If you want us to cover your story or to do an interview kindly send your request to face2face@hospitalityindia.com
- Only happy employees can make customers king - An interview with Patu Keswani, CMD, Lemon Tree Hotels. (Posted on 5/06/2007)
- We weren’t running with the times - An interview with M.S. Manchanda, acting chairman and managing director, ITDC. (Posted on 8/04/2006)
- Provide value-added travel services - An interview with Gordon Wilson, President and CEO (International Markets), Cendant Travel Distribution Services. (Posted on 11/03/2006)
Only happy employees can make customers king - An interview with Patu Keswani, CMD, Lemon Tree Hotels. (Posted on 5/06/2007)
You cannot have happy customers when you have unhappy employees, says Patu Keswani, CMD of the Gurgaon based Lemon Tree Hotels. His passion for the hotel industry drew Mr.Keswani, to set up Lemon Tree and Red Fox hotels in early 2002. In the first few years of operations, private equity giant Warburg Pincus has picked up a 27% stake in both the hotels.
You seem to sell Lemon Tree as a refreshingly
different brand through shock-the-conservative
management style. For instance, your site shows
a couple of four-legged creatures on the management
team?
It tells a lot about our culture. We genuinely believe in the fun element in our workplace. When a customer logs in he gets an immediate feel of Lemon Tree Hotels. The challenge is in ensuring that the culture does not decay. Our dogs do what we say they do.
Will Lemon Tree move away from its current
upscale budget branding to set up five-star hotels?
Never. Today we have a clear advantage. The market may change after seven years and we may have to change tack accordingly. Currently, we are eating into five-star hotel sales. Around 75% of our guests are five-star users. We are offering a good product at a good price. Currently, we are price followers but soon we will be price drivers. There is an over supply of five-star hotels. The hotel business in India will grow. Budget and mid-priced hotels will expand the market and push five-star culture in hotels to the brink.
What role will acquisitions play in your
overall strategy?
Our strategy is to stay in the mid-priced and economy hotels. After having set up new properties across the country, we will look at existing hotel properties in the domestic market. We have been approached by TFCI (Tourism Finance Corporation of India) to buy 12 hotel properties, which are not money-spinners. We will make acquisitions but not at top of the cycle because then the yields are low. We will buy hotels and design and operate them accordingly. I will not make any distress acquisitions. I do not believe in paying a premium for someone else's mistakes.
Hotel is all about consumers and management
issues. You seem to tackle the issue well.
If I keep my employees happy and motivated, they will keep customers happy. It makes good business sense for me. I have seen that large organisations have pockets without soul and that occasionally affects people. We do not live to work. There has to be a clear work-life balance. I strongly believe that you cannot have happy customers if you have unhappy employees. We have high customer return ratios and our shareholders are happy. Around 30% of our customers are repeat customers, who are willing to pay a premium to stay in our hotels.
Has the wealth-sharing concept given adequate
returns?
Absolutely, our attrition rates are the lowest. Employees gain from ESOPs and we are using this as a wealth creating opportunity and as a retention tool. Currently, 17 employees are millionaires due to ESOPs and this number is set to increase in the next few years. It is not only about wealth sharing but also about tapping different pools of talent. We plan to empower the disposed and disabled.
Is hospitality in India and the developed
markets comparable in branding and service?
As markets, India and he US are completely different. There is a heavy demand for service in India. The three-star hotels in the US give half the service of five-star hotels, but three-star hotels in India give 90% of the service in India. Product is cheap in the US but that is not true in India. Service is cheap here, but land and project costs are huge. Therefore, a typically global model will not work in India. It has to be localized around the demands of the Indian consumer. By cutting out the extravaganza, you can offer the product at 50-60% of the five-star cost.
What are the major challenges before Indian
hospitality industry?
The steep land costs, restrictive government regulations
and rising wage costs. I am quite sure that at
least half the promised 120,000 rooms may not
be built. I feel conversion rate will be as low
as 40%. Real estate prices have shot up and land
price accounts for 60% of the cost as against
20% of a hotel project cost till a couple of years
ago. This will push up the price point for rooms
across the board. A correction of at least 20-25%
in room rates is expected. Courtesy Economic
Times
We weren’t running with the times - An interview with M.S. Manchanda, acting chairman and managing director, ITDC. (Posted on 8/04/2006)
The story of the Rs.350 crore tourism and hospitality major, India Tourism Development Corporation (ITDC), is typical of many PSU's search for identity, post disinvestments. M S Manchanda, acting chairman and managing director, ITDC, has been with the organisation for 34 years, where he started off as a trainee. He shares an insider's view of what went wrong with ITDC and how the organisation is learning to stand on its feet and now getting ready to run.
You've seen this organisation from close quarters, how it grew and floundered over the years. What ails ITDC?
We were perhaps not running with the times. We
had a large number of hotels in our portfolio.
The product had to be upgraded and renovated from
time to time. We needed to fund them properly
so that they could compete in the market. Our
focus is now to consolidate our position and be
up-to-date. We shall be at par with, or have an
edge over other private hotels over the next two
years. From now on we will take timely action
and be ready to take on competition. We are getting
ready for the Commonwealth Games 2010.
You took charge at a time when ITDC was going through an identity crisis. What has been the trust over the past one year?
