You walk into a hotel lobby, select your room from a touch-screenkiosk, swipe your credit card and quietly collect your encoded keycard from the kiosk's vending slot. Nope, that's not the future ofthe hospitality industry but the present and it's happening at GingerHotels, the no-frills brand from Roots Corporation of IHCL. No longqueues at the reception counter, no waiting for the luggage to bebrought in and no traditional welcome tika and garland (for the die-hard tika fans, their TVC does show a guest applying it himself!).
Welcome to the world of automated hospitality. In an industry thatis renowned for its human interface with guests, brands like Gingerare not just redefining the rules of the game but in the processchanging the game itself. "Mom-n-pop no-frills hotels have beenaround in India for a long time, but because of their limitedinvestment and know-how, many of them offer poor value," says PrabhatPani, CEO, Roots Corporation, which offers rooms at Rs 999 a night(at select properties) and competes with guest houses and unbrandedhotels.
While Pani's reason for cutting down on human interaction is hisfocus on the no-frills segment, a shortage of skilled manpower is thereason for the larger and more expensive hotels. While earlier it wasthe BPO sector that dipped into the hospitality pool, retail andairlines are now taking turns draining manpower away from theindustry. Some, like Lemon Tree Hotels, have introduced employeestock options (ESOPs) for supervisors and above, while others such asEIH offer them only to senior executives. Given an attrition rate of20 per cent, players like Sarovar Hotels, a mid-market brand, aredangling substantial retention bonuses in front of employees to makethem stay. Salaries in the sector--especially for managers--may haveincreased by 60 to 100 per cent over the last three years, but thework-life imbalance continues to take its toll on the human resourcespool of hotels.
Trimming Costs
With talent in short supply, hotels are on overdrive on the costfront. They are looking closely at both fixed and variable expenses,including things like energy consumption and even project costs.Hotel construction technology, which used to be a major reason for afacility's long gestation period, has ushered in some new concepts.Berggruen Hotels, which is introducing its Keys brand in India in thebudget segment, has adopted a cookie-cutter approach for its venturewith hotels having the same design, a similar room size anddetailing, and standardised tangibles. The blueprint can be executedanywhere, according to Partha Chatterjee, CMO, Berggruen Hotels.
Others like easyHotels, which is coming to India in a jointventure with Istithmar Hotels, is opting for stack, connect and sticktechnology to not just cut down construction costs, but also paybackperiods. While the concrete shell will be prepared onsite using pre-fabricated columns, the rooms will be mass produced at a "factory"off site at an Istithmar facility in Dubai. It would include theroom's structure made of steel, the flooring, which will be builtfrom a composite material, all internal plumbing and wiring,furniture, flat screen TVS and even bedding and towels. Each roomwill be 15 square metres in size and will be shipped to the hotelsite to be stacked and stuck inside the concrete shell. Each roomwill be connected with the others through pre-fabricated corridorsand lifts. Istithmar claims that if the concrete structure is inplace, a typical 200-room easyHotels can open its doors within fivemonths.
Energy costs, which typically jack up a hotel's operationalexpenses, are being bettered with the latest in technology."Typically in India, energy costs are 10 per cent of operationalexpenses for a hotel--that is twice the world average," points outAjay K. Bakaya, Executive Director, Sarovar Hotels, which hasinstalled Variable Refrigerant Volume (VRV) systems that Bakayaclaims have cut energy costs by 50 per cent.
Hoteliers say that with customers becoming cash rich and timepoor, operational efficiency is becoming the key differentiator. Forinstance, the Palm-top PDAs used by stewards in restaurants (TajConnemara in Chennai, among others) to take guest orders have notonly improved the speed of service and, therefore, faster turnaroundof tables, but have also done away with the cumbersome paper kitchenorder tickets that needed to be made in triplicate--one each for thecashier, the kitchen and the order taker. Now, all a steward does ismake a selection from the stored menu items which are transmitted toa printer in the kitchen, which will print out a kitchen order ticket(KOT) for the chef.
