Hilton Hotels & Resorts wants to shed its challenger position in India and adopt a more dominant stance
By Vinita Bhatia
It is always enticing to watch when the stakes in any business sphere are raised higher; when existing players adopt a more aggressive position and start challenging traditional status quo of established brands. That is what Hilton Hotels & Resorts has been doing in India for the past few months, albeit subtly.
It began with the appointment of Alan Watts as executive VP and president, Asia Pacific in September 2017. He was assigned with the task of overseeing the company’s pipeline of over 415 hotels, as well as the operations of more than 225 Hilton properties across the region. Reporting to the companyâ€™s president and CEO, Christopher Nassetta, he is also a member of the executive committee.
This was followed by the announcement that Navjit Ahluwalia has joined Hilton as senior VP and country head, India. At the same time, Jatin Khanna, a Marriott International veteran who oversaw the companyâ€™s operations in Bangalore region and was the general manager for JW Marriott in Pune, came on board as VP and head of operations, India. Ahluwalia will oversee Hiltonâ€™s 33 hotels trading and under development, including the recently opened Conrad Bengaluru, while leading the companyâ€™s growth strategy in the country.
Additionally, last year, Hilton registered a double digit RevPAR growth in India, which was its strongest in the past five years, and is forecasting double-digit RevPAR growth again this year. Yet, from an organisational perspective, Watts is bemused that the company finds itself in a challenger position in the country.
â€śHilton is arguably the leading hospitality company in the world; it is the second largest in terms of rooms. So, we are often in first or second spot globally. I believe the fundamentals in India are different and we are one of the smallest players here, which is strange, but it is still a good place to be in,â€ť he said.
Hence, Watts revealed that when he joined Hilton and was interviewed by the board one of the first questions that Nassetta asked him was about his experience and passion for India, because this is the market the company wants to focus on.
â€śSo, 90 days into the job, we opened Conrad Bengaluru â€“ our second hotel under this brand â€“ and attracted top professionals like Ahluwalia and Khanna. We are investing in a new sales and marketing office to ensure we have the same infrastructure as the largest players in the market, despite having a smaller footprint,â€ť he disclosed.
CREATING A DISTINCTION
Over the past century, Hilton has built a portfolio of 14 brands, which it has grown organically rather than opting for the acquisition route. However, it has decided to operate only five in India.
Talking about this stratagem, Watts explained, â€śThe reason we are so successful in Asia Pacific is our ability to deploy brands at the right time and our ability to regionalise them. A great example of this tactic is the success of the Hampton by Hilton brand, which we launched in China in 2016. It is our most requested brand globally, but until we customised it for the domestic traveller and ensured the product, service and cuisine was right for the region, we did not bring it to the Chinese market.â€ť
What he wishes to underline with this instance is that while scale matters, regionalisation makes all the difference when it comes to separating success from debacle for a brand. This is what Ahluwalia and Khanna have been assigned to do with their respective teams â€“ identify the Hilton brands that can be localised and launched in the market and decide the timing for its introduction.
This is also a reason why the company has been holding off its decision to launch Waldorf Astoria in India. If one pays closer attention to Hiltonâ€™s brand tree, it has avoided having brands at the similar price points, to prevent customer confusion and commoditisation of brands. Hence, there are only 30 Waldorf Astoria hotels globally and the company is very particular about if, where and when it should deploy it.
Explaining the brand architecture, Watts said, â€śIf Conrad is our business hotel, then we have Hilton as our leading brand. Doubletree, Hilton Garden Inn, Hampton and Tru are our lifestyle and long stay brands. We are hypersensitive that no two brands should have the same price points.â€ť
SETTING THE PACE
This does not mean that Hilton will slacken its growth pace in the country. Au contraire, Ahluwalia stressed that the company will strive to double its existing portfolio within the next three years.
â€śWe are quite under-represented in the Indian market, whether you look at the luxury or the full service space. So, there is plenty of opportunity to grow our pipeline since we are looking at the long haul,â€ť he emphasised.
At the same time, he, too, maintained that the company would introduce the right product at the right location with the right partners. â€śI don’t think we are going to do anything in a rapid hurry. We just want to ensure that we are growing in the way we should be,â€ť he added.
Ahluwalia also highlighted that Hilton has a great opportunity in the resorts space, which is where it will focus in the upcoming months. â€śWe already have a number of resorts within our portfolio, but we feel there is plenty of prospect to grow this domain in India as new destinations open up,â€ť he stated. One reason why the resorts business is a lucrative one is because it has relatively lower occupancy but offers higher realisation.
Watts recognises that the key to success in the hotel industry is to treat owners, associates and customers with the same level of hospitality. â€śPeople do business with people, not just brands. So, when it comes to Hilton, people might want to sign a deal with Ahluwalia and know that he is going to be at the end of the phone for a long period of time,â€ť explaining why the company is aggressively hiring people with the plenty of experience in hospitality operations.
