The Indian Hotels Company recently took a detour from the luxury path its trodden thus far to launch the indiOne brand of no-frills hotels. Aimed at budget travellers and tourists, indiOne promises to break new ground in India's hospitality industry with its 'smart basics' properties and trimmed-down services.

Indian Hotels is running the indiOne operations through its wholly owned subsidiary Roots Corporation, which was incorporated in December 2003. Sheila Nair, the chief operating officer of Roots, spoke to Shubha Madhukar and Saloni Meghani about the idea behind indiOne, its conceptualisation and teething problems, and its prospects.

What was the concept behind the smart basics hotels?
Indian Hotels has over the last 100-plus years been operating only in the luxury sector. There was a whole sector of secondary and tertiary markets where we did not have a presence. So the question was: how do we utilise this market opportunity? How do we increase our market share? How do we further segment the market and get into the next race? That really was the thought that led to indiOne and the creation of a product with a sensitive and competitive price point. 

What took so long for this to happen in India?
It depends on what stage the country's economy is in all the connected stuff. In terms of the development of secondary and tertiary cities, the India of today is where America was 40-50 years ago. These cities are growing, consumers are doing a whole lot more travelling and they are looking for that brand experience. All of which means that now is the time.

What was C. K. Prahalad's role in bringing the indiOne idea to life?
Dr Prahalad co-created the concept and he guided us. He tried to teach to us not to base indiOne on our past work, but to peg it to where we wanted to be in the future. That made us look at the project differently. We knew the hotel had to be compact in size and that we had to enter the market with rooms priced below the Rs 1,000 mark. We established these targets, put a box around them and then started working backwards. 

It took about 12 months to get all the conceptual thinking in place and a further two-three months to secure the various board approvals that such a huge venture required. From there we needed about nine months to build the first prototype. The lessons we have learned from creating this first property will help us cut the time needed to build new ones down the line.

What has the customer feedback been like since the Bangalore indiOne opened?
It has been extremely positive; I think we have scored 8-9 out of 10 on this scale. But there have been some struggles for us internally in terms of increasing efficiency and such. We are still fine-tuning things at the systems level, which is why I would score us at 4-5 out of 10 here. As far as customers go, we have had to do some explaining on the kind of model we have - no room service, no porters, etc - but they settle down when they learn how different our package is.

Who are you targeting the hotel at?
Being a budget hotel, it is perceived that we are targeting people looking for cheap rates, but that is not the case at all. We are aiming indiOne at customers who seek a certain unique set of features, among them cleanliness and hygiene, safety and security. We have already had traders, entrepreneurs and chief executive officers as our clients. One day there was this Mercedes parked outside the hotel and, turns out, the person was the CEO of a Mysore-based company. He had driven in from Mysore and he stayed for two nights.

Actually, from the inside an indiOne property does not give the impression of being a budget hotel; you get the feeling this is an international, Scandinavian sort of product.

What have you cut down in these hotels?
We've really cut down on nothing.

Then how do you manage the economics?
There is a science to managing it and it extends across the project: across manpower, across systems, across planning, etc. It's difficult for me to say I cut this down and therefore the cost came down by Rs 5 or Rs 10; it's not like that. It's cutting across various dimensions of the project.

It's clearly one of a kind in the country…
Yes, it's the first time something of this kind has been designed in India and it's based on intense consumer research. I read an article recently which said the prime minister of Singapore will probably be nudging companies in his country to come up with a project like indiOne. That's gratifying. 

What are the expansion plans for indiOne?
We're will be building about 1,500 rooms by next July. These will be in pilgrimage locations such as Hardwar and Rishikesh and trading centres such as Coimbatore and Ludhiana.

Do you have plans to tap foreign markets?
It's all a question about how the indiOne unfolds. But, yes, we do have patents registered in several countries. 

Why is it called smart basics?
We called it smart basics because we have changed the definition of what basic in a hotel means; we have configured a new set of basics for India. Suddenly people are asking why they should stay at a place where they do not have access to an ATM or a cyber cafe. 

What is the occupancy rate for the Bangalore indiOne right now?
Occupancy is touching 75-80 per cent already and we're not even pushing it. There's been a limited buzz in the market because we want the operation to get settled. That's more important for us than just proof that we've done 100 per cent. There are always teething troubles with any new system.

That's a pretty good rate considering there hasn't been much marketing.
Our sales team is definitely promoting indiOne with companies and other target groups, but we do not intend to have too many ads or banners. It'll make sense for big companies to tie up with one chain and have one billing mechanism.

Do you expect to break even soon?
Breaking even is not an issue; we'll be cash positive in year one.

One of the stay: Targeted at budget travellers and tourists, indiOne offers an innovative hospitality model where the emphasis is on delivering quality hotel rooms at low cost

Uploaded on August 9, 2004