Leading the Pack: Stalwarts from IHCL expound solutions and strategies
IHCL’s ‘Aspiration 2022’ strategy is likely to see it emerge as a clear market leader. Puneet Chhatwal, MD & CEO, IHCL talks about how a combination of European-style management, American skills in marketing, and emotional intelligence of Indians has proved to be a winning formula.
Earlier this year, Indian Hotels Company Limited (IHCL) posted a rather large profit. This is a remarkable achievement given that you have only just settled into your role at the helm of India’s largest hospitality company. How did you achieve such stellar results in such a short span of time?
After joining IHCL, as an important first step, the company’s senior management got together and developed a five-year strategy — ‘Aspiration 2022’ which has set its sight on making IHCL an iconic and profitable hospitality company in South Asia. Our strategy is three pronged: Restructure, Re-engineer and Re-imagine our portfolio to achieve 8% point earnings before interest, tax, depreciation and amortization (EBITDA) margin improvement by 2022. We are very pleased with the progress we are making in the execution of our strategic plan to drive profitable growth for our company.
The Taj Group has experienced several highs and lows during its long and checkered history. But you seem to have got your act together, with a strong focus on growth. How confident are you of consolidating your position in South Asia?
We are South Asia’s largest hospitality company by market capitalisation and are also an iconic brand. Our confidence comes from working for one of India’s most loved brands, backed by a strong legacy of the Tatas and a fantastic team of 30,000 people who work tirelessly to ensure that exceptional service is delivered, day-after-day.
There seems to be a sharp focus on EBITDA-margin enhancement as well as renewed focus on Jiva Spas, Taj Chambers and Khazana as individual profit centres. Can you highlight specific focus areas and core strategic plans?
We want to maximise revenue opportunities and there is a renewed focus on ancillary businesses as part of our plan to unlock value in IHCL’s various businesses and brands.
Can you elaborate on Aspiration 2022, the five-year plan you rolled out earlier this year?
We have re-imagined our brandscape and portfolio by sharpening and expanding it. The re-structuring of our inventory, driven by scale as well as simplification of our holding structure, is well on the way. Finally, all these activities will lead to re-engineering our margins with the support of engaged employees, customers and all stakeholders.
There is a sharp focus on operational excellence [anchored] on the bedrock of Tajness to ensure consistency and efficiency in hotel standards. For instance, as per the KPMG Global Customer Experience Excellence Report, IHCL has been chosen as India’s leading brand by consumers and has been recognised as one of the ‘Top 20 Hotel Brands in the World’ by Travel + Leisure. Our flagship hotel, The Taj Mahal Palace, Mumbai ranked at the top spot globally according to an evaluation by TrustYou, the world’s largest guest feedback aggregator. These awards and accolades are encouraging but the journey to become the world’s best hospitality company is ongoing.
Apparently, the refreshed brandscape will enable IHCL to expand its portfolio across different customer segments, at different price points. How does the new strategy vary from that implemented by your predecessors?
Ours is a multi-brand approach, offering us an opportunity to leverage high-growth segments across different price points, thereby catering to a wide range of audience. This will also help the company grow its margins and profitability.
Prabhat Verma, Executive Vice President, Operations – South India, International and Ancillary businesses, answers some pertinent questions on the way forward and developing ancillary businesses.
What made The Taj Group take the decision to bid for Taj Mansingh? And now that you have reacquired the property, what sort of benefits do you think the Taj Group will accrue by retaining the property?
The Taj Mahal Hotel, New Delhi was our first hotel in Delhi and is one of our most iconic assets. The capital city is an important market and the Taj Mansingh has excellent locational advantage. While retaining the Taj Mansingh was certainly important for us considering our aspiration to be the most iconic and profitable hospitality company, we genuinely believe that the best fit for Mansingh is Taj and wanted to ensure continuity of excellence, for our associates and our guests.
This hotel has always been profitable and will be profitable in the future too. We will re-imagine the business model of the hotel and undertake smart renovation in a phased manner to maximise profitability. A landmark like The Taj Mahal Hotel, New Delhi also provides a great platform for us to groom talent – many of our Area Directors today have served at the hotel at some point in their career.
