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Indian Hospitality:The Shifting Equation

Tapping the Untapped

In the past five years, while the big cities such as Bangalore (74-59%), Hyderabad (63-55%) or Mumbai (80-73%) have shown a big drop in occupancy, small cities such as Kochi (75-81%), Bhopal (70-76%) have registered a positive demand despite the increased supply.

Anirudh opines, “The decision to develop hotels in any city is determined by the demand and supply scenario in the city and the type of product, corresponding development costs and expected ROIs from the project. Most small cities in the country are in a growing phase either from a Commercial or Industrial standpoint or from a leisure demand perspective. Should the city attract a fair quantum demand from either of these segments, it would perhaps make sense to develop a hotel project there. However, if the location is remote or unique, an inward looking development that makes the proposed hotel/resort a destination in itself may also be considered. Some hotels/resorts currently located in locations like Rishikesh, Kanha and Ranthambore are examples of the same. Additionally, a large scale convention centre development will more often than not induce demand in any market given the lack of quality large scale convention facilities in the country.”

We are observing a trend in the mid-market segment wherein primarily the business travelers, the SMEs and the unorganized sector business people are moving to newer towns and cities owing to business investment and expansion.

– PK MohanKumar

So, which are the smaller cities that have been the main attraction for the hospitality sector & why? Anirudh says, “Smaller Indian cities like Jaipur, Agra, Chandigarh, Surat, Kochi, Udaipur, Vadodara, Vizag, Amritsar, Shimla, Indore and so on already have a fairly large inventory of branded hotel rooms. These cities are either important destinations from a leisure demand point of view or are developing Commercial or Industrial zones that cater to demand from the Commercial segment. Going forward, as these smaller cities continue to develop and evolve, we anticipate hotel demand and supply to keep pace with each other.”

Markland Blaiklock, Senior VP, Sofitel Asia Pacificcounts the reason behind, “The growth in Tier II cities offer large untapped potential, as they already possess the basic amenities required to establish businesses. The ample availability of resources like land, skilled labor with the provision of connectivity helps set up shop for service providers. A 2010 study on these emerging Tier II cities of India by the UK Trade & Investment Board gives a summary of why developing partnership with companies in these cities would be beneficial in the long run.”

The growth in Tier II cities offer large untapped potential, as they already possess the basic amenities required to establish businesses.

– Markland Blaiklock

Cost management & Quality Assessment

Brands throughout the world maintain a certain level of quality in service delivery which adds a significant extra amount to the guest pocket which middle class Indian people still won’t be able to pay. Talking about the cost management practices done at Ginger Hotels, PK Mohan Kumar avers, “We are creating a culture of cost management in the system. We employ austerity measures across various departments such that there is smooth functioning of the hotel without compromising on the service quality.Some of the initiatives are cost-cutting in payroll, energy conservation and getting the right source of funding.

Tier II & III cities lack Cleaning & FM suppliers

While shifting its base to tier II & III cities, hotel operators’ priorities change, cleaning and maintenance department has to deal with new problems such as the lack of desired manpower, lack of the availability of right cleaning equipment, chemicals, and accessories. In case of budget hotels with 24 hr working environment (in three shifts), outsourcing the facilities has become a need to fulfil the demand within the budget assigned. Surface cleaning has been practiced once a day while super cleaning, a thorough cleaning of everything done at weekly basis. Budget hotels have to practice all this to cut the ARRs particulary when they are located in smaller cities.

After having worked at budget hotels as well as five star hotels across the country, Manish Jain, Executive Housekeeper – The Lalit, New Delhi avers, “ Five star hotels essentially prefer not only skilled but well-educated manpower which is difficult to meet in tier II & III cities. Getting the vendors and necessary equipment are the other hurdles that need to be addressed as it delays the hotel routine at times.”

Hence easier the cleaning companies and suppliers extend their availability in Tier II & III cities, sooner will they be able to tap the market.

“One of the things we have done is deploy design-led construction concept for easy maintenance with minimalist design. We have a standard design that is replicated across hotels. Also the interiors are designed in such a way that it is dust-proof thus reduces at least two hours of cleaning which in turn helps us save our maintenance cost. Ginger has also increased use of mill-made products. Mill-made products are fixed furniture such as wall cupboards, which are produced large-scale at lower costs. We are also developing a culture of smart travel wherein we encourage our employees to use economic means of transport and also maxim ones visit to a particular region thus helping us save on travel costs.” But the same can’t be practiced by a five-star hotel.

Markland speaks about the Sofitel practices and its sustainability through maintaining the excellent services, “Sofitel’s strength lies in its French heritage amalgamated with the local culture which helps us build our own brand differentiation and identity. We are focused on keeping our ear to the ground and delivering excellence be it in terms of F&B, design, MICE facilities or cultural events.”

With QoS ↑ Here Comes Cleaning & FM Industry

In five star hotels, Quality of Service (QoS) comes from their turned down services – the kind of Wine, Martini they offer to their guests – with a blend of their own culture or tradition which guests are willing to experience. “Each property is distinctive and designed keeping in mind the local flavour and charm. It provides everything you need to work productively, maximize down time, eat well and sleep soundly, and keeps your stay going smoothly, all at an exceptional value,” says Vijay.

It’s difficult to calculate the exact figures as rooms’ expenses include cleaning expenses, f&b expenses include cleaning expenses ….. Repairs & Maintenance charge for a stabilised property can range from anywhere between 4-5.5% of the gross hotel revenue depending on the positioning of the hotel.

Anirudh Katre

“Value-added features hotels offer today are inclusion of breakfast and wi-fi access in the room rate. Additionally, some hotels may offer airport or office transfers, discounts on laundry, F&B, and other hotel services and so on,” says Anirudh.

Ramakrishnan says, “At Marriott, we are the highly managed, profit oriented team managing the best of QoS. To keep altogether intact, we are now outsourcing parts of facility services such as laundry. With modern design and amenities, Marriott is known for providing consistent and reliable service at an exceptional value. We provide frequent travel programs that allows members to earn hotel points or airline miles for every dollar spent during each stay.”

Mohan Kumar shares, “We recently tied up with OCS Group; one of UK’s leading facilities services providers. The tie-up will ensure that OCS offers total facility management services to all Ginger Hotels across the country. This kind of a tie-up or partnership ensures that there is standardized service across all our properties. This standardization helps us to maintain the consistency of the brand and also give the customer a uniform experience at all our properties. A Ginger guest will have the same stay experience be it any property across India thus enabling us to forge a lasting relationship with him. Also the facilities management firm can directly deliver core services such as cleaning, hygiene, engineering, security and other services. The need to appoint multiple contractors is eliminated thus ensuring that there is smooth functioning of the hotel operations.”

All this abuzz, Hospitality sector might play the role of harbinger with over 300 brands coming to India with a projected investment of over US $200 billion creating US $10 billion business for Cleaning & FM Industry.

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