The right rate, happy owners and healthy hotels
What is the space that you are eyeing in India – in terms of market segments?
Chaudhary: From all the brands that we have in our bouquet in the moment, our focus is on the space that is still untapped. Our business model focuses around a rate segment where there is a void. In today’s world the market drives the rates. Let me give you two examples to illustrate – The Ginger hotel brand which was an ‘indie’ brand before, was envisaged to be a `1000 room rate hotel. Because the markets were commanding much, much more, they could get better rates and room rates scaled to `3,000. Then there’s Lemon Tree. When they came into Gurgaon, their business model was expected to draw rates that were no higher than `3,500. Their room rates at present are `7,000. The market has pushed the rates up.
However, we believe that with all the changes in the market and with the recession as well, corporates are probably being more cautious with their spending – we believe this space of `4,000 is still untapped. We want to be within the US$100 rate unless the market drives the rates down.
The product that we are bringing into the market, Zinc City, has the look and feel of a four or five star but the rates are three star. So for a traveller, the product is made to accommodate a family, but it could also work for the business traveller or the corporate executive who just looks for the key things one needs in a hotel – a good bed, good shower, connectivity, gym, etc.
Why India and why now? What are its challenges and how do you foresee Zinc Invision benefitting?
Beauvais: Getting our flag all over Asia is imperative and that is why we’re investing initially in over 30 projects all over Asia. India is one of our key markets. We are clearly focused on the other eight countries.
The domestic market is very strong but as international travel increases in India, we have to make sure that the domestic traveller knows our brands in places that they want to travel to.
When you look at the challenges of labour or of construction, those are challenges everywhere, maybe a little more in India, and that is okay. We’re up to the task.
Are you modifying the product to suit an Indian audience?
Chaudhary: Yes. We’ve actually spent over two and a half years to build the prototype that is coming in Cochin. We assessed the existing offering in the market in terms of the rooms, amenities, services, operating standards, the facade of the hotel, etc not only in India but also from our experience in the hotel industry around the world. We did a lot of benchmarking of products in Spain, Italy and other such markets to find out what would be the right fit for operations, for the developer or owner in terms of an asset.
We took a conscious decision that until we have the design or our team in place we would not move forward. Now we’ve designed the room, the sizes, the amenities, the public spaces, and the look and feel to form a product that doesn’t exist in the market right now.
How would you define a favourable deal structure with owners and your company?
Chaudhary: We want our brand equity and visibility. We also want to create a strong asset base for ourselves in this country, which is why all the four projects we’re doing at the moment – two in greater Noida, one in Surat and another in Cochin – are 100% owned by us.
In India, seeing is believing and when we talk to investors they see that we have our own product and our own brand and our own operating team.
Beauvais: We also want to be able to invest in these initial projects because we want to get them off the ground properly. We don’t want to be an asset light organisation relying on the developer to get our brand right.
Do you have a timeline in mind for the present pipeline, future expansion? Is there a footprint that you are aspiring to?
Chaudhary: The Glow Studio in Greater Noida will be up and running around July and our Zinc City in Greater Noida is expected to come online in the first or second quarter of next year. The other two will be up by 2013.
We’re witnessing sizeable lead time for our hotels as we go about identifying and developing our own assets. In the future we’re looking at fast growth. We’re already looking at 20-30 projects as we speak and we want to start closing projects over the next three years. If any hotelier comes to us, at any stage we will be able to help.
Could you tell us a little about the Greater Noida property? ‘Studio’ as in serviced apartments?
Chaudhary: It’s not entirely a service apartment but a 220 unit development. We have hotel units as well as service apartments, so it is a combination of both but for the marketing strategy we’ve put it as a hotel itself. So I would call it more of a hotel.
Greater Noida is a unique market that caters to IT companies, colleges and schools – it caters to both, the short term stay guests as well as the long stay guests. We also have the F1 track coming up around the corner from our development.
Beauvais: Fundamentally it is a hotel. We use the term ‘studio’ to be able to create a niche that we are focused on in the short term and the long term. We are equipped to fundamentally accommodate short stays but we have the size and the capacity to accommodate medium to long stays as well.
In different markets we will focus on what the market needs are. In Greater Noida, there is a great strength of corporate businesses there; clearly there will be some longer stay opportunities. Having a mix of room types gives us more flexibility than if we were just a hotel or a service apartment.
We’re looking at development both inside and outside of India. Our business model would be to have a baseline 24 sqm room but then we will have a 40, 60 and 80sqm service studio.
What is Zinc Edge all about?
Chaudhary: It is our luxury hotel product that is more focused on business travellers. Soma is our luxury resort product. The name Zinc Edge has more city product connotations.
At the moment we are working with an architect from Barcelona, to do the brand prototype for Zinc Edge, we are developing our first Zinc Edge in Dubai and we are also developing our first Zinc Edge in Nepal.
Tell us more about Touch by Zinc.
Beauvais: Our first Touch by Zinc property is The Farm in the Philippines, a spa-wellness-medical-resort. We know that The Farm is a model that works so we will be endorsing the Farm with a Touch by Zinc.
For this segment, we already have a site in Nepal and that will come online in 2012. We have other such properties under development throughout India and in Vietnam. I think they will all come together really quickly because everyone is talking about medical wellness.
The basic question for this segment is -how do you create a health retreat that is not painful to go to?
These properties will be resort component and certainly in the future they will be a standalone but initially we’re looking at establishing the brand.