A Cross sec tion publication
First published in 1975
May 2018. ` 50
www.bitb.org
Heritage Needs PPP, Private Sector has Equal Stake in Conservation The signing of the maintenance agreement between Dalmia Bharat and Indian government for the upkeep of Red Fort is being criticized, for all the wrong reasons. Infact, adoption can be game-changer for our monuments nationwide.
IndiGo 2.0 gets going
Photo Credit: PIB Images
inside
I
Sports tourism is a most positive disruptor, a force to reckon with ...pg8 PM Modi at Red Fort on Independence Day. The experience of visiting the national monument must get elevated and it requires private sector participation.
I Pragati Maidan 2.0 was an idea whose time had come: L C Goyal ...pg4
Taj to ensure development pipeline to 50% of current inventory ...pg16
s the private sector less ‘national’ than the government? Is the PPP model a sell-out of national heritage? Has the government ceded control of its assets? None of this is true. Only the leasing of conveniences, upkeep and upgrading of facilities to ensure that our monuments can become world class experiences. Everyone knows that governments are bound by rules and red-tapism. It is easier for the private sector to hire talent and international expertise. And when a leading corporate will put out its name plate as the custodian, it is putting out its prestige and corporate brand value. None will risk it. On the contrary, this is CSR fund best spent, in the full public glare, so much better than in so many cases where we will never know where they went! In the case of the iconic Red Fort, a sum of `25 crores is coming to government as leasing value. This could help sustain numerous smaller entities. And this amount is only coming from leasing out one monument. And Red Fort will require additional monies towards upkeep and upgrades by the corporate entity directly. This will enlarge the fund basket, increase the size of the cake. It is also not just about funding but overall management. Just like everybody does not want governments to run businesses, so it should be true of managing our heritage. This is PPP in the right direction and one that none should fear. We spoke with a former secretary tourism at the centre, Rathi Vinay Jha, for her comments: “Unfortunately, and for mostly understandable reasons, the budget set apart for the monument upkeep is meagre. The Tourism Ministry probably wants to ensure that its world class attractions offer world class facilities, as we see in many developed countries. This is my guess! And for all this, funding is essential. So why not a PPP for managing such sites? BUT the terms and conditions must be very clear. The heritage monument cannot be just handed over. Roles and responsibilities must be very clearly laid out. So the essential point for us to understand is IF this has been done. Govt must still keep all the control. And the government must constantly monitor, review and ensure that “adoption” is to the positive advantage of the monument and in complete public interest”, she said. Should the government have given out leases of iconic structures such as The Red Fort? Depends upon which way you view the prism. It is possibly best to start where we can make the difference. The Taj Mahal, for instance, had a plan prepared by the US National Park Service some thirty years ago, but nothing has happened. Nothing much has happened to The Red Fort in all these years. Funds available with ASI remain absurdly small. Such partnerships are mutually beneficial, in the national interest, only that the terms of reference must be most trans– Navin Berry parent, always. So that there are none or few dissenting voices.
