example wherein luxury as an experience is continuously evolving. While the definition of luxury changes from one person to the next, we hoteliers are entrusted with the task of identifying the requirements of each guest and finding innovative ways to cater to them,” Vadhera adds. According to him, luxury as a concept is synonymous with India’s rich cultural and social heritage. “Thus the global luxury traveller is drawn to India owing to the diverse experiential possibilities our country has to offer; be it the mystical lure of our majestic architecture and the varied cultures or the geographical layout that could take a visitor from the Himalayan peaks to the beaches along the Indian Ocean,” he adds.

 

Growing potential

The millennial generation is geared to pleasure rather than possessions. “The Indian luxury travel market is expected to cross US$18.3 bn by the end of 2016. Indian Luxury market is poised to expand fivefold in next three years and the number of millionaires are expected to multiply three times in another five years,” Joulak says and opines that India is on the cusp of a new golden age of luxury travel as technology and globalisation drive new trade routes, capital flows and wealth creation. “As domestic travel increases and Indian travellers continue to demand more sophistication in terms of both quality and experience, we have significant opportunity to grow our brands across the spectrum in gateway cities as well as in resort destinations,” Joulak adds.

Vadhera also feels the same. “The luxury travel segment in India is growing by leaps and bounds. We are beginning to see many international brands entering the market with properties that are synonymous with luxury in every which way. Our economy is booming comparatively to many other scenarios thus boasting a healthier spend ratio. So, while the growing number of HNIs in India are very lucrative outbound travellers for various countries, their spend within the country plays a major role in many ways. Destination weddings within India at exotic locales, FITs etc. all contribute to the growth of our luxury travel industry,” Vadhera says.

According to Menon, luxury travel market in India is certainly on an upswing and more unique cultural experiences and exceptional activities are being offered within that segment. “Indians are now seeking a new and evolved kind of luxury travel –where an exclusive and personalised experience is the watchword. The Indian destination wedding market is booming, with unique and special destinations emerging the favourite with new couples. Though mass market travel is something we can’t rule out, the slice of luxury travel is firm and possibly growing,” Menon adds.

 

Changing profile

Replying to a question over how today’s luxury travellers are different from older luxury travel consumers, Joulak says that today 85 per cent of our guests hail from generations X and Y, and the brand is uniquely positioned to cater to this emerging and ever-more global generation of affluent travelers, which we call as “The Disruptors”. “These are guests who want to experience what’s new and next in the most unconventional way. The Indian traveler is a lot more sensitive and demanding towards luxury and W‘s lifestyle positioning is perfectly poised to leverage this opportunity. An obsessive lust for a life drives the typical W guest to push boundaries, demand more, experience it all and hit repeat,” Joulak adds.

Vadhera also echoes the similar opinion. “I would consider the former to be a more exploratory avatar of the latter – while both exist and have their own distinct contributions towards the luxury travel industry. The more traditional luxury traveller is a major steady contributor to various institutions within the travel sector. They are of a more conservative mindset, comfortable with choices that stem from earlier experiences,” he says.

As affluent millennial travellers are emerging as one of the important segments for luxury travel, Vadhera sees change in trends from joint households to more nuclear families wherein global exposure comes at a very early age. “With younger people fueling more important jobs across the globe in every arena, incomes are on the rise and so are spend. Adventure, luxury goods, bespoke experiences all play an important role in their day-to-day lives. The world is their oyster and they won’t have it any other way,” Vadhera says.

Menon feels that wealthy millennials are increasingly setting new travel trends, especially in Asia. “What these travellers are looking for, are unique and experiential holidays. Local flavors in the destinations they arrive by way of culinary experiences or craft cocktails are what they are seeking. Social media and friends’ recommendations are their yardstick for the coolest destinations. Studies indicate that ‘stuff’ is unimportant, millennials are not seeking to own. They simply want fluid access in the form of experiences.”

Indira Banerjee, Director - Sales and Strategic planning, The Imperial, New Delhi says that millennials do not believe in the concept of ‘tomorrow’, for them everything is ‘Now’. “They are prepared to go to offbeat destinations rather than the ‘usual suspects’ and this is what sets them apart from the previous generation of travelers,” she says.

