Turning into a Hotelier: In coversation with MD Amarnath Reddy of AR Foundations
Amarnath Reddy, MD, AR Foundations, the man behind the Sheraton Grand Chennai Resort & Spa, on what it takes to build a premier resort property and the need to control costs.
Sheraton Grand Chennai Resort & Spa is the first hospitality project for realty major AR Foundations. It is also Sheraton’s first resort property in India, making it a rather significant opening. Located on the East Coast and built in collaboration with the FHD Group, its multi-level cube uses multiple rectangular frames to accentuate vistas of the rolling sea and the property’s large manicured flowerbeds and lawns. The hotel is well situated to explore the Tamil Nadu coast. Mahabalipuram is barely 20 minutes away.
Mathan Ramaiah, Director, FHD Group, talks to Amarnath Reddy, Managing Director, AR Foundations, on what made him enter the hospitality field, the planning involved, and how he managed to keep the cost in control.
Mathan Ramaiah (MR): It takes at least three years to complete a project of this scale, but you have finished it in a year-and-a-half. As a successful real estate developer, what made you enter the hotel industry?
Amarnath Reddy (AR): I always wanted to set up a resort, but the numbers, somehow, didn’t make any sense. However, when I stumbled upon this property, it seemed ideal for a resort. So I decided to keep the numbers aside and follow my passion.
Initially we had thought of creating convention centres, and that would have given us good numbers. But it would have ended up becoming another Kalyana Mandapam rather than a resort, so we decided to opt for a hotel model with a convention hall, where we could accommodate up to 1,000 rather than 3,000 people. We added another 20 to 30 rooms.
MR: You have chosen to appoint an operator for the property rather than run it yourself. What prompted this decision?
AR: Our first instinct was to run it ourselves. I could have created my own team and run it. But we decided to go ahead with the operator because of the prevalent booking system. Operators have a very good booking system, loyal clients and royalty programs we could tap into. We realised that if we have a brand on board, we could command a small premium that more than offsets the management fee we are paying.
MR: Could you take us through the design process of the hotel?
AR: The one point I always mentioned to the architects in meetings was about maintaining a lesser setback and incorporating a bigger courtyard at the centre of the hotel. The idea was to create a feeling of spaciousness. Most people are amazed by our usage of space, the flow of traffic, the planning involved, the space within the rooms, even the size of the banquet hall. I think the flow [of space] is very good. Luckily, the operating team helped us with the placement of public areas so that the operations are smoother and all the public areas are stacked on one side of the building.
MR: Besides the operations, what other feedback did you seek from the operators?
AR: We did talk to them about the number of outlets and the kind of cuisines that would be served. For restaurants, there are a few norms. The number of restaurants you have is based on the number of rooms in the property. There are guidelines about how big the restaurant should be, what its seating capacity should be this, and much more.
MR: I think the scale of the landscape reminds me of resorts in Bali or Thailand. Was that intended?
AR: I am very passionate about landscaping, so I was keen on getting the right person on board. Saritha Pandey is a fantastic landscape architect.
MR: The cost of building is the key to the right use of resources. I remember how you would fix the cost at a certain level. Do you think you have met the target?
AR: Being a first time hotelier, obviously I couldn’t anticipate every cost, but the cost escalated by only 20% over that budgeted.
MR: What advice would you offer to a first-time hotelier?
AR: Do not enter the field of hospitality if you do not have a passion for it. I made mistakes since I have built only residential and commercial projects. Hospitality projects are more difficult, and I did not anticipate or expect that. I did not have a large enough team or quality people who understand the hotel industry. On site, I became the project management consultant. The intricacy in the detailing required for this kind of project is totally different and if you don’t have the knowledge, you will make mistakes.
MR: What is your mantra for success?
AR: Much like the Germans (I studied in Germany), I believe timing is very important. We have to stick to the deadline and get the job done. The other thing is financial discipline. We planned the fund and cash flow and we were also personally involved in all decisions.