inder sharma autobiography released
I
t was a rare moment of truth, signaling a possible good-bye to an era when traditional brick and mortar tour operators reigned supreme. There was then no other category. And here we were paying our homage to a man who was truly the last of the titans. The occasion was the release of the autobiography of none other than Inder Sharma, creator of SITA Travels and founder of Select CityWalk. There is nothing he touched which had to be the best. And here, his friends and admirers had got together to remember him. Passages from the book were read out. His busi(L to R) Noni Chawla, Neeraj Ghei, LG of Delhi Anil Baijal, ness acumen and solid character were recalled. The list From Karan Singh and Arjun Sharma included Dr. Karan Singh, S K Misra, Balbir Punj and others whose life he touched. On the stage were his daughter mark of the man himself. Neeraj and son, Arjun. I have had the privilege of knowing Inder Sharma at close The book is not just about his life but his close encounters hand. Everyone knows of his getting the Padma Shri. It was at with tourism. His views also matter as a solid reflection of his my home, over dinner, that we received the news with a call from times when tourism was still nascent as an activity. The book is his residence, saying some government guys were trying to get marked with many personal anecdotes, often punctuated with in touch with him. And yes, we all celebrated that evening - the – NB utmost honesty and candour, something which was always the first National Award for anyone in travel. Destination India ◆ May 2018
ndigo is in the news again, this time in the process of announcing its new management team, as it embarks upon its next phase of development. Having acquired 140 aircrafts, all one type, become India’s leading airline by market share, its next phase will fly on multi-type aircraft, low cost long haul, and buying planes instead of leasing them. Its ne x t ph a s e w i l l need more senior people, with more internationa l experience. Its outg oi n g pr e s i d e nt has experience in aviation limited to Indigo; the process of bringing expats started some years ago and these have been joining in key Rahul Bhatia capacities, with experience ranging from 30 to 40 years, to strengthen the top management team. This is gearing up for the next phase, as the airline looks are flying international and maintaining its profitability. The exit of Aditya Ghosh will not make the airline miss a heartbeat, as pointed out by Rahul Bhatia, one of the two promoters of Indigo; infact, in the emerging scheme of things, his exit was almost imminent! It’s merely a blip, as the airline looks to more tailwinds on its international plans. That its shares have fallen in the last few days and news reports mentioning SEBI query with regard to timely filings are another issue. With oil prices witnessing an upward trend, aviation companies may experience some challenges in the – NB short run.
IATO aspires to be a whistleblower on industry issues
I
n the recently held biennial elections of the Indian Association of Tour Operators (IATO), E.M Najeeb, Managing Director, ATE Group registered a comfortable victory, taking over the reins of IATO as the Senior Vice President for t he c om i ng t wo ye a r s . Sp e a k i n g exclusively to Destination India, he shared that he intended to propose to the organization to focus on “new areas”, such as social responsibility activities and digital promotions. He E.M. Najeeb also favored “earnest involvement of IATO in the tourism industry of various regions” to enhance the relevance of the association. He stressed that the association needed to look into quality issues in the industry and could act as whistleblowers to bring spotlight on issues affecting the larger tourism industry.
turn to Page -3
1
innovating since in 1 9 7 5 tourism in 1since 975 innovating
Editorial quote unquote
Good time to consider the ‘Kerala model’ for the country
H We are developing infrastructure for Buddhist tourism, which is going to connect SE Asia with the important Buddhist sites of India. I am also very pleased that the government is a partner in the restoration of many Buddhist temples. Narendra Modi Prime Minister
Those who are crazy might succeed, but lazy will never succeed...But lazy might succeed in tourism, because if there are no lazy people, why will tourism succeed? I think there are enough opportunities for everybody. Suresh Prabhu
Union Minister of Commerce & Industry and Civil Aviation of India.
