Taj expansion to continue: Bickson

In an interview with , Raymond Bickson, Managing Director & CEO, Taj Group of Hotels, talks about the hotel industry and shares his business outlook along with discussing strategies about recasting Taj as not a single luxury brand, but as a multi-branded

We have more outbound Indian travellers than inbound travellers. We need to cater to this market as well Raymond Bickson Managing Director & CEO Taj Group of Hotels

2013: A bleak year

The hospitality sector faced unprecedented challenges on account of the sluggish domestic economy, fresh supply of rooms in the market and a weak economic environment in US/Europe, which are the key source markets for high-end hotels in India.

Even leisure arrivals have not been that great. Business travel also has not been good. 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 witnessed occupancy levels of 68 per cent across its properties as opposed to the average occupancy levels of 58 per cent across Indian hotels.

Rising competition on the 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 complacent 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 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.

Strategy for expansion

The idea is to have an asset-light model via management contracts in order to get more market share. Despite the current pressures in the industry, the hotel chain has continued to roll out 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) to have a large footprint across India. Going forward, it will be an important growth vehicle for Taj and we are looking at quickly scalingup the brands to a large number of hotels across India. We opened one hotel every month last year. The most recent opening was The Gateway Hotel EM Bypass Kolkata in December 2013. For this year in 2014, we have 14 hotels in the pipeline, including the new Vivanta by Taj in Dwarka. As for luxury hotels, the cost of land is sky- rocketing. So that will see fewer openings this year.

Exploring the overseas market

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.