What are the takeaways from your international experience that you would like to put to good use in India?
A combination of European-style of management, American skills in marketing, and emotional intelligence of Indians is a winning formula for business. Historically, India has been known for its competitive spirit. From kindergarten to college to jobs, Indians are taught to compete with one another rather than collaborate. It would be more beneficial if a culture of collaboration was encouraged across businesses and industries.
Where does the new brand, SeleQtions, a ‘named’ collection of hotels that are unique and one of a kind, draw inspiration from? And what prompted the creation of this new brand?
These select hotels have their own identity and we felt the need to create a separate brand to house them under, to call out to their distinctiveness.
Ginger will reportedly have a significant presence in the IHCL portfolio. Do you see the brand as a focus area to drive growth in the fast-growing midscale and economy segment?
We have a huge opportunity with Ginger, the company’s brand in the lean luxury segment. Today, we have 45 hotels under this brand across 32 locations, and 10 more hotels are under development. We are in the process of implementing new design and brand identity for the Ginger brand.
How do you strengthen your core i.e. Tajness and redefine it further to ensure that attributes such as ‘Trust, Awareness, Joy’ are reflected in customer experience?
The service ethos, epitomised in what we call Tajness, is the soul of IHCL. We have redefined Tajness as ‘Trust, Awareness, Joy’. The trust that our guests, associates and stakeholders place in us; the awareness of what is happening around us and what we need to do as responsible members of the Indian hotel industry; and to do something effectively, we must enjoy what we do, we must do it joyfully. All this keeps the customer at the centre [of the vision]. One of our key indices for measuring our success are our guest satisfaction scores, which I am proud to say are the highest in the industry.
How will your enhanced loyalty programme and marketing alliance with Shangri-La help improve business and shore up the bottom-line?
Taj InnerCircle is a very robust loyalty programme with some industry-first features that have won many awards. We recently entered a path-breaking strategic alliance with Shangri-La which, for the first time, gave our customers an access to 200 hotels across 131 destinations in 27 countries. And this is just the beginning. Going forward, we are looking to forge new alliances with partners both within and outside the TATA group.
Given that brands such as ITC have stolen a march with their ‘Responsible Luxury’ strategy, how will IHCL approach the sustainability challenge?
IHCL has a strong 115-year-old legacy of giving back to the community. We have led many initiatives in sustainability and environmental stewardship, the more recent one being the phasing out of single-use plastic in our luxury hotels and plastic straws across all our 145 hotels. We also opened India’s first zero single-use plastic hotel, Taj Exotica Resort & Spa, in the Andamans. Various other initiatives in areas of water conservation, renewable energy and sustainable livelihoods are ongoing [in the company].
Rohit Khosla, Executive Vice President, Operations – North and West India on growing existing markets and new openings
How do you plan to keep up the momentum and further sharpen the brandscape in the face of fierce competition from local and international brands?
At IHCL, we want to always ensure that we are setting benchmarks in service quality and product. The collection demands constant innovation for the future. The refreshed brandscape will enable IHCL to expand its portfolio across different customer segments, with various brands to address different price points. The brand portfolio will comprise the iconic Taj Hotels, which will continue to operate in the luxury segment in key gateway cities. Vivanta will be the growth driver in tier-2 and tier-3 cities and operate as upscale hotels for the sophisticated traveller. Ginger will have a significant presence in IHCL’s portfolio and will address the company’s requirement to be present in the lean luxury segment.
We have launched a new brand called SeleQtions — a “named” collection of hotels with its unique identity. Expressions will include all the service retail brands like our signature F&B outlets, Khazana — the lifestyle retail brand, Jiva — our spa brand and the salons, with the view to unlock equity of these brands. TajSATS is a market leader in airline catering, providing inflight catering at key cities.
Where do you see IHCL five years down the line?
We aim to be consistently profitable, having achieved 8% EBITDA margins in line with Aspiration 2022. We will also increase room inventory to over 25,000 rooms in all categories and enhance our geographical footprint in India and key growth markets abroad. We have already signed up 16 new hotels in the last six to eight months, including greenfield projects in Makkah (Saudi Arabia), London and Dubai. At the moment, we have 25 hotels under development.