Tourism’s growth, on the one hand, and sustainability on the other are not at odds; the situation is far from a zero-sum game. Zurab Pololikashvili
Secretary-General of the World Tourism Organization (UNWTO)
ow do we take our tourism to the next level has been a part of the national discourse for some time now. It is generally accepted that the present state of growth will continue unabated, that there is a natural momentum to the economy and that travel will grow commensurately. H owever, if we are aiming at a quantum leap, a game changing scenario, and we are looking for solutions, it maymake sense to examine the ingredients behind Kerala’s tourism growth story. It is an interesting coincidence that for the first-time possibly in the history of tourism in India, we h ave key positions at the centre taken up by people belonging to the same state – Kerala. The tourism minister belongs to Kerala. We have the DG from the same state and a joint Secretary. And that state is alsothe most successful model of case study for developing tourism, not only in India but the world over. Sometwenty odd years ago, the state was not in the reckoning among themore significanttourism destinations in the country. Backed by a pro-active stance, the state has outperformedand outgrown manyof the moreestablished states in the country. Finding solutions to India’s tourism could well lie in understanding what made Kerala the success story, adopting and adapting what is possible at the national level. It must be kept in mind that Kerala is only a comparatively small coastal state while India comprises of 29 states and 7 Union Territories; some states are way larger in area and have a much more diversified tourism bouquet. Therefore, not all of it can be adopted verbatim. A closer look at the components that went in to the making of Kerala as a successful tourism destination suggests that several considerations came together to make Kerala what it is today. First and foremost – identify the product. Understand it, nurture it and strengthen it. Stay steady with it, and don’t keep tinkering with it. S pecify what works for international markets and what works for domestic. At the national level, given the much largerdiversity and scale of tourism products, comparedto Kerala, it would be a most difficult task to identify just a few, but therein lies the first challenge in making it work. Important therefore to identify a few verticals and take them up one at a time. Far too many times, the product has been tinkered with – to each his own, and every successive team has shifted priority, and so have ministers in charge. Once the product is identified, there must be consistency in adhering to the product definition which essentially means that there is continuity in strategydespite changesat the helm. With the product defined, a detailed activity calendar comes next and thereby removes chances of adhocism which remains a perpetual problem. The second elementwould be a pro-active private sector. The private sector in Kerala did not come from nowhere. Also, the business acumen in Kerala is no different than elsewhere in the country. But what happened in Kerala is that the state reached out to the private sector, empowered them to take initiatives, invest capital and acquire expertise upfront. This has not been happening at the national level, though some measures have been suggested in recent months. Experiences around the product were built by the private sector, with active government help. There must be a genuine PPP (Public-private partnership) where the state encourages private partnership and involvement. There is no contesting the fact that the private sector, at the national level, has shied away in recent years. The sector has witnessed massive transformation and has been hit hard by the advent of online industry with global players waging a bloody battle, backed by institutional funding and enviably deep pockets. There has been substantial diversion of tour business to FITs. The other component is the sustained marketing that has gone into ensuring K erala’s growth story. K erala was the first state which decided to come out of the India Pavilion at leading international travel marts t o showcase their offerings in a standalone manner, averting a cumulative fate. It is marketing that is essential, once we have a product in place. At the national level, we have some regimes as having done more than others; some have shown no inclination to spend! Perhaps, it would be most opportune to study what worked for Kerala and what did not. And then to see how much of it can applied to the national level, in taking the India storyforward. – navin berry
(Contd. from page 1)
IATO aspires to be a whistleblower on industry issues Reacting on being elected in the IATO team, he suggested that he was glad that the members of IATO had reposed their confidence in him. “I contested the election putting forward my earnest intentions to make the association more inclusive, involving members from all parts of the country in the activities of IATO,” he said. “The organization would become closer to the hearts of the members if it is made more transparent,” he added. On the way forward, he believed that it was necessary to “equip the organization well to move in pace with the changes and developments” in the tourism industry around the world to remain abreast with changing times. Batting for concerted efforts, he argued that the association should stand up for the causes of tour operators in the country. “We should also make ourselves fit for the times to be one of the best trade associations in the country. I believe that there is a great pool of experience and knowledge among the valued members which should be brought together for the benefit of the organization,” he said. He noted that larger stakeholders of the tourism industry should view IATO “with great amount of goodwill and appreciation” for their ongoing efforts and achievements.
editor
Navin S Berry navin.berry@bitb.org managing editor
We should be able to look into the quality issues in the industry. We can be whistleblowers when it comes to issues affecting the tourism industry. We should also make ourselves fit for the times to be one of the best trade associations in the country.
