News and Views: The End and Beginning of Eras in the Indian Hospitality Industry
T he Indian hospitality industry is undergoing a major transformation; it is expected to witness a new era in leadership and growth along with a rapid change in processes. Some important trends that will shape the coming years are as follows:
Leadership changes are being witnessed in almost all the hotel companies, making it by far the single-most important development in the country’s hotel sector in the last decade. Consequently, an entire new set of leaders with single minded focus on efficiency and profitable growth will offer a new approach and bolster competition in the sector in the coming years. Neeraj Govil, at the helm of Marriott in India, has done a spectacular job over the last couple of years. Noteworthy is the recent announcement of Puneet Chhatwal as the Managing Director and CEO of Taj Hotels Palaces Resorts Safaris. Viewing this as an evident move towards focussing on growth and in a bid to gain from Puneet’s diverse set of experiences, the appointment is being hailed by industry stakeholders as a sensible and forward-looking step by IHCL. In other news, Navjit Ahluwalia has recently moved to Hilton as their India head after an immensely successful run of well over a decade as Marriott’s head of development. Similarly, Hyatt and IHG have recently appointed Sunjae Sharma and Vivek Bhalla respectively, who come from strong operations backgrounds, in leadership roles. Moving forward, international hotel companies like Marriott, Hilton and IHG will continue to challenge the hegemony of the domestic origin players like Taj, Oberoi and ITC, making the contest more challenging and intense.
Indian born hotel groups will have to sharpen their strategy for growth and profitability, it is ironical that Marriott International which started its journey in 1999 with one single asset is looking at a pipeline of 180 hotels! Most of the Indian hotel companies have not shown a similar growth record, partially due to relatively slow decision making and an old working structure. To survive, they will have to change their ’go-to-market’ strategy and be more proactive to reach out to new prospective partners.
The Spirit of entrepreneurship is another fast-catching trend. In the big league are Pattu Keswani from Lemon Tree and Ashish Jhakanwala from SAMHI, who are well on their way to becoming success stories with the launch of their companies’ IPOs. Moreover, Kapil Chopra, President of The Oberoi Group, is planning to branch out on his own to pursue his dream of offering a new product to the Indian hospitality sector.
“Human Resources as a function will be forced to reinvent itself and become more robust in the coming years, as rising costs and low productivity will be questioned by the owners and management companies.”
Yet another interesting trend likely to pick up pace in the new era is Sales and Marketing professionals gaining extensive recognition as they drive companies for higher growth and create new segments to achieve greater profitability. “Shaadi by Marriot” is an excellent example, wherein Marriott created a new identity to tap the country’s most lucrative wedding segment in an innovate and organized manner. We also anticipate the role of social media and digital marketing to further gain prominence in the Sales and Marketing function.
Furthermore, Human Resources as a function will be forced to reinvent itself and become more robust in the coming years, as rising costs and low productivity will be questioned by both hospitality management companies and owners alike. The concept of shared services will gain momentum. Human Resources will have to focus on productivity and yield analysis, efficiency and work-life balance will be some of the key focus areas. With an actively under development pipeline of approximately 250 new hotels being added across all segments by 2023, the Indian hotel industry will have to add at least a minimum 64,000 new jobs. HR leaders of tomorrow will have to be more agile, use modern methods of engagement on a continuous basis wherein workers, management and owners jointly will play a crucial role for “organizations branding” which shall segregate the winners from the losers for attracting, retaining and sustaining talent.
Also, 2018/19 will witness a lot of movements, and HR Managers will have to align themselves with the growing expectations of young professionals who will hunt for better opportunities. The recent appointment of Jatin Khanna as the Vice President Operations for Hilton is an example where growth and compensation were deciding factors for movement. Expectedly, payroll costs will witness an upward trend going forward, putting additional pressure on the hotel companies. Companies like Shrofile, a tech start-up, are assisting in data management and bringing video recruitment and profiling at the door step of HR Managers. Platforms for enhancing the need of learning through simulation, chat-bots are still alien to the hotel industry, but shall gradually be used extensively. Use of technology will play a vital role in reducing costs and shortening the time for hiring.
The industry should also look at the concept of Fix Term Contracts, wherein “highly talented and skilled professionals” are engaged by companies to work for specific tasks or projects. We expect this trend to primarily impact Digital Marketing, Revenue Management, Asset Management and HR functions. Fix Term Contracts will enable companies to work with specialized professionals at a blistering pace while cutting through the management structure to improve their bottom line and productivity. A recent example of this is Shalini Arora, ex-Head of Marketing at Taj, who has been appointed by an advertising company to manage the rebranding of a major FMCG brand.
“The next two years will be packed with a lot of excitement for the Indian hotel industry in terms of growth, consolidation and profits.”