 

Offering authentic experiences

“W Hotels are unique and individual expressions of modern living, which is reflected in the brand’s sensibility of holistic lifestyle experiences. Goa, with its vibrant, cosmopolitan vibe and beautiful surroundings- beach, cliffs, rocks and the warmth and cheer of the people- it has it all. Our brands are differentiated from a lifestyle perspective and not from a price point, with every brand and each hotel; we constantly try to create unique experiences which are true to the brand’s identity. W Goa offers a chance of detox, retox and repeat experience at one place. One can unwind completely in our boldly-decorated guestrooms, suites, chalets and villas spread out across our secluded coastal setting. Adding to this our very own W Insider Rashila Lobo, is always there to make sure your endless appetite to discover what’s new/next is never missed, breaking norms to see more, feel more, go longer, stay later,” Joulak informs.

The Ritz-Carlton’s afternoon tea is an experience most luxury travellers don’t want to miss as it gives them a sense of place and abundance. “Product innovations can never undermine experiences, so for us, we would like to focus more on the experiential journey of a guest. One on one cooking experiences led by our chef and a crafted meal at the Chef’s Table make for an unforgettable experience as much as evening sundowners where craft cocktails jostle for supremacy with stunning city views from our rooftop bar, Bang,” Menon says.

Fairmont offers adventure excursions, heritage walks, hot air balloon rides and cultural performances amongst others. “We are truly a modern day palace hotel, one which resonates the architectural brilliance of the land it is situated in. We offer experiences that are authentically local, in hotels and resorts of unrivalled presence. At Fairmont Jaipur we believe in turning moments into memories for our guests through our engaging service, the unrivalled presence…,” Vadhera says.

Banerjee says that to The Imperial is authentic in the real sense of the words. “From the greeting of ‘Namaskar’ with folded hands to a traditional ‘Arti Tikka Welcome’ – the experience is authentic and unique. Apart from this guests can choose to learn traditional Indian cooking with our highly qualified chefs, learn how to drape a traditional saree, and even engage with our staff during one of the many festivals that we celebrate in the hotel,” she adds.

 

An arty affair

Along with food, art is now also taking a central place in luxury travel. Vadhera feels that art is a healthy cross connects to see various aspects within what we define as the ‘luxury & lifestyle’ specter come together in any manner. “Art is and always has been an important player within the lifestyle arena and has seen constant growth owing to its rising demand as a luxury good throughout the world,” he opines.

“The carefully curated art collection comprising of more than 1200 pieces from acclaimed national as well as international artists and sculptors gives guests a unique experience. The Ritz Carlton Bangalore showcases some of the most majestic designs to ever be adorned in an international hotel by eminent artists from around the world. Each piece of art, display or carving, exemplifies the ultra luxurious elegance of the hotel,” Menon informs. The Ritz Carlton Bangalore features the work of artists such as the master of life-size figurative Robert St. Croix, the renowned sculptor Alexandra Gestin, the legendary Cuban sculptor Manuel Carbonell, our home-bound landscape artist PareshMaity and the celebrated Indian abstract painter Revati Sharma Singh.

According to Joulak, design is one of the key passion points of W hotels, it defies expectations and sparks imaginations. “Art is one of the elements that sums up to a design and it is becoming a key element in a luxury place. However, in W we do not see art in a conventional way, especially in a hotel space. W Goa has craftsmanship from different artistes, selected from different dialects and none of them have any similarity in their work, but still the way they blend with the whole design is quite amusing,” Joulak says.

The Imperial and ‘Art’ can actually be used as synonyms – with Imperial boasting of some of the finest collection of art at display in the entire country. “It is no less than an art museum in itself – with a collection of over 4500 paintings and artefacts on display. We also conduct an ‘Art Tour’ of the hotel where one of our executives gives the guests a description of the art on display in our public areas – and this art tour is extremely popular with our guests,” Banerjee says.

 

Sustainability

While focusing on offering luxury services, these hotels do not forget their role of keeping the environment intact. “Responsible or mindful luxury is what we profess and we are very vigilant of the impact that our luxury has on the environment. This falls directly under the purview of our Community Footprints, an initiative integral to every Ritz-Carlton across the world,” Menon says.

According to Joulak, ‘going sustainable’ has become a vital aspect for any business venture of any industry. “At W Goa we have a legacy of caring for the communities in which we operate, so Global Citizenship comes naturally to us. Our work focuses on the environment and our communities and leverages our people, our brands, our relationships and our global reach, because we are uniquely equipped to help our talents and guests create a better world to experience,” he says. Fairmont Hotels & Resorts also embraces environmentally sustainable business practices and continues to seek new ways to proactively green our operations.

 

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