Shashank Shekhar shashank@bitb.org director business development
sudhakar Joshi sudhakar@bitb.org Destination INdia is printed, published and owned by Navin S Berry and printed at Anupam Art Printers, B-52, Naraina Industrial Area, Phase II, New Delhi - 110 028. It is published from 412, Surya Kiran, Kasturba Gandhi Marg, New Delhi - 110 001. Editor: Navin S Berry Total pages 24
E.M. Najeeb
Destination India ◆ May 2018
3
Infrastructure pragati maidan revamp
An artistic impression of Pragati Maidan International Convention and Exhibion Centre
Stainless steel columns will adorn the structure
An artistic impression of to be constructed mammoth Ashoka emblem is shown here
Pragati Maidan 2.0 was an idea whose time had come: L C Goyal
The structure of the convention centre embodies architectural elements of Lutyens Delhi
L C Goyal accompanies Cabinet Secretary P K Sinha to appraise him of the project’s progress
4
L C Goyal, CMD, ITPO, inspects the progress. Alongside him is Cabinet Secretary P K Sinha
Destination India â—† May 2018
Q&A Infrastructure
pragati maidan revamp
L C Goyal, cmd, Itpo The revamp of Pragati Maidan in its 2.0 avatar has been on the cards for a few decadesnow. After years of announcementsand dilly-dallying, the project is underway with a much grander budget and provisions than ever conceived. To his credit, L C Goyal, CMD, ITPO has been pivotal in not only getting the project going, cutting across the maze of multiple agencies involved but also putting in innovative means to good use to ensure that budgetary needs were met. He believed that the revamp of Pragati Maidan was an idea whose time had finally come, and he was merely carrying outthePM’s mandate given to him to create a world-class venue for meetings and conventions. An exclusive interview unravels the details behind India’s biggest push in creating a global-level convention and exhibition venue. Excerpts:
S
haring his initial thoughts on the ongoing Pragati Maidan revamp, its 2.0 avatar so to speak, he mentioned that a “great sense of satisfaction and fulfilment” prevailed. He said that the project had been on the table since 2003 and much water had flown in The Ganges since then. “I am happy that it is happening when I am around. I have built the project brick-by-brick,” he shared, adding that he was following the PM’s mandate of creating a world-class venue for conventions.
How the cookie crumbled Recounting the experience of dealing with the mammoth undertaking, he conceded that he was “confronted with challenges from day one”. He even quipped that given the plethora of challenges, he could “write a book”, suggesting that he had to surmount numerous obstacles. Listing out some major constraints, he mentioned that ITPO had to work out a “strategy to get street pavilions back” with them. He shared that those buildings were not classified as heritage buildings as mandated by Heritage Conservation Committee and Delhi Urban Art Commission had approved ITPO’s plan – which entailed demolishing existing structures. He conceded that structures were “useful” and had been put to good use for a long time but reasoned that the “old had to give way to the new.” “We are building a state-of-the-art structure with modern technology,” he reasoned. He also mentioned that a few cases were filed with the National Green Tribunal and others, against the project, but were going to have little impact on the time-line of the project ‘s completion. He revealed that when he assumed the charge of ITPO in September 2015, he realised that the proposal was “only to construct a convention centre”. “The project was expected to cost around INR 677 crores,” he recollected. He noted that a stand-alone convention centre was a “financially unviable” project and he decided not to go ahead with the same. Any proposal needed to have all the elements – including a convention centre, exhibition halls, hospitality, retail and others – of a world-class MICE destination, he explained. Only when the entire proposal was revised to incorporatetheabovem entioned changes, the proposal was sent to the Cabinet Committee of Economic Affairs (CCEA), CMD said. He admitted that the project had turned out to be “humongous” and “way beyond” what even he had imagined it to be. “It has been huge in terms of its capacity, features, design and, more importantly, in ensuring that the venue is accessed without any bottlenecks. Today, the project is worth INR 3,437 crores,” he informed. Interestingly, a sum of INR 923 crores had been earmarked only for traffic-related interventions to ensure that “three peripheries of Pragati Maidan” remained free from congestion. “I was keen on having an additional lane on Bhairon Marg to relieve itstraffic congestion. T heidea of whether India Gate could be connected to the Ring Road through a tunnelwas an important addition. To my surprise, I realised that it was feasible. Now there would be a tunnel of 1.1 kilometres in length with six lanes and 57 metres in width,” he detailed. T he proposed tunnel was going to have direct access to bothsidesofthebasement parking at the venue. Giving further insight, he shared that he roped in NBCC and zeroingin on the façade and design of the convention centre was a “big challenge”. Several meetings were convened, roping in stakeholders like NBCC, Delhi Police, Ministry of Urban Development, DDA, architects, and others, he said. He also shared that he was personally keen on taking inspiration from architectural elements of Rashtrapati Bhawan and Parliament. The project itself was a good blend of “traditional architecture and modern technology”, he emphasised. The convention centre would feature a front plaza of 15 acres (6000 sq. mtrs) with a water-body of two acres. It would have a musical fountain. T he venue was going to be “eventually thrown open to public, with some regulations”.