Immediately after disinvestments, both business and the morale of employees went down. Out of 26 ITDC properties, 18 hotels were divested between 2001 and 2003. This disturbed our existing businesses. We have now chalked out plans to renovate our prime property at Delhi, The Ashok. We also plan to expand our existing network of duty-free shops. We will have duty-free outlets in the new airports, railway stations and outposts bordering Pakistan and seaports like Mumbai to tap international cruise traffic.
Ashok Travel and Tour, our ticketing and tour operations, is looking at entering the outbound travel business, while the engineering consultancy services division is helping state governments to build tourism-related infrastructure. The thrust of our hotel division is now on conference and convention business. The twin properties of The Ashok and Samrat offer over 800 rooms with 14 conference halls besides a convention centre that can house over 2,000 people. All our divisions are being forced to get business from outside. We are also focusing on more private-public partnerships to shore up our business. The thrust is to consolidate our operations to increase turnover and profit.
What were the lessons learnt from the last year's scotchgate scandal?
The key lesson is that we need to be a good negotiator when buying products and pass on the value to our guests. I have personally monitored the best price of various products offered by ITDC. We have ensured that manuals are filled and followed strictly. As a result the basic cost of procurement by our duty-free shops has gone down by 16% over the last one year. Our market share may go down due to increasing competition but we plan to increase our volume of business by becoming a wholesaler in the duty-free business.
How was the financial performance of ITDC in 2005-2006?
We are still in the process of compiling the numbers but we expect to record a turnover of over Rs.400 crore as against Rs.350 crore registered in the year ending March'05. All divisions have registered substantial increase in their performance. Net profit is likely to be up by 30% in FY2005-06. The duty-free business contributes as much as 38% to our topline with 30% coming from our hotel division while other divisions such as ticketing, event management and engineering consultancy account for the remaining. Our events division is actively pushing for international conferences. The idea is to create our own brand as The Ashok group. In fact, around 27% of our hotel occupancy is accounted for by conventions and meetings.
Other factors such as reduction in our wage bill
by around 20% over the last one year have also
helped to improve performance. We have brought
down our staff strength from 3,524 to 2,881 as
of now. However as business grows we now feel
the need to hire around 30-odd fresh management
specialists in various divisions. Courtesy
Economic Times
Provide value-added travel services - An interview with Gordon Wilson, President and CEO (International Markets), Cendant Travel Distribution Services. (Posted on 11/03/2006)
Gordon Wilson, president and CEO (International Markets), Cendant Travel Distribution Services, part of $18-billion Cendant Corporation, spoke on how its technology solutions will help travel intermediaries to deliver better service and enhance their business.
How important is the Indian market for Cendant?
India is an important strategic market that offers excellent growth opportunity for all of our businesses. We plan to continue utilizing India's excellent IT and BPO resources to support our global technology platforms and customer services. We will leverage our technology to deliver more content to the travel agent. Apart from driving an increasing number of international travelers to India, we plan to offer enhanced solutions to Indian hotel groups.
Galileo India, Cendant's Global Distribution System, is estimated to occupy 36.9% market share in India - one out of every three travel transactions out of India takes place on Cendant. India currently contains 28% of all Galileo terminals in Asia.
Going forward, we plan to target the retail and leisure market with Galileo Leisure that will be rolled out in April. Through Galileo Leisure we will be integrating the entire inventory of Gulliver's Travel Associates. The inventory being offered will include 23,000 hotels, 3,000 car rental locations, 3,000 apartments and villas, 2,500 transfers. Galileo Leisure offers flexibility for each individual market to meet the content demands of the agents of that particular market.
How sustainable is the India growth story
in the travel business?
India offers huge growth opportunities with the travel and tourism demand estimated to grow by 10.9% over 2006-15. There are more travelers within Asia than those traveling from Asia to Europe and America. The intra-Asia travel market was around 105-million strong in '04. In comparison, around 33 million are traveling to and fro between Europe and Asia and around 17 million travel between Asia and Americas. Within America itself the intra-travel was worth around 94 million.
Coming to India, the entire GDS market grew by 21% in 2005. This growth has come riding on the demand created by India's growing middle class population. Going forward, we can expect exponential growth in travel business in India. Average air trips per citizen per annum in the US was 2.2 in 2004, on a base of 285-million strong population. The figure was 1 for EU with a population of 350 million. However in the case of India, this figure is just 0.02 with population over 1 billion. India has just 178 aircraft in 2004 while the figure for the US was 6,537.
How does that translate into increasing Cendant's investments in India?
Cendant in India has presence in hospitality, car rental, travel distribution and development of technology solutions and supporting our global back-end services. We are present in India through eBookers and Interglobe Technologies. We have leveraged India's prowess in the IT space for developing a passenger reservations system for low-cost carriers, in association with a Trivandrum-based IT company. We hope to double India head-count over the next five years.
With travel distribution companies like Cendant offering end-to-end solutions, are the days of travel agents offering vanilla services numbered?
For travel agents, the days of making money only through selling of tickets is gone. They have to sell experiences and add value to the experiences of travelers. What is important for travel agents is to look for ways to go further up the value chain. In fact, Cendant with its product portfolio is in a position to help them grow. We plan to increase or interaction with travel agents to protect the long-term growth of the travel industry.
Global distribution systems like Galileo are increasingly
aggregating air and non-air content like hotel
packages, car rentals on their platform. This
helps travel agents to offer full services, thereby
increasing the value they bring and the revenues
they can drive. As a result travel agents become
less reliant on traditional commissions as their
source of income. Courtesy Economic Times
|
