A bleak 2017, but 2018 of­fers hope

On the side­lines of PACE (PIHMAA An­nual Con­clave & Ex­change) 2017, TRAVTALK finds out from prom­i­nent hote­liers in the coun­try how the year 2017 has been so far for the in­dus­try and what they ex­pect from the com­ing year.


It’s been a very dif­fi­cult year for the food and bev­er­age busi­ness, first with the liquor ban and then the un­cer­tainty of busi­ness. Around 29 of our ho­tels were im­pacted. We had some restau­rants and bars to open, but couldn’t. How­ever, we are grate­ful to the Supreme Court for hav­ing amended and lifted the ban to a rea­son­able level. Busi­ness seems to be pick­ing up and oc­cu­pan­cies are bet­ter. We are see­ing a pos­i­tive change but more would be known dur­ing the next off-sea­son. There is more do­mes­tic busi­ness which is hap­pen­ing now and I hope MICE busi­ness also im­proves.

All the chal­lenges faced this year, in­clud­ing GST, liquor ban and de­mon­eti­sa­tion, were def­i­nitely a dis­rup­tor for us but all said and done, the in­dus­try is limp­ing back to nor­malcy. A re­cent respite has come in the form of GST for restau­rants, which could go back to 12 per cent. This will be a wel­come move for the in­dus­try. If I look at the year ahead, oc­cu­pancy will con­tinue to in­crease and rates will con­tinue to soar as well. The econ­omy is slow­ing down; this is some­thing we are watch­ing very closely be­cause our ho­tels, es­pe­cially Radis­son-branded ones, are largely de­pen­dent on cor­po­rates.

Busi­ness was ma­jorly im­pacted this year. One rea­son was de­mon­eti­sa­tion. GST also made sure that com­pa­nies post­pone their plans on MICE move­ments and con­duct­ing con­fer­ences. Liquor ban re­sulted in another 3-4 month loss of busi­ness. What the gov­ern­ment needs is to do con­sis­tent pol­i­cy­mak­ing. Once we sta­bilise the base, things will only look pos­i­tive in the next two years. We are on the right track. I see a promis­ing Novem­ber-De­cem­ber, the fourth quar­ter is show­ing signs of re­cov­ery. Great days are ahead as long as pol­i­cy­mak­ing is con­sis­tent and we are not sur­prised by events like liquor ban.

There were some ini­tial bumps and a lot of ap­pre­hen­sion and anx­i­ety, es­pe­cially with de­mon­eti­sa­tion and GST be­ing im­ple­mented back-toback. I think we crossed over well and are back to busi­ness. We are very op­ti­mistic from a MICE and lux­ury per­spec­tive. We see a sig­nif­i­cant up­side be­cause there is an ease of do­ing busi­ness. In 2018, we are fore­cast­ing an al­most dou­ble-digit growth in terms of what we have done this year. There is a lot of trans­parency now and a feel-good fac­tor of how busi­ness is con­ducted in In­dia. I think it all au­gurs well for our busi­ness.

Over­all, I have seen the rates go up, which is pos­i­tive be­cause so far the chal­lenge was that oc­cu­pan­cies were climb­ing up steadily but rates were static. There has been a 4-8 per cent growth in rates. Some ho­tels have even seen 10 per cent growth. Ho­tels that rely heav­ily on for­eign­ers have done ex­tremely well. The dol­larto-ru­pee ra­tio has stayed steady, so has not af­fected buy­ing pat­terns. A large amount of the leisure growth has come through the do­mes­tic seg­ment. For the first time, we have seen a dou­ble-digit growth among for­eign leisure tourist ar­rivals.

The hos­pi­tal­ity in­dus­try has been through a ter­ri­ble patch. For al­most seven years we felt the stress as ca­pac­ity and sup­ply of in­ven­tory of rooms in­creased in al­most all our key cities and de­mand shrunk. There's now enough ev­i­dence that the in­dus­try is per­haps at the be­gin­ning of an up­cy­cle. Last year the oc­cu­pancy level in al­most all key cities went up, this is a pre­cur­sor to ADRs go­ing up. Our fore­cast for the in­dus­try over the next four to five years is that we are headed for a bull run. Un­less some­thing goes dras­ti­cally wrong, we are con­fi­dent of an up­cy­cle.