Contours of the Pragati Maidan 2.0 Aedas– a leading design firm based out of Singapore – is the architect for the project. The main project is being carried out by Shapoorji Pallonji while traffic interventions are being undertaken by Larson & Tubro (L&T). NBCC is the advisor for the project. The entire structure of the convention centre will boast of stainless steel pillars. The convention centre would feature a front plaza with over 15 acres in area. It would have a 2-acre waterbody with a musical fountain. Traffic intervention initiatives are expected to be wrapped by August next year, a month prior to the expected completion date of the project. Three out of six exhibition halls will be completed by February 2019. The rest three would be completed by September 2019. The convention centre would be called ‘Delhi New International Convention and Exhibition Centre’ (DEL-NICE).
It has been huge in terms of its capacity, features, design and, more importantly, in ensuring that the venue is accessed without any bottlenecks. Today, the project is worth INR 3,437 crores.
The financial matrix of the mammoth undertaking The project, first mooted with a sum of INR 677 crores, grew and for right reasons, to INR 3437 crores (519 million USD).
Financing the undertaking turned out to be an equally challenging assignment, shared L C Goyal. He explained the dynamics of funding, sharing that as ITPO paid no dividend to the exchequer, it had substantial funds accumulated in its corpus. “A sum of INR 1200 crores from the ITPO’s corpus has been utilised in the project,” he told us. In a bid to monetize available assets, ITPO has also decided to auction a land of 3.70 acres for a “probable lease period of 99 years” for constructing a hotel. The ITPO chief hoped to receive a sizable sum from the auction. Important to mention, the winner of the auction would have to deposit the entire sum “upfront and ensure that construction is completed in a defined time-frame of three years.” ITPO has also taken a lending route and will be raising a sum between INR 800 crores – INR 1200 crores from various banks, “depending on the quantum of sum received from the auction of 3.70 acres of land.” Approximately 80 percent of the sum needed for traffic interventions, standing at INR 923 crores, is being obtained from an “already existing scheme” under the Ministry of Urban Development to de-congest Delhi.
ITPO to emerge as a significant player in pushing MICE segment L C Goyal unequivocally asserted that the project was going to add muscle to ITPO’s standing on the global stage. He shared that he had mooted creating a body called ‘New Delhi Convention and Exhibition Bureau’ – a city specific bureau aimed at promoting Delhi as a MICE destination. “The idea being to attract more conventions and exhibitions into the city of Delhi. The ITPO CMD will be the ex-officio Chairman of the body,” he detailed. He added that the body would involve the larger gamut of stakeholders, including event organisers, airport, airlines, logistic providers, conference organisers and hotel industry stakeholders, among others. He noted that he was “almost there with the idea” and the body was going to be functional in the coming few months. He shared that stakeholders were “very encouraged” with the idea and had welcomed the move. He believed that with the body being operational, it was expected that all stakeholders would gain from better business prospects and each stakeholder was going to “get its share”.