This is interesting since India has a history of expatriate hoteliers being at the helm of affairs, who manage the company for a period of three to five years, before moving on. During his long career in the industry â€“ Watts spent two decades at InterContinental Hotel Group, where he was COO for its Asia, Middle East and Africa AMEA managing the companyâ€™s operations in 280 hotels across six brands and 40 countries and territories â€“ he has realised that owners don’t merely sell the asset, they want to get into mutually beneficial relationships for 15 years. And owners invest first and foremost for better yield on their asset.
â€śThese owners are often involved in various asset classes â€“ retail, commercial, residential or hospitality. Those asset classes are constantly competing with each other. Currently, the travel and tourism segment is doing very well in India, registering approximately 6% growth. That said, we have to ensure that the industry gives owners great returns, or we could lose our beautiful hotels to shopping malls or residences,â€ť he stated.
This pragmatism is why the company is designing brands around what customers want and not what it perceives that guests expect. If this means investing in forward-thinking technology, then Watts strongly advocates it.
Secondly, he has also realised that as a hospitality company, it is important to give the same intent and care to the team as Hilton does to its customer, as well as its owner. â€śMy customer wants a great stay, my team wants a great career and my owners want a great yield. I can’t be doing either one or two of these things, and then presume to be successful. I have to ensure that all stakeholders are happy,â€ť he said.
In his opinion, people work for people. â€śWhen folks join Hilton and aspire to have the top position at the head of the organisation, we want to provide those opportunities to them. So, if you consider the investment we are making into attracting the right talent and expanding our pipeline to double our portfolio within the next three years, you can see how we are set to challenge the market leaders.â€ť
Ahluwalia seconded Wattsâ€™ outlook about building a service culture for associates where they enjoy working with the brand and strongly believe in the growth map for their career. His take is that Hilton can grow only if its team members grow and prosper with the company.
The challenge, however, lies in making the above mentioned investments turn the company into a bigger hotel entity than what it is today with the right brands at the right time. Watts and Ahluwalia donâ€™t seem perturbed, as they have been engaging in marathon series of conversations with individual owners that own Hilton brands and others who have the ability to partner with the company. And they maintain that the response has been very encouraging.
One reason why owners are keen to embrace Hilton is because it is constantly innovating its brands and adapting it to match evolving guest expectations. Whatâ€™s more, it has been using technology to enhance a guestâ€™s travel experience.
â€śI’m anti-gimmicks,â€ť Watts claimed. â€śBut, I believe in using technology to facilitate the guestâ€™s stay. So, we are conducting trials around connected rooms at our lab in Washington. Under this concept, Hilton Honors members can use through their phone not just to check in and enter their rooms, but also control the lighting, the temperature, or in-room entertainment.â€ť
Ahluwalia pointed out that it is important to involve the customer in this experiential journey and let them use their handheld device to actually manage everything in their stay experience. â€śIt’s important that it’s their device, not ours. This way they are in control of the data, which is a topic that guests are often very concerned about. We are only bringing in personalisation into the picture and ensuring security in various ways to enhance the guest experience,â€ť he added.
At the same time, the duo clarified that empowering guests with technology does not mean bringing down their interaction with the hotel. Instead, the objective is to have more meaningful relationships with travellers but with the right kind and amount of information.
â€śBy using technology appropriately, the front desk will have longer conversations and shorter transaction times with guests. At the same time, a guest might want to use digital key to stay at Waldorf Astoria or Conrad and not want to interact with our associates, which we perfectly understand and respect. We just need to ensure that we have this personalisation down to a fine art so that we are not intruding into a guestâ€™s space,â€ť added Ahluwalia â€“ a valid point since it is very easy to overstep boundaries in this market.
Not too long ago, hotel companies were opting for re-branding of properties when it came to refreshing a property. However, this can become a time-consuming and investment intensive exercise for the asset owner. They would have to invest huge monies into renovating the existing hotel to fit into the standards of another brand.
Watts questioned that if a design-led hotel doesn’t fit any hard brand, then how does a hotel company give that hotel an access to scale? That is why Hilton designed collection brands like Curio and Tapestry.
However, he cautioned that companies ought to be careful with collection brands so that they do not dilute their product shelf. In his opinion, a straight-out conversion bucket is akin to behaving like an OTA.
â€śI am wary of the trend of companies forming a conversion brand to give owners access to their distribution and commission advantages, and plugging them into the system; there is nothing unique about this. You are just selling yourself as an OTA and calling it a conversion brand,â€ť Watts said dismissively. In fact, he believes that hospitality companies should protect themselves against commoditisation and competing on the basis of price.
As it gears up to deal with competition from established players and other up-and-coming brands that are nipping at its heels, Hilton knows that it cannot afford to be complacent in India. At the same time, it has to time its movements well in the market to remain relevant, and owners as well as customers can determine the impact it is attempting to make in the over-cluttered hospitality industry.