Chander Baljee, CMD, Royal Orchid & Regenta Hotels is a veteran hospitality thought leader and an expert on owned, leased, managed and franchised hotel models. His success story features in a book titled ‘Stay Hungry Stay Foolish’ which follows the professional journey of 25 IIM Ahmedabad entrepreneurs. In an exclusive interview with Steena Joy, he elucidates on the changing hospitality landscape, the demand for industry status and advises hoteliers to boldly venture into newer segments, try new niches and create new experiences
You started Royal Orchid in 2001. How has the hospitality industry in India changed over the last two decades?
We have come a long way. The early years; 2001 to 2003 were years of struggle. The five years between 2003 and 2008 is actually when the economy boomed, only to realise there was a shortage of accommodation options. Investors at that time naturally turned bullish and desirous; everyone had a plan to operate 100 hotels. Growth, however, comes with its own challenges. The industry battled funding, investment and licensing issues. It was normal for the process to take 3-4 years before a hotel could open and many hotel projects got delayed because of this. In 2008 recession hit the market. The economy was in a limbo, and ironically, by now, there was an abundance of hotel inventory. The downturn continued for 10 years – it was the biggest slowdown we have seen.
Over the last few years, growth in technology, financial services and manufacturing sector has led to high demand for rooms and hotels have started doing well. A lot of new players have entered the market. So much of unorganised inventory is now available for booking and all of this has been enabled by technology. Look at the enormous and fast growth of Oyo, Fabhotels and Treebo. OTAs have been enablers of monumental growth. We see thousands of small hotels now being able to list themselves and get bookings online. People have started converting houses into guesthouses, which goes to show that the demand is healthy. Also, an increase in disposable income, new airports, better road and rail connectivity has led to an increase in demand for hotels.
As an industry, we have certainly benefitted from tech advancement. Our distribution and reservation systems are now on the cloud. We’re able to manage the entire customer lifecycle journey, thereby building an ecosystem where we know much more about our guests so we’re able to deliver personalised experiences. I remember the days when it was difficult to manage individual hotels, and we’re certainly much stronger today when it comes to revenue and operations management across our portfolio. We use multiple technology platforms that give us real-time analytics and insights into business on-ground, enabling us to create better value for our asset owners and investors in terms of occupancy, ARRs and GOP.
We’re today actively exploring AI systems, automating most of what happens in the front and back-of-the-house, at least in terms of forecasts and planning. We’ve got platforms where marketing is automated and we’re able to deliver brand-standard collateral and campaigns for our hotels located in various locations across India. We measure our hotels’ performance everyday and we continue to optimise operations everyday – and this, is the key.
Social media has certainly brought about a strong change in how we engage with our guests and with the community. Our reach today is much stronger and we’re able to tap into newer source markets, with much more interesting and engaging content. Two-way conversation across channels is now a norm, and something we did not have till a few years ago. Our feedback systems are much more robust now and we can capture our guests’ experience pretty much on-the-go today. We’re in a much more drive-by-wire environment, and hence growth is faster.
What we’re seeing in F&B is that the younger generation, the millennials today, are much more open to new experiences, new concepts and cuisines. We operate 110+ F&B outlets and we keep trying to create new experiences. Guests today need multiple options, and this leads to new trends coming about every few years. Guests today prefer casual dining to formal dining. First it was draft beer, then came breweries, then molecular cuisine and now vegan; we have a large number of guests now opting for better, healthier ingredients, which also leads to more compassionate eating habits. Owing to all of the above, standalone restaurants have also grown in numbers and earned their fair share of recognition.
Do you think the GST was a move in the right direction? How has it impacted the business?
GST started with the market panicking initially, I think lack of understanding led to confusion; it was a monumental move that affected every single person. It has though, moved in the right direction now. The recent reduction in GST for F&B and banquets to five per cent has given the industry much required relief, banqueting has definitely picked up since the new rates have come into effect.
How has India evolved as a hotel investment destination?
Well, setting up and operating a hotel in India is still not devoid of challenges. Multiple, sequential approvals make it a mammoth task. There is no single-window process, one that the industry has been asking for years.
What we have at best is a single window which leads to multiple doors, which are closed. It is a cumbersome task to get land with a clear title, clearances from multiple departments, and fulfilling statutory requirements. India has huge potential as a hotel investment destination but it is not easy being an investor in India.
Is the industry mature enough to get industry status?
We have been in talks for so many years. We’ve been struggling to get the benefits that are enjoyed by other industries. Electricity for example; hotels have to pay commercial rates while industries get subsidised rates. The same is the case with finance interest rates. There is a huge disparity in what hoteliers pay as interest vs what other industries pay. To truly elevate hospitality as an industry, the government must provide longer term loans at lower interest rates. There’s much left to desire but we’re hopeful.
What is the vision for your hotel chain? Any international plans?
Yes, we are looking at neighbouring countries for expansion. Our aim is to operate 100 hotels by March 2022. We’re now investing in wildlife, spiritual, and leisure destinations, while continuing expansion in Tier 1 and Tier 2 cities. People today wish to travel much farther, more often, and experience much more. They look for curated experiences and personalised service. People like to escape the rigmarole of stressful daily lives, detox and rejuvenate often. They look for holistic experiences and spend more time with their loved ones, which is why we see a higher number of people booking staycations, weekend-escapes and spa or yoga packages. We currently operate in 37 locations across India and plan to reach 55 in the years to come.
International vs homegrown brands in India….is there enough market for both?
Yes, in case of five-star hotels; where the market is international, foreign brands do enjoy an advantage because of brand recognition and strong loyalty programmes. In cases where the market is primarily Indian, there is no real advantage. I don’t also see much benefit in tying up with a foreign brand because of high fees. Indian hotel chains offer better value and enjoy better connect with local owners. While international brands bask in the glory of the brand, we perhaps deliver local-market suited, tailormade, value driven, faster breakeven business models – leading to better partnership experiences for asset owners. We operate regional sales offices, very closely track performance and ROI, and run tactical campaigns.
What is your advice for aspiring hoteliers?
Think about where the market is headed, prepare for tomorrow and move fast. I often tell my team, “Bring new ideas, venture into newer segments, try new niches and create new experiences. Build spaces that will be enjoyed by millennials. Keep your investment low; don’t get swayed by fancy embellishments. Work with your end-customer in mind. The bottom line is scalable and sustainable growth. Work with rigor and hustle hard. Don’t be lazy and never have a passive approach to operations on-ground; you may be able to hire very talented people, but don’t work from a distance, immerse yourself and dive deep. Never forget to give back to the community and enable the ones who lack opportunities.”
We run employment-linked skill development courses conducted by the Presidency College of Hotel Management where we train people and make them employable for the hotel industry. These are long-term as well as short courses conducted through Skill Development Centers with online modules from AHLEI. We operate 10 centers and we have skilled 5,000+ aspirants.
Under the Baljee Foundation, we sponsor school fees for many of our staff’s children and we contribute to the underprivileged in Shimla. We have been working with the Association of Physically Disabled (APD) to train their candidates for the hospitality sector.