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Thursday, 03 May, 2018, 10 : 11 AM [IST]

HICSA 2018 - Echoing hospitality industry’s strategic sentiments

At the 14th edition of Hotel Investment Conference South Asia (HICSA), held under the Hotelivate umbrella for the first time, the focus was largely on the mid-scale segment, emergence and growth of alternate accommodation and consolidation of global hotel brands. For a change, HICSA 2018 followed an unconventional mix of panel discussions, interviews, and Ted-styled masterclasses, to make the conference interesting and engaging for delegates. Akshay Nayak & Disha Shah Ghosh report on the two-day deliberations held at Grand Hyatt Mumbai on April 4 and 5.

HICSA 2018 was held in an atmosphere of positivity as the overall hotel industry business sentiment is at a high with nation-wide occupancies crossing 65% mark consistently in the last two years, and even touching almost 70% in atleast some key gateway cities. Along with consistent increase in occupancies, there has also been some movement in the Average Room Rates, adding to the confidence to the stakeholders. With near future outlook promising for the industry, the deliberations at industry premier investment show looked more robust this year.

The Uncensored Interview
Having built HVS in India for 20 years there wasn’t much opportunity to grow, and therefore Hotelivate was set up to expand and grow, said Manav Thadani, MRICS, Founder Chairman, Hotelivate while replying to a specific question from Kapil Chopra, Chairman of the Board, EazyDiner. Since both Thadani and Chopra have turned entrepreneurs in the past few months, the session was largely about building a brand and sustaining it.

While it is a known fact that Thadani has become a name to reckon with in the hospitality industry, he believes that Hotelivate is the brand and it needs a dedicated team effort to take a brand forward, refuting claims that he is bigger than the brand. Moreover, he spoke about growing Hotelivate organically in the Asia Pacific region with its latest office in Singapore. “We are aware of the competition, and therefore decided to partner for the USA market with LW Hospitality Advisors. Partnerships between consultants are to leverage on expertise and the local experience. As far as the APAC region is concerned, we have the expertise with our two-decade-old experience. The Singapore office will focus on asset management, and we will expand further in the region in the coming months.”

I am bullish about investment in India and hopeful about 2018, Thadani said. “However we have to be watchful about 2019 because of the national elections. The upturn started towards the end of 2016 and now the supply demand is in favour of hotels,” he said.

According to Thadani, investment in technology has become paramount and the locations fit for building hotel are leisure destinations. “OYO and Treebo are examples of innovation in the budget segment,” he stated.

The Future of Travel Tech
Deep Kalra, Chairman and Group CEO, MakeMyTrip said that the travel industry was the first industry to get on to the e-commerce platform and it is technology that allowed blurring the lines.

Talking to Megha Tuli, Partner and Co-Founder, Hotelivate about the changing business scenario for Online Travel Agencies (OTAs), Kalra said that commissions from reservations will get rationalised over a period of time. “While we make double-digit commissions from hotels, the commissions from air ticketing have come down to single digit. Going forward, commissions will get rationalised,” he said.

“It is difficult for a player today to win without technology. China today uses the superapp model and it is very different from our offerings.” Besides investment in technology, CTOs have become an integral part of the value chain, and despite advancement in technology cash remains an important component, said Kalra. He stressed on the need for investing in data for predictive analytics for better business conversion.

The Leaders’ Panel
The Leaders’ Panel moderated by Dilip Puri, Founder & CEO of Indian School of Hospitality had top decision makers of the international hotel companies in the panel. The leaders participated in the panel had no doubts about the India market potential both from domestic as well as outbound perspective. The financial slump of 2016 behind, Allan Watts, President – Asia Pacific, Hilton, felt India outbound is poised for major growth in coming years. He said that they have their strategies in place for the market including investments, as “the dynamics here are different” from other markets.

Talking about recent rebranding, Katerina Giannouka, President – Asia Pacific, Radisson Hotel Group, said that “rebranding was just the tip of the iceburg.” She said that the Group will formulate India specific brand standards to take the growth forward here. “We will strengthen the brand in India and have India-specific standard for each brand to have a distinct identity.”

Pascal Gauvin, Managing Director – India, Middle East and Africa, InterContinental Hotels Group, said that 80% of their brands are in the mid-scale segment and this augurs well for the brand. “We are learning to grow in India,” he added.

According to Gerlad Lawless, immediate past Chairman, WTTC, replicating the Jumeriah model would be a great opportunity in India. “Jumeirah can’t afford to remain a Dubai-based company when India is its number one for visitor arrivals year on year,” He said that WTTC has worked with governments understand the importance of travel & tourism from an economic view point. “The travel & tourism industry accounts for nearly 43 million jobs in India. Restrictive visa regimes are impediment to tourism, and 15 years ago we advised UAE to stop expecting reciprocity in terms of visa waiver. Today, India’s ETA policy is a welcome move,” he said.

