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C. Raja Rajeshwari
Shyam G. Menon

Indian Hotels is on a roll, what with occupancy rates looking up. Mr Raymond Bickson, the executive director and COO (luxury hotels) and the MD-designate, has a plateful of challenges to tackle as he sets about taking the Taj Group to a higher plane.

Being the first non-Indian to head Indian Hotels Corporation Ltd (IHCL), he has his hands full with a large portfolio of luxury and economy property. In this interview to Business Line, he tells us about IHCL's plans to beef up the brand and on going global.

Excerpts from the interview:

How was business in the April-June 2003 quarter?

Very encouraging. In the first quarter, in spite of the Iraq situation and SARS, our performance has been quite strong and we are confident of achieving the budgeted numbers. June has been particularity good, with occupancies rates of 65 per cent.

In hotels, business travellers account for 80 per cent of the occupancy. As everybody was holding back following the Iraq war and SARS, there was a pent up demand of business to happen. Once that was released, it was business as usual.

The other interesting thing is that in the second quarter, our forward bookings are better than last year's.

What are your plans after you take over at IHCL?

We are continuing the programme that `The Taj' has been focussing on for the past three years. We are looking at our brand architecture and the brand equity of Taj after 100 years. We believe that `The Taj' brand will have a strong and significant role for expansion outside India.

Now we have a portfolio of property that spans the globe and which is particularly large in India. In the 1980s and the 1990s, we expanded without a clear programme but with the idea of increasing marketshare, which is why we are in so many cities.

However, `The Taj' hotel experience that one has in Mumbai may be different from that of other areas and, so, this brand architecture will help us establish `The Taj' brand in itself — resorts, hotels and palaces — only for high-end property.

This would begin with the luxury collection and we would extend the brand to the unique palaces we operate. We are currently repositioning, upgrading and renovating the property and services.

In the case of other hotels, they will be re-branded separately — like the Gateway or Residency brand, for instance. It will become `The Gateway, by Taj' or `The Residency, by Taj'. It essentially means that according to the services and products they offer, these properties would fit into the brand segment.

`The Taj' brand would be for the high-end super luxury hotels. This architecture is crucial in order to establish the Taj brand and the luxury image of the brand. Our focus is to establish this by the end of this year.

What about your expansion plans?

Domestically, we are expanding by way of brand extensions. Our first foray is into luxury residences — in the form of Wellington Mews at Mumbai. It has all the amenities of a hotel, but in an apartment environment. We see this has a large demand in India.

We are also looking at adding 100 rooms to The Taj Lands End and in cities such as Bangalore, which is an attractive market, and the suburbs of Delhi. . So this is a natural brand extension for us.

Can you throw light on your other brand extensions?

There is a great need for developing spas, another brand extension, particularly in our resorts. It is amazing that one has to go to Bali, or Thailand or Malaysia to experience the best spas in the world when everything used in them are from India. Spas are a $14-billion industry. In India, it is a relatively untapped market. The Oberois have done a wonderful spa arrangement with Banyan Tree. But we feel that we should develop our own Taj spa experience.

We are focusing on creating destination spas and in cities — day spas.We have started a separate `Taj Spa Company' and identified a consultant to develop our own brand.

We will do extensive research and develop our own indigenous Indian therapy with `Taj Spas'.

We have 16 spas now. We have also identified sites in the Rambagh and Lake Palace and with these put together, we are talking about a significant presence in the spa market.

We are also looking at branding in other ways, which we have not looked at before. One of those is eco tourism.

We have signed a joint venture with Conservation Corporation of Africa, operators of luxury wildlife game experiences. We are having the venture in Rathambore hotel, which would start in six months.

We will first use this concept in Rathambore and then look at how to proceed from there. For us at Taj, this is a just another way of leveraging our brand.

About your budget brand, it is said that there might be a rollout sometime in the latter part of the year.

We have been working on a new product for the past two years, which is a value hotel. These hotels are again leveraging on what we have, by being modular units.

The perfect sites would be pilgrimage , transport hubs, universities and IT parks. This brand will be real value for money and it would be branded separately.

The new concepts will have the Taj brand. Could you explain how these extensions will not dilute it?

These are done the world over successfully by different companies. One expects the service to be of certain level and quality in keeping with the `Taj' brand name.

But as it stands, we have a varied product. We have to then fit that product, brand it differently and sell it appropriately and gear it towards a certain price category and market. This would not dilute the brand. The new extensions will have the same level of quality and service that `The Taj' signifies but without the name Taj. They would be called `run by the Taj' or so.

What about your international plans?

Internationally, The Taj has been looking at expanding for quite some time. A few years back, we were actively pursuing `The Carlyle' in New York. Since then, we have looked at different opportunities to expand, either through an acquisition of a cluster of hotels or individual properties, which strategically fit our portfolio.

We have been looking at North America and Asia as well. We believe there is great potential for growth in China and are pursuing sites in Beijing and Shanghai. As of now we are looking at management contracts. Taking an equity stake in properties would depend on the country, the location and the opportunities and comfort level of the group.

Being part of the Tata group, the hotel expansion would mean high-profile publicity for the Tata brand overseas.

Is it not opposed to your asset light strategy?

In the restructuring exercise, we have brought down the number of properties from 60 to 40 and are planning to further scale them down to 30. We believe that by being asset-light we can be nimble and react quickly. So, we are open to more management contracts.

This is similar to the Four Season's model, which owns very few properties. But that does not mean that we are selling our hotels. We would own them through our subsidiaries. We have a 30-50 per cent equity stake in PIEM and Oriental Hotels and manage the hotels for them.

With the restructuring, is it right to assume that quite a few of your business hotels would migrate to your subsidiaries and IHCL would predominantly have a luxury portfolio.

Right now, we are focusing in the brand architecture that is coming up.

There will be some hotels in the leisure and business sections that might migrate into the luxury end of it. There is going to be some merging in our properties.

The recurrent investment in luxury properties is high. Will not having a predominantly luxury portfolio affect the returns to investors?

We are not looking at selling of the business section totally or transferring all of the business/leisure hotels to our subsidiaries. The owning entity is not going to change ultimately.

The only change is in marketing and selling them. The luxury hotels, per se, generate 75 per cent of our revenues.

The returns are as high as the investment. That is why we are focusing on the luxury segment.

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