Also, Asset Management shall gain substantial importance in the coming years as it provides owners, management companies and other stakeholders a new way of thinking by challenging the traditional style of management and help in improving the bottom lines . Our new division at Hotelivate, led by Saurabh Gupta is currently working with owners and operators of some key hotels in the country and in a short span of just six months, have improved their bottom lines by more than 20%.
On the operations front, General Managers of tomorrow will have to walk the extra mile to understand the business in its entirety, moving away from micromanagement to gain a more holistic view of things. The concept of Cluster Manager/Area Manager will gain popularity, as companies will identify stars of tomorrow by giving them more responsibilities and larger geographies to control. Anuraag Bhatnagar, Sanjay Sharma, Taljinder Singh, Rohit Khosla, Farhat Jamal, Aseem Kapoor, Gaurav Pokhriyal are perfect examples of such leaders, who are using experience and imparting knowledge to drive efficiency and growth of their respective regional portfolios.
One must further note that the Indian hospitality sector is increasingly seeing women in influential positions. Nirupa Shankar of Brigade and Deepika Arora from Wyndham are great examples of trailblazers, making us hopeful of seeing more women in leadership roles in the new era. We hope that more women general managers are being groomed to take senior responsibility and the appointment of Huvida Marshal & Ranju Alex, to manage the portfolio of Trident hotels and Marriott is a step in the right direction.
In terms of development, midmarket hotels in India are growing rapidly. The recent acquisition of Sarovar Hotels by Louvre Group under the inspirational leadership of Ajay Bakaya, is one example of this trend. Meanwhile, Rahul Pandit is transforming Ginger under his dynamic leadership style, even as the appointment of Samir MC at Fortune promises to drive up the chain’s operational performance. Also, the recent announcement of IHG’s Holiday Inn Express brand entering into a management contract with the erstwhile Accor portfolio of Formule One Hotels shows the growing interest in the sector. We still believe there is a lack of leadership at the midscale level and would be interesting to see how companies shall overcome this problem. It would be good for hotel professionals to move over from traditional mindscape and jump at this exciting opportunity to build and shape their careers.
Food and Beverage is anticipated to play a very dominant role in improving the bottom line of hotels, going forward. In fact, the contribution from F&B is seen matching that of the Rooms division in some cases, like at JW Marriott Delhi. New concepts, with regional and international cuisines packaged in innovative ways is being widely accepted. Notably, Prasanjit Singh and Abhijeet Mukherjee of Studio Gourmet Services are already advising some of the top international hotel companies to change their menu and design. Additionally, collaboration between restaurant companies and hotels is likely to grow in the future. Massive Restaurants, headed by Zorawar Kalra, is in talks with industry leaders to partner with major hotel brands, while Kylin Restaurants under Saurabh Khanijio is already operating an outlet with IHG in Delhi.
Lastly, the past year has witnessed mega mergers and restructuring in the hotel industry. While such developments open avenues for professional growth, they can also impact careers adversely. The integration of Marriott and Starwood was well executed under the leadership of Gurmeet Singh and Ritu Verma, demonstrating the power of positive collaboration between two different cultures and ethos. However, the dramatic reorganization of Carlson has resulted in the exit of its top leadership. Thus, the era of job security has gone, and merit and performance shall drive business in the years to come.
The next two years will be packed with a lot of excitement for the Indian hotel industry in terms of growth, consolidation and profits. The new era will see young leaders challenge the status quo, a rise in technology across domains, and rapid development of new business models. The hospitality and tourism industry is on the cusp of a Golden Era which shall see the attraction of more capital and new players entering into the market.
For us at Hotelivate Executive Search, 2018 marks the beginning of a new era as well. We have parted ways with HVS, which we introduced in India 17 years ago, and decided to embark on a new journey to create the region’s most trusted and valued search firm. The team is grateful for all the support and encouragement it has received from the industry. We look forward to an interesting and fruitful year ahead!
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Excellent overview here! Very well captured by you.
My assessment is that Franchising will rapidly grow as an option. On the People side of things, that should throw up a new level of required depth & expertise. Second, serviced apartments should grow and I think they will because an unmet market need exists – that too should bring forth a requirement of operating expertise which frankly, is not widespread in India.
Fabulous read !
A great and clear insight into hospitality trends both current and emerging ! You have captured all aspects and it is indicative of the change and shift in focus from top heavy specialists towards lean and efficient management full of ideas and new thinking.
Most of those identified have either been my colleagues or those with whom I have inter acted during the course of my career.
Congratulations for this very well written piece and analysis..
Interesting to read this great article of Indian hotel market trends and perspectives from overseas hotel owner’s point of view, good job..