The Taj group has great things planned for the next five years. A strong showing in the last quarter is just the beginning: it is riding on an impressive 71 per cent increase in net profit (Rs135 crore for the quarter ended March 31, 2007, up from Rs79 crore for the corresponding quarter in the previous year), and revenues up 45 per cent, at Rs539 crore, from Rs371 crore.

The Indian Hotels Company (IHCL), which runs the Taj group of hotels is raring to go forward. Not only is it looking for properties in other parts of the country, it is also moving to expand globally over the next decade. In an interview with Candida Moraes, IHCL’s managing director and CEO, Raymond Bickson, shares the company’s future plans and talks about the outlook for the hospitality sector in India and the world. Excerpts from the interview:

Your Q4 results have been very impressive. To what do you attribute this?
During 2006-07, IHCL has outperformed its competitive set in India — East India Hotels (EIH), ITC, the Leela group and others. This is the result of a very sharp focus on attracting and retaining customers, regular property upgrades and renovations, launching new restaurants and cuisines, maintaining very high service standards and tight management of costs.

In the last few years, we have made extra efforts to retain (or regain) leadership in each market that we operate. While the sector has been on an upswing over the last two years, we believe that the Taj group has earned a premium over its competitive set and the market, because of these initiatives.

Can you share the company's plans for the next few years?
The Taj will continue to grow organically and inorganically, to consolidate its market share as well as create new opportunities and new price points. In India, we are expanding through new builds, leases, management contracts, joint ventures and associate companies.

Our strategy is to strongly position the Taj brand in the high-end luxury and five-star segments, the Gateway brand in the full service segment, and Ginger at the bottom of the pyramid. We are also expanding in the serviced apartments sector, through management contracts. Apart from this, we are renovating our existing restaurants progressively, and launching new restaurants, since the food and beverage (F&B) business is an extremely critical revenue and profit driver.

Tell us about your joint venture with CC Africa.
Taj Hotels, the Conservation Corporation of Africa (CC Africa) and the Cigen Corporation — part of the Chaudhary Group — have a joint venture to offer a series of luxury safari lodges in India. It will present naturalists, nature lovers and even ordinary tourists with a fascinating alternative to Africa. It will improve the quality of safari management in India and take it to international standards.

The Taj Spas have done extraordinarily well…
In-depth market research on the emerging global wellness industry showed that increased levels of stress, frenetic work pace and sedentary lifestyles had created a need for wellness and well-being for business and leisure travellers alike. At Taj Hotels, we leveraged our own Indian brand cache, the Taj Spas, to meet the global demand for rejuvenation and wellness.

Unique signature treatments offering Ayurveda and other indigenous traditional Indian healing therapies form the pillars of the Taj Spas experience. They offer a new lifestyle awareness; accomplished practitioners teach yoga and meditation, and there are specially designed programmes like yoga retreats, ayurveda journeys and wellness holidays.

What about expansion abroad?
In the international market, we are building luxury hotels in Cape Town and Johannesburg in South Africa, apart from a high-end resort in Phuket, Thailand. We have also entered into management contracts for a high-end resort on the Palm Island in Dubai and a golf resort in Doha, Qatar.

Our strategy in India is to consolidate and expand our presence through clear brand differentiators in different segments, while in the international market, we want to expand only in the high-end luxury segment. Our recent acquisitions of The Pierre in New York, the Taj Boston and the Campton Place in San Francisco make this very clear.

How are the Ginger hotels doing?
Roots Corporation, a wholly owned subsidiary of IHCL, operates the Ginger chain of hotels. At present, we have eight 100-room Ginger hotels operating, and construction is underway at another seven or eight sites. We have a large enough land bank to see 30 Ginger hotels operating by March 2009.

We are aware of the enormous size and potential of the emerging domestic travel market. This segment is essentially mid-market and cost sensitive, and today, no branded quality chain of hotels caters to its needs.

Ginger has reshaped consumer expectations and developed a new market. At surprisingly affordable rates of Rs999 to Rs1,499 (plus taxes) per room per night, many of these new hotels already have high occupancy figures. The new advertising campaign is building awareness about the Ginger brand.

While the first few hotels were on the conventional greenfield model — built on bare land — our new approach is more flexible, to combat the increase in real estate prices. For example, the Ginger hotel in Ludhiana, which is under construction, is on the upper floors of a mall.

IHCL has sold its property in Nepal. Are you revamping its overseas assets?
During 2006-2007, we exited from properties that we managed in Kathmandu, Seychelles and Oman. We are also exiting from a management contract for a three-star hotel in Sana'a, Yemen. As I said, the Taj's new strategy is being seen only as a high-end luxury player in the international market. We will exit from legacy assets that do not fit into our new strategic plan.

What is the outlook for the hospitality sector over the next five years?
We are very positive about the hotel and tourism industry in India, which is making its presence felt on the global map. Considering its rich cultural and traditional heritage, India can be one of the top tourist destinations in the world.

The outlook for the hospitality sector in India will continue to be strong in the near term. This is driven by an acute shortage of rated hotels, compounded by the country's strong economic fundamentals and the resultant increase in domestic travel. Outside India, we believe that markets like the Middle East, South East Asia, South Africa and the Far East will perform strongly. Mature markets like the US, the UK and Europe are already strong, and the future upside will not be the same as in emerging markets.

We want to expand globally over the next decade. Over the next five years, we would like to double our total room inventory. We will be opening urban hotels as well as resorts.

We are the only hotel company that has resorts throughout the Indian Ocean rim — Chennai, Sri Lanka, Kerala, Goa, Maldives, Seychelles, Mauritius, and a resort under construction at Phuket, Thailand. Other destinations in this circuit, where we would like to expand are the east African coast, the Andaman and Nicobar Islands, Rebak Island in Malaysia, and in Indonesia.

Our urban hotels will be in key gateway cities across the world. We already operate in London, New York and Sydney, and are looking at other major destinations in Asia, Africa, Europe and North America. All of this will unfold between now and the next decade.

Uploaded in December 2007