Talking Tough

International entrants, cannibalising territories, political instability, natural disasters, troublesome vendors – how do our general managers cope? Hotelier India finds out.

At the risk of repeating information, there will be 40-.international chains with presence in India by 2011. This is going to mean a countless number of added keys; while Bengaluru has put most of its plans on the back burner for fear of there being no takers (10,000-rooms were expected within the next five years) New Delhi is perforce adding on almost 40,000 on account of the Commonwealth Games.

With so many players entering a particular market, the lines tend to be blurred as regards target segments; many hotel heads have expressed their frustration at brands not hitherto considered in the same league now posing competition by virtue of location alone. What do general managers think about this cannibalisation of territories?

Vinay Menon, general manager, Dream Hotel, Cochin, says philosophically that it is part of change. “As far as one is able to effectively monitor and analyse the paths and sources through which business enters the hotel, I think the increase in the number of options are welcome and part of the change that we need to adapt to,” he says.

Says Tamir Kobrin, general manager, The Leela Palace Kempinski, Udaipur: “You must identify where you stand in the overall market and ensure that you highlight your position very clearly; this will lead to making certain that your targets are met and ensure that your potential has been realised.”

Ashwani Nayar, general manager, Le Meridien Jaipur, who comes from a sales and marketing background, says that opportunities may arise from creating synergies from even competitors at times. He adds that individual brands need to focus their product and services around their target segment needs, as there will always be an overlap on common segments.

Says Deepak Manocha, general manager, Courtyard by Marriott, Pune Hinjewadi: “Shift in territories is a given thing in a developing market and needs constant evaluation and monitoring to maintain/increase the market shares; the serious players get to play hard ball and others tend to lose the game. As they say, it is times and markets like such that separates the ‘men from the boys’.

New players coming in undoubtedly means there is a risk of staff poaching, simply because there aren’t so many skilled people going around in the first place. In an exclusive interview to us, Liam Lambert, president of the Oberoi Hotels & Resorts, has stated that it was actually flattering for them to know the competition rates them highly enough to take on Oberoi staff blindly.

Virender Razdan, general manager Sheraton Park Hotel & Towers, Chennai, says ensuring best working practices for their associates means the chain is hardly impacted by new players (ITC Welcom Group was awarded with the Hewitt ‘ Best Employer Award‘ in 2009).

In similar vein, Stephane Fabregoul, general manager, Westin Hyderabad Mindspace, says that Starwood’s aggressive plans for India have created huge career options, along with training and development, which, in turn, will ensure retention.

Manocha offers a completely different take on this by saying that some transition/attrition is also healthy for the organisation; it gives the individual different perspectives and there have been instances of employees joining the competition and then returning to the fold, as they could not adjust to culture outside of the Marriott environment.
Adds Kobrin: “There is nothing that can be done except make certain that you are competitive in what you are offering, provide opportunities to your team and hope that their eagerness to move to better and greater places in the perceived sense is minimised.” Menon says newer hotels actually provide that necessary push for all existing properties to see and recognise advances in technology and customer experience opportunities, and insist that you catch up or outperform them to stay in the race.

So - international competition, security issues, the economic environment, political instability…what do general managers perceive as their threat areas? Declares Razdan: “Competition - national or international - brings out the best in us; it is an opportunity rather than threat. The biggest threat according me is the sensitivity associated with today’s global traveller. Things which are beyond our control, for instance issues like H1N1, volcano fly ash, and recession, have impacted the business.” Agrees Kobrin: “In today’s world it most definitely is the instability of the regional components of terror, this leads directly to people less inclined to travel. A destination is affected by the regional outcomes of the ripple effect.”

Menon says it would be a combination of security, the economic environment as well as the political drive to make destinations successful. “And I say ‘drive’, not ‘will’, as I think all nowadays destinations and products have to be driven by the governments of the day to catch the customer mind space, given the options available in quantity and quality that are trying to gain that share at the same time,”he adds. Manocha says that today’s business environment is extremely dynamic: “No threats – stay alert and guarded. Maintaining constant checks across all parameters and acting upon them in time does not and will not cause any such serious or threat-like situation/condition,” he adds. Says Nayar: “Across markets and businesses, these threats remain similar in nature, it is important to look carefully at the nature of the threat and your level of control over these external factors which then makes it less challenging. The more deeply you study the threats the more opportunities you find arising out of them.”

For Fabregoul, operating out of the presently volatile city of Hyderabad, it is hardly surprising that the major threat arises from the current political uncertainty, leading key players to adopt a ‘wait-and-watch’ policy, which has unfortunately seen to a slowdown in investments in the city. How would these gentlemen explore opportunities to drive sales, as general managers? Fabregoul opts for the basic strategy of maintaining a high market penetration through a combination of traditional sales calling and aggressive GDS marketing. For Nayar, it is the belief in his relationship strengths, developed over a period of nearly two decades in the industry.

Says Razdan: “I believe in a hands-on approach. Opportunities are like a sunrise - if you wait too long, you miss them. By ensuring better networking in the city I scent the first smell of a business coming. My week does not get complete without hands-on sales calls; I have my own target of rooms which I contribute every month.” Concurs Manocha: “I stay engaged with the clients, guests, sales team and all other revenue making areas. Constantly evaluating and monitoring ways and means to increase and enhance business levels has always excited me as a general manager; overall, I think it should be a GM’s topmost priority.”