Restructure, Re-enginner, Reimagine – Taj Redefined
Having taken over the reins of Indian Hotels Company some months ago, Puneet Chhatwal said that India with a population of 1.3 billion needs a large dedicated hotels with massive convention space. “As far as the Taj brand is concerned, we are looking at growing our margins by 8% in the next 5 years. There is lot of action in the mid-scale and economy segments. Our primary market is India, which is very heterogeneous in nature.” The Ginger brand, which is a mid-scale offering, has a footprint of more than 40 hotels in India. “We will explore opportunities for other brands to grow.” He said that there is need for a 360-degree approach to grow margins, which needs improving in staff skills.

The Art of Growing Brands
In the limelight, Gaurav Bhushan, Global Chief Development Officer, AccorHotels, answered an uncustomary set of questions posed by the interviewer, Nirupa Shankar, Director, Brigade Hospitality Group, which majorly focussed on knowing more of AccorHotels’ non-traditional growth strategies.

Kick-starting the interview, Shankar said that while talking to the various hotel operators recently, she learned that Airbnb was being an active disruptor, but the operators opined that it was not in direct competition to the mainstream hospitality business. “But with the purchase of Onefinestay by Accor for a EUR 150 million, and the purchase of 49% stake in Squarebreak, Travelkeys, etc. does it point to you trying to take Airbnb head-on and try to come back over the threat that it poses?”, asked Shankar. Bhushan answered that the French Hospitality major has interests in the alternate accommodation space, which is complimentary to the hotel business too. He added that their approach has been a bit different, where the recent acquisitions were done to cater to the guest segment which demands luxury in apartments that they rent for a couple of days or weeks, hence to meet this need, the acquisitions have been done, where he feels that Airbnb lacks on this front. “It is the perfect adjunct to the luxury hotel business that we have,” Bhushan said.

“With co-working spaces, co-living, and hospitality having a strong link with each other, it would be something that people would focus a lot on in the coming years,” said Bhushan on being asked about the company’s partnership with Bouygues Immobilier to develop Nextdoor Co-working spaces, starting with France.

With AccorHotels’ acquisition of 80% stake of John Paul Concierge Services, Shankar asked why does not the company just partner with these companies, but acquire? To this Bhushan replied, “We, in-fact, are partners where we have the 80% stakes, but 20% still remains with the founder, because it’s not just acquiring the business, but acquiring the expertise and human capital, because they know how to run the business and we want to make sure that we don’t lose the benefit of the human capital that has gone into the value of building the business.” He said that looking at this potential of the human capital, they retain the management of the companies acquired.

The Disruptors are here to Stay
Presenting a potent topic of discussion was Ritesh Agarwal, Founder and CEO of OYO Rooms. He spoke at length on how OYO as a brand, in the past 3-4 years made an impact on the hospitality industry. He highlighted the point that while most of the players still talk about the upscale and luxury segment of hotels, we forget that more than 90% of the Indian travellers consume the economy rooms.

In his presentation while decoding the initiation of the brand he said that with the soaring prices of building greenfield projects, and technology almost ignored, he thought of bringing in a pioneering model that would bring good-quality rooms to the customers and also profits to the individual asset owners who are in abundance across India. He said that he followed the tip-of-the-iceberg theory, where above the sea-level is a smaller piece which refers to the leisure, luxury and other upscale segment, but below the sea-level lies the potential larger mid-market segment, which is still unorganised. He added that looking at this, the strong OYO team first revamps the asset’s interiors and then gets the OYO brand, of which over 96% of its distribution through OYO’s private channels, while only 4% are listed on other private hotel meta-search engines and OTAs.

Having recorded over 2.2 million room nights in December 2017 alone, Agarwal said, “We are able to make a significant impact by being a brand full of asset owners, where we are able to get a significant direct transaction.”

Speaking on the growth plans and mission of the brand, Agarwal adds, “Our mission with 75,000 keys, adding 10,000 a month, operating at 75% occupancy, having 70% of our revenues coming in from routine users, it’s quite simple, we are not here for the numbers, our intent is to serve the rest 99.9% population. We want to bring them beautiful living spaces at low cost, by creating a pioneering model that we are doing here, and try to make a difference in the travel and hospitality industry for Indians.”

Hospitality 2030: A Journey into the Future
Nikhil Nath, CEO, Knowcross during a concurrent session held at the 2-day investment event, spoke about how hoteliers were primitively grudging to accept technology in most of the operations, while the only technology in the hotels were the ovens, air-conditioners, etc., however he feels, with the proliferation of technology over the past five years, and with the next-gen managers in place, the situation is changing now, where the active use of technology through various modes are being applied in hotel functions like RMS, PMS, distribution, etc.

In this session, Nath spoke at length on how technology has taken over head-on in almost every vertical of the human use today – be it social networking, home security, automated cars, to that of robots and PMS, to make a distinct point on how technology can be applied more efficiently across the hospitality industry too.
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