We are family: Ginger
Convincing the family-run hotels to take up the Ginger brand and be part of the organised sector is a challenge, feels MD and CEO of the Ginger group…
MEGHA Launched
in 2004, Ginger started operations with room rates priced almost at
1,000. However, the soaring land cost and slow process for approvals and permits in the hospitality industry has forced the hotel chain to increase its average room rates to near about
2,000. In a bid to cut costs, the hotel chain is now tweaking its business strategy for future expansion plans. The budget segment chain is eyeing management contracts with family-run businesses to scale up room inventory. The group is looking at regions such as Guruvayur in Kerala for the same, PK Mohankumar, Managing Director and Chief Executive, Ginger reveals.
“There are thousands of hotels in the budget segment in the unorganised sector. To convince the family-run hotels to take up the Ginger brand and be part of the organised sector, is a challenge. Especially in the South, this market is highly mature, unlike the North or East. But most family-run hotels are now facing the heat with branded hotels entering the market and this is where we see a lot of potential,” he says.
The huge wedding market in the South is also untapped, he opines. “At places such as Guruvayur, there are many wedding halls
No other brand has ventured into the metro to sell rooms at 1,800. This is a huge challenge
but no accompanying facilities for lodging, especially in the branded hotel category. In many of these places, families own large pieces of land. But they don’t have the bandwidth to design and architect a hotel,” he informs.
Apart from management contracts, the group is also exploring various options like conversion of existing operations and greenfield and brownfield projects as well. “We are looking at the franchise option also. The company has got responses from Mumbai and Bengaluru and Tier-1 cities in South such as Mysore, Trichy, Mangalore and Salem, he confirms. In the North, places such as Chandigarh and Amritsar and new emerging towns such as Kota will be our focus,” Mohankumar points out.
Talking about the challenging task of setting up and promoting the brand, he replies, “Ginger is the most challenging assignment for me. No other brand has ventured into the metro to sell rooms at 1,800. It’s a huge challenge. We have a hotel in Andheri (Mumbai) today at that rate. Yet, the hotel is making Gross Operating Profit. But leveraging the corporate costs and bringing in the returns that is required in terms of investment is a challenge. To achieve this, we will have to scale up and bring in 10 Gingers in Mumbai and Delhi. This is going to be a task.”
Throwing light on the incentives that are needed for the mid-market segment, he feels, “The government has to bring in more incentives for the budget segment. Today, the rules are designed and tailored for luxury and upscale segment. It’s not a level- playing field. For a greenfield Ginger hotel to get the approval time, it takes the same amount of time as a luxury hotel. Also, the sector has not yet become a powerful lobby to influence policy making.”