|By Madhurima Nandy, Mint, New
DelhiMcClatchy-Tribune Regional News
March 19, 2013--BANGALORE -- The Indian hospitality industry is going through a contradiction of sorts, where some companies are in consolidation and restructuring mode while the mid-market hotel segment is looking at rapid expansion.
P.K. Mohankumar , the new managing director and chief executive of the Ginger hotel chain, run by Roots Corp. Ltd, a unit of Indian Hotels Co. Ltd, says that the intent of the mid-scale brand is to achieve exponential growth in the days to come. Mohankumar has been with the Taj group of hotels for 39 years, both in India and overseas, and has only recently joined Ginger Hotels after being chief operational officer at Gateway Hotels and Resorts from 2009.
At the opening of the 27th Ginger hotel in Bangalore on Monday, Mohankumar spoke on the company's expansion plans, profitability and the challenges that lie ahead. Edited excerpts:
What was the brief given to you when you came to head Ginger hotels?
I am probably the only hotel professional who has transited through all brands across different segments such as luxury, upper upscale and mid-scale.
Having spent all my life with the Taj group, I was very excited that at this stage of my career, I was given the youngest brand of the group. Ginger is exciting and also has its own challenges. Ginger occupies about 60% market share in the mid-segment at a price point of Rs.1,500-3,000 with only 26 hotels. This is where we believe is our space.
Our main focus would be on the stay experience because in this segment, the profile of clients who stay at our hotels want a safe and secure and are time-challenged. There is a continuing quest to see how swift can our whole experience of check-in and delivering services be and the focus remains on the FIT (Free independent traveller) traveller and long-stay travel guests.
The plan is to scale up immediately to leverage the costs and look at various avenues of growth opportunities to create a balanced portfolio including the traditional greenfield model, lease model, management contract and in future, also explore the franchise route which is still not common here. We have 27 hotels now and another 10 in the pipeline.
What do guests who stay at Ginger Hotels want?
The age group of guests in this sector is generally below 40 years. At this price point, they are looking for hygiene, efficiency which doesn't mean only warmth, but actually bringing in speed and technology into the whole experience. Sleep and shower experiences are critical, there should be basic food and breakfast is becoming a lifestyle meal as part of the stay experience. Guests want more efficiency and not discount at Ginger Hotels.
There is fierce competition, with a large number domestic and international brands, in the rapidly emerging mid-market hotel space in India. What is the potential of this market and where do you see Ginger?
This is a relatively new and un-served space in India that has been created by the large number of corporate travellers within the country and those who visit from overseas. This segment will only be about value-driven propositions, where there is a slice of luxury without the luxury. For example, guests don't want a large lobby or big restaurants, but they demand the same experience without these frills.
So far your focus has been on non-metro cities. You opened the first Ginger property in Mumbai last year and have only one in Delhi. Will this continue?
There will be a strategic shift in this regard and the focus will be on how to proliferate our presence in Mumbai and Delhi for the visibility of the brand. There is a consistent demand for hotel rooms in these two cities, just like in London and Paris. Ginger intends to be present in multiple locations in Delhi and Mumbai going ahead. Incidentally, the two hotels there are our best performing Ginger hotels, at an average 100% occupancy.
Where do you see this space and Ginger?
Growth of mid-market hotels will be in metro cities, in new satellite towns coming up near large metros, but also in smaller towns. The challenge is how do we also expand into the leisure segment, which is very seasonal in India because if you don't have year-round occupancy, how do you leverage the cost? These products need to have a year-round occupancy because it is an occupancy-driven business.
We would expect a lot more players to come into this space and Ginger has a strategic growth plan and we are clear that we will be scaling up very rapidly and as early starter, Ginger has an advantage.
Profitability is a key concern in the hospitality industry today. How do you ensure that in a business model like this?
Today, Ginger's average room rate (ARR) is Rs.1,600. To make the Ginger model sustainable, ideally, average occupancy should be 70-80% around the year and in high season there should be sold-out dates. The biggest challenge in the industry, not just for Ginger, is profitable growth. The brand would be not only focusing on revenue growth but also on cost management. Innovation is happening at all levels to see how we can bring about cost substitution without compromising the quality of the guest's experience. This can happen with the help of technology, energy conservation, lease rentals.
We are looking at making every Ginger hotel profitable and self-sustainable and are looking to not just increase market share, but also rationalize various costs.
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