Menon goes the sales team way too: “Develop the sales team to be a relationship focussed team work. Continuously giving the team interacting with guests - in-house or out in the market - a product that has something positive and exciting for them to talk about, is important,” he says.

Along the same lines, Razdan believes that revenue through acquisition from competition and yield management strategically increases his share of business. For Kobrin, it comes from highlighting the USP’s of the product he has to offer and making certain that one differentiates where one is offering better value-for-money.

Says Vishal Singh, general manager, Vivanta by Taj, Goa: “Hotels throughout the world are facing factors that put brands, market share and even market cap at significant risk, but also represent new business opportunities. We believe that sustainability is about increasing the profitability of businesses by holistically managing economic, social and environmental risks and opportunities.”

Says Menon: “Understanding that market segments shift from season to season and the ability to take fluid and fast decisions in responding to the changing needs guests remains vital to get the market share right.” According to Manocha, the answer lies in continued evaluation, focussed approach and keeping the ears to the ground. “Monitoring parameters of business such as occupancy, ARR’s and market share index, along with continuous rapport building as well as identifying areas and opportunities to grow business in are some key areas,” he adds. Declares Nayar: “As long as my sales associates and I remain ‘hungry’ we would keep driving the business and maintain growth above the competitive set.”

Product differentiators is a wholly nebulous area in India; ill defined and therefore poorly perceived by the consumer. Menon concurs this aspect is still in its infancy, Razdan thinks it’s all still hazy, while Kobrin feels it all depends on the market segment - the uber luxury segment offers distinctly unique differentiators. Manocha thinks every product has its own different market that creates a niche for itself in good times; when people get spoilt for choice is when every product will have its own identity. Fabregoul is of the opinion that the increase in global travel means customers now have a higher awareness about product differentiators and know what to expect from hotels. Singh sums it up: “For many consumers, competing brands are essentially the same; a branded differentiator can be a feature, service, programme or ingredient. To be worthy of the term ‘differentiator,’to be more than just a name slapped on a feature, it must be meaningful to customers, it must be both pertinent and substantial enough to matter. Successful new brands consistently score highest on that dimension, and mature brands -even when they remain strong on relevance, esteem and knowledge - start to fade when they lose clear points of differentiation,” he says.

Many markets are now facing over saturation, that is, an inverse situation of more supply and less demand (read Hotelier India March issue). Business is cyclic and such imbalances are temporary, says Nayar; Menon believes a continuously evolving business model is the key; while Fabregoul thinks it is important to retain the positioning strategy and not take reactive measures – these are some of the survival tactics these GM’s follow. Says Manocha: “Demand and supply never go hand-in-hand, so there will times when either are up or down - now appears to be the saturation time in some markets, however, serious players and industry leaders have enough of experience with them to see through such times and markets.” Razdan does not see much of a problem here; “Where is the question of survival when you will be on top of the pack?” he asks confidently.

Apart from the above, general managers, being at the helm of the ship, have loads of other problems to handle, not the least of which is being sitting ducks for their various vendors, including cable channel suppliers. Fabregoul concurs that the current monopolistic situation has given cable TV operators/broadcasters the benefit of levying prices which have no logic.

Manocha counters this: “Maybe at some places and in the past, but not anymore - these suppliers and cable TV operators are also faced with lots of competition and have to earn their buck. It’s not as easy as it may look, with hotel companies too now working on economies of scale especially on the supply side,” he says.

Says Menon: “I think a reasonable discussion between both parties that share relevant data for reaching decisions on what they’re supposed to get is essential. A win-win is not just desirable but possible in all these relationships.”
Every general manager has his own modus operandi for controlling costs, be it in terms of the energy factor or raw materials. In Singh’s opinion, inventory control is a significant aspect of management accounting and effective hoteliering, and one aspect of inventory control is the storage of raw materials. Says Nayar: “Our resource maximisation strategy is participative - everyone contributes. We strongly discourage savings at the cost of quality; reductions are driven by minimising loss from wastage.”

Razdan says that the mantra in these testing times is the deployment of ‘Lean Six Sigma’ across all functions in the hotel. Menon believes that there is a clear need to control waste and have small, integrated teams, instead of just saying that costs need to be controlled in a luxury offering, which often leads to compromises on standards or customer experience. Kobrin’s way is to ensure vigilance starts at the source and educating the team of the importance and the effect each and every one of them has directly on the final outcome. Avers Manocha: “The modus operandi is follow the 80:20 principle, that is, 80% of costs come from 20% of items be it in raw materials or energy. Identify the 20% which contributes to 80% of the cost, analyse these and put measures to control them along with the department heads.”

A constant debate is who has it better so far as business is concerned – leisure or city hotels. Says Manocha: “Leisure is the first to get impacted when businesses suffer.” Menon says diplomatically that the seasonality does offer interesting challenges. Adds Fabregoul: “Both have their own challenges but leisure hotels definitely face a greater challenge in attracting trained manpower and more so in retaining them.” Kobrin is more emphatic in his viewpoint: “No, in my opinion they withstand economic downturns and market difficulties in the long run better.”