Raymond Bickson, MD & CEO, Taj Group of Hotels

Raymond Bickson, Managing Director & CEO, Taj Group of Hotels, talks to MICEtalk about the hotel industry and shares his business outlook, along with discussing strategies about recasting Taj as a multibranded hotel group, not just a single luxury brand.

Q How has the year 2013 been for you?

The hospitality sector faced unprecedented challenges on account of the sluggishness of the domestic economy, influx of new supply of rooms in the market and weak economic environment in US/ Europe, which are the key source markets for the highend hotels in India. Business travel also has not been good because the economic conditions here have not shown any improvement. With the depreciating rupee and the high cost of overseas holidays, the only increase has been in the domestic tourism segment. Taj, as a brand, has remained consistent in this turbulent time and has witnessed occupancy levels of 68 per cent across its properties as opposed to the average occupancy levels of 58 per cent across Indian hotels.

Q How has the domestic business been? What is your opinion of the rising competition on home turf?

The hotel scenario in India has changed dramatically over the last few years. Till a few years ago, the three big domestic hotel chains could afford to be content, since they had a combined 60-plus per cent market share in the absence of competition. Now, there are over 50 big hotel brands with huge loyalty

programmes. And since over 80 per cent of visitors to India are business travellers, chances are they would be drawn to these foreign brands. The challenge, thus, is to maintain Taj’s domestic market share. Acquiring land and approvals is another challenge in the Indian market. While the demand for hotel rooms will grow this year, the continued commissioning of new capacity, across the key markets, will put pressure on the rates.

Q What are your plans for the future?

The idea is to have an asset-light model via management contracts. This is necessary if we want to get more market share. Despite the current pressures in the industry, the hotel chain has continued to roll out its new hotels in the domestic markets with recent launches of Vivanta, Gateway and Ginger. The group, through the Indian Hotels Co Ltd (IHCL), operates four brands – Taj (in luxury segment); Vivanta by Taj (in the upper upscale category); Gateway (for the upscale segment) and Ginger (in the economy segment). The Vivanta, Gateway and Ginger are part of the Taj Group’s strategy to have a large footprint across India. Going forward, it will be an important growth vehicle for Taj and we are looking at quickly scaling up the brands to a large number of hotels across India. We opened one hotel every month last year. The most recent opening of Taj was The Gateway Hotel EM Bypass Kolkata. As for luxury hotels, the cost of land is sky rocketing. So we will see fewer openings this year.

Q What is your strategy for expansion in the overseas market?

Hospitality industry is a cyclical business. We are all sitting on top of real estate. We cannot say the hotel sector is immune to the disasters in the realty industry. Thus, in order to have a balanced portfolio, we cannot depend solely on the Indian market. It takes time for us to grow outside but there are challenges in the Indian market as well. We also have more outbound Indian travellers than inbound travellers. We need to cater to this market as well. Our international expansion is through Taj, which is our most well-known brand. Currently, we have some international properties of Vivanta by Taj that include Sri Lanka, Maldives, etc.