Soon, there may come a time when only a computer at some hotelknows when you came and when you went. And if that makes your staycheaper and better, you'd have no reason to complain.
THE FLIP SIDE OF AUTOMATION
While technology will play a leading role in budget to mid-marketsegments, it will only be a facilitator in the upscale and luxuryhotels, feels Prakash Shukla, Senior Vice President and CIO, IndianHotels. "See, the back-end operations like reservations, propertymanagement systems (PMS) and loyalty programmes have already beenautomated, eliminating the need for human interface, which is onlylimited now to front of the house areas," he elaborates. Mandeep S.Lamba, Managing Director, Dawnay Day Hotels India, considerstechnology important, but says that it is a cyclical phenomenon. "Forthe next 5-10 years, technology will play a huge role with theinternet emerging as the single-largest sales tool for hotels.However, there will be a return to human interface," he predicts. Afact corroborated by P.R.S. Oberoi, Chairman and CEO, EIH (OberoiHotels), who feels that while technology can improve efficiency, inhospitality, it cannot replace the human element.
Overseas, Weakly
Indian hospitality groups have been making desultory acquisitionsabroad. That may not be enough to produce an Indian Four Seasons.
It's a delicious irony. While india is running short of hotelrooms, the country's hospitality majors are busy acquiring hotelsabroad. Some would like to believe that it's happening becausehoteliers in India want to maintain the capacity shortage to keep theroom rates high, but that's a far-fetched theory. As our previousstories show, there is more than sufficient money coming into thesector to reverse the situation in a few years.
But given that buyouts abroad by Indian hotel groups have nowbecome commonplace--Indian Hotels, for instance, bought the RitzCarlton in Boston last November for $170 million--is there a methodto the madness? "The mature markets are extremely important for us,as the UK and Europe generate 25 per cent of our business, while theus is about 15 per cent," says Raymond Bickson, Managing Director,Indian Hotels. "I think the idea is to establish a brand presence inthe developed markets like the US, which generates a lot of inboundtourists for India," adds Manav Thadani, Managing Director, HVSInternational.
Indian Hotels' strategy hinges on combining the synergies of itsproperties on the US west coast and Sydney to cater to the travellerson this route. In contrast, the other big Indian hotel chain EIH, ofthe Oberoi fame, is avoiding the developed markets. "The US andEurope are developed markets with very little growth, so we don'thave any plans of expanding there," says P.R.S. Oberoi, Chairman andCEO, EIH. Oberoi says he goes purely by market economics regardinghis overseas investments and is not averse to pulling out if thefiscals are jittery. "We sold off our Australian hotel (The Windsorin Melbourne) when the wage costs became too high," he states.
While India's big two have been at the forefront of overseasbuyouts, other players are also loosening their purse strings. TheSuri family-controlled Bharat Hotels is developing a greenfieldproject in Dubai, The Grand Fort Dubai, while Club Mahindra Holidayshas made its first overseas acquisition by buying the 97-room, 4-star Hotel Bon Alpina in Austria's Innsbruck region. "We invested m4million (Rs 22 crore) for a 75 per cent stake in the property as wefound it lends itself well as a family destination," says RameshRamanathan, CEO, Club Mahindra Holidays. Ramanathan reveals that thecompany's next target is South Africa and it is also scouting forproperties in West Asia and Europe.
However, getting a foothold in foreign markets has not been easyfor Indian establishments, which probably explains their lack ofbrand visibility. Nakul Anand, Divisional Chief Executive, ITCHotels, feels that Indian hotel majors have hitherto concentrated onthe domestic market, which itself is nowhere close to saturation. "Ifyou look at all the global chains, they have first established apresence in the domestic market before venturing overseas," he adds.Oberoi says that the perception of people abroad about Indians wasalso a constraining factor in Indian brands going abroad. But Indiaof the new millennium is seen very differently by the world. Perhaps,that will embolden hoteliers like Oberoi to conquer markets overseas.
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