The in­dus­try was hit by de­mon­eti­sa­tion, GST and liquor ban this year. This raised chal­lenges for some of our ho­tels, es­pe­cially be­cause of the liquor ban. It im­pacted our F&B rev­enue as well as the room rev­enue. I don’t think de­mon­eti­sa­tion had a huge im­pact on ho­tels ex­cept in the wed­ding seg­ment, but chal­lenges bring their own op­por­tu­ni­ties and it gave us the chance to look at our cost struc­ture. Most of the ho­tels did very well and came out with great re­sults. Over­all, the chal­lenges were well han­dled. De­spite the set­backs, most of our ho­tels have grown over the past months. The up­com­ing year, with­out any hic­cups, looks bet­ter. We are ex­pect­ing firm rates with oc­cu­pan­cies do­ing rel­a­tively well. It’s all about man­ag­ing bet­ter rates in 2018. Gain­ing guest loy­alty is go­ing to be the big­gest game changer. It will in­clude loy­alty pro­grammes, cus­tomer sat­is­fac­tion, per­son­alised ser­vices, etc. With OTAs and play­ers such as Airbnb com­ing in, loy­alty can be a dif­fer­en­ti­at­ing fac­tor. We are not com­pet­ing with each other in the ho­tel space; we are fight­ing tech­nol­ogy and other lines of busi­ness. So, what is go­ing to re­ally make a mark is gain­ing the loy­alty of con­sumers.

The year 2017 was tough. We started with the liquor ban, then the GST. How­ever, it’s been a year that will set us right for the fu­ture. At the end of the day, when busi­ness is tough, you have to rein­vent your­self; you look at your ex­penses and ef­fi­cien­cies. I am con­vinced that it will be bet­ter now as we have seen that food and bev­er­age rev­enue, es­pe­cially in ban­quets, is back on track since Septem­ber 2017. Also, we are look­ing at an in­crease of 10 per cent in RevPAR. I am hope­ful that the last quar­ter will be the best in terms of rev­enue.

The in­dus­try faced a lot of chal­lenges be­cause of the liquor ban. Liquor is one of the most im­por­tant com­po­nents of the in­dus­try and we didn’t re­alise its im­por­tance un­til it was gone. When the liquor ban was im­posed, we saw how the en­tire gamut of busi­ness moved around liquor and how ho­tels strug­gled. With GST, it was not very clear how it was to be im­ple­mented and till date, ho­tels are strug­gling with what’s right and what’s not. A few amend­ments are still awaited. Over­all, we are a very re­silient in­dus­try; what­ever hap­pens, we bounce back.

Michel Koop­man Gen­eral Man­ager The Leela Am­bi­ence Gu­ru­gram Ho­tel & Res­i­dences

K.B. Kachru Chair­man Emer­i­tus & Prin­ci­pal Ad­vi­sor, South Asia Carl­son Rezi­dor Ho­tel Group

Arindam Ku­nar Area Gen­eral Man­ager, South In­dia In­ter­Con­ti­nen­tal Ho­tels Group

Anurag Bhatnagar Multi-prop­erty Vice Pres­i­dent Lux­ury (In­dia) Mar­riott In­ter­na­tional

Shipra Sumbly Kaul Gen­eral Man­ager Hol­i­day Inn Ex­press & Suites Bengaluru Race­course

Raj Rana South Asia Carl­son Rezi­dor Ho­tel Group

Man­deep S Lamba Man­ag­ing Di­rec­tor, In­dia JLL Ho­tels and Hos­pi­tal­ity Group

San­jay Sethi ITC Ho­tels & Wel­comHo­tels

Kapil Cho­pra Pres­i­dent The Oberoi Group

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