The Calculated Approach
Sanjay Sharma, Market Vice President, North India, Bhutan & Nepal, Marriott International, traces the ever-evolving dynamics of managing hotels in one of the most competitive regions of South Asia.
By Gurmeet Sachdev
Given that you have the largest single portfolio of Marriott units under your belt, including Nepal, how do you manage to do justice to the multiple brand differentiations in your region?
We follow a strong brand segmentation strategy, which allows us to focus intimately on understanding the desires, needs and aspirations of a certain target group of travellers.Through this process we are able to provide customised messages and products to fit the needs of that particular segment which may vary from luxury to full-service and, finally, select service options. The brands are then further differentiated on a price point spectrum, from mid-scale to luxury, which allows us to further identify the target market and match the needs in alignment with our various hotel brands. Our entire focus has always been to successfully work the key brand differentiators, be it service touchpoints, brand standards, price points and, above all. clear brand expectations for our customers. Multiple brands in multiple locations give us the opportunity to weave all into one fabric of loyalty with Marriott Rewards.
Since these hotels are spread across multiple regions, how do you address challenges pertaining to properties located in different geographies?
Surely working in different markets has its own opportunities and challenges. Typically, what works in one market may or may not work in another. What has helped in my career is thinking globally. Working for a multinational for over 20 years has helped me bring global practices to the job, adapt and blend it with the local environment and thinking. The fundamentals donâ€™t change, however the application and usage might change. To give you an example, in finance, the USALI (Uniform System of Accounting for Lodging Industry) is common globally. Currently, many ownership companies maintain the financial year that is in line with the countries fiscal year due to tax return filing, and accounting is done accordingly. However, the books of account of the hotels managed by global companies work on a calendar year.
We have seen global practices being adapted much faster in mature markets for our business. Another example is in revenue management practices. The risk appetite for making bold decisions is higher even in moderate markets due to the environment. Both customers and hotels are used to dynamic pricing practices since a few years now, whereas in India it has been on for the past two or three years and will take a while before it becomes a practice.
What risks â€” calculated risks even â€”have you taken along the way?
Supporting and being part of an early mover strategy in many markets. Moving in a market where you are the only international brand does mean that you play a part in building and creating a destination. Our teams work hard at driving results in new markets that have just come onboard. Over the years, the job has seen me take risks and make tough business decisions towards driving results or investing in upgrades and renovations.
The results in our business are driven in many ways but I strongly believe that dropping rates does not help in driving a healthy bottom line. Neither does it help in managing the product and over all reputation of the brand. The old debate of what makes money, occupancy or average daily rates is finally put to rest. We had found a good answer â€” revpar drives profitability. In fact, itâ€™s a blend of both revpar and total revpar that marks business success. Total revpar is the new mantra, which is total revenue per available room. We donâ€™t only bank room revenue, we bank the total revenue of the hotel. Each revenue generating department of the hotel is important to drive revenues, hence the bar must be raised in every area. Losing business for long-term gain is a very painful journey which many donâ€™t want to cover. I have walked that path several times over in my career.
Having been at the helm of the largest number of Marriott hotels, what are the major milestones your hotel brands have achieved under your leadership?
Our business is hospitality and it is a big feat to be recognised amongst the Best Employers in India by AON HEWITT at their recently announced Best Employers in India 2018 awards. Our talent is the core foundation of our success. Today if we speak about our portfolio, be it luxury, premium ,mid-scale or select serve, our margin, manning ratios, brand recall and expectations are much higher than our competitors. We are very cognizant of the fact that we need to work harder as we need to do better for associates and guests than what we have done so far. Our success has come from every single leader and associate in our organisation. Above all, our relationship and trust with our developer community is even stronger with a very aggressive expansion footprint plan across the country.
Given that the north of India is among the most competitive regions, how do you keep pace with the changes afoot in the industry?
Working in a competitive environment gives me an opportunity to continuously think on how we can better ourselves, learning from past experiences. I do enjoy the diversity we have in the north. It is a great blend of corporate hotels and resorts. What more can one ask for, when you have a portfolio of culture and heritage hotels that stretch across the mountains in Mussoorie, to the heart of beautiful Rajasthan.
Our brands and loyalty program lend a major competitive advantage. We strive to serve our guests with the best brand experience which, in turn, helps us grow our guest base and footprint in the region. Marriott is a strong believer in innovation, be it design, guest experience or technology to increase productivity and efficiency. Truly these fundamentals give us the advantage in acquiring and retaining the best talent in the business across our brands. In true words our success and strength lies in our people and our brands.
What is your vision for the region given that there is stiff competition from both Indian and international brands?
Marriott International is the worldâ€™s largest hotel company with close to 6,700 properties spread across a portfolio of 30 brands that include luxury, lifestyle, classic full-service and select services. We have a competitive advantage based on the strength of the brand, pricing power, market share, and sheer scale of operations, in addition to following an asset light management work model. As we map the ever-evolving customer base in an increasingly competitive landscape, we will have to go beyond segments to provide personalised services and continuously develop our brands through signature experiences, utilise collaborations and encourage innovation to maintain an edge in both technology and overall hospitality service standards.
How do you ensure a healthy bottom-line for your hotel owners?
In my opinion we are in the business of relationships, be it with our customers, associates or business partners. Hotels have many unavoidable costs such as labour, utilities, property operation costs, customer acquisition cost, etc. We meticulously track and manage our operating costs which directly impact profit margins. Our automated revenue management systems help as they focus on the hotel’s performance and assist in identifying and controlling the larger cost contributors. Also, our sustainable business practices dramatically affect energy consumption and help contribute to a healthy bottom-line.