Quantitative change on the cards with the revamp L C Goyal noted that the new look Pragati Maidan was going to usher in a “massive change” in the carrying capacity. “Before the demolition, the complex has had a capacity of 65,000 sq. mtrs. Of exhibition space and seating capacity of close to 1000-1500 people,” he said, adding that the basement parking could accommodate around 500-600 vehicles. Drawing a comparison between the capacity, before and after the revamp, he informed that “the aggregate capacity of the new convention centres was going to be close 11,500 people” which is a massive jump in seating capacity. Add to that, 3000 extra-seating capacity was being provided by the amphitheatre. “In a single-format, the seating, the convention centre can accommodate around 7500 people – which is five times the capacity of Vigyan Bhawan,” he said, indicating at the quantum jump in the capacity.
What next? The convention centre will be “up and running” by September next year. Also, three out of six exhibition halls were “going to be completed by February next year”, LC Goyal informed. Conceding that it was “tough timeline”, he shared that three halls were going to be complete in all aspects with connectivity with Mathura Road, tunnel access, F&B units on the Mezzanine floor, and others. Also, the second phase of the project could be taken up sooner, depending on the earnings generated by ITPO, he told us. The second phase would entail revamp of seven old halls – hall no. 7, 8,9,10,11,12 and 12A – with ITPO. L C Goyal informed that the ITPO projections suggested that the “revamp of these halls were going to be taken up in 6-7 years”. – Shashank shekhar
Destination India ◆ May 2018
5
Pure Tourism perspectives
Innovation in outreach outcome of limited resources: V K Duggal V K Duggal, Former Governor, Manipur shared his insights on his engagements with the tourism industry, reflecting that several successful initiatives were outcomes of ‘out of the box’ thinking. Excerpts from his address at India Travel Congress:
V
K Duggal, at the onset, stated that his was only sharing “facts” based on his experience and explained that innovation in marketing and outreach in the Indian milieu came primarily from the “fund crunch” officials were often faced with. He
suggested that once there was an understanding that the competition was fierce, and funds were limited, innovative and ‘out of box ideas’ were natural outcomes. He also called himself “lucky” in having received the support of “very able colleagues” both senior and junior, besides receiving support from the industry. He shared the experience of his days in Sydney, Australia as the Director of the tea board where he worked with the India Tourism Office and Air India. He revealed that all of them were working in “silos” and eyeing a change in the scenario, he requested the then Indian Ambassador to Australia for a more “concerted effort where each one could piggyback” to promote India. He added that fund crunch was a primary reason for such a suggestion. He shared that the reception to the attempt was “so good” that Air India approached him to collectively promote Indian cuisines. “We opened the first five-star restaurant, anywhere, in Sydney,” he detailed and shared that numerous Indian delicacies and beverages such as beer and ethnic drinks were flown in from India to be served to locals. He further noted that India was promoted in Australia through such joint collaborative efforts. Speaking on his association with Goa and his role therein, he shared that it was decided after a meeting with senior industry stakeholders to market Goa’s monsoon with a fifty-fifty contribution from government and industry. He candidly admitted that industry then did not see much potential in marketing monsoon tour-
ism. He detailed that a team was put together under his supervision in 1986. “It was one of the first PPP initiatives of its time,” he added. Art illustrations by Mario Miranda were splashed across newspaper generating significant queries from individuals, he shared. V K Duggal noted that the effort had paid off and hotels in Goa recorded as high as 60 percent occupancies, compared to previous years when hotels offered free stays and discounted food to keep their assets operational. He also noted that buoyed by these developments, the first charter plane had landed in Goa. Goa has since emerged a busy monsoon tourism destination, V K Duggal reflected, adding that it was evident with “flights going chockablock.” Having served as the DG of Tourism, GOI, he quipped that he had some “anecdotes” to share. He noted that the idea to hold a tourism ministers conference in India was mooted and the then PM Atal Bihari Vajpayee was “very keen on it”. Unfortunately, the idea never materialised as 9/11 terror attacks took place in the USA only a day prior to the event, he revealed. He asserted that the ‘Incredible India’ campaign was a huge success story and credited officials for their initiatives taken during that time. He also reminisced the successful hosting of PATA conference. V K Duggal noted that he had re-started the e-visa initiative once he assumed the position of Home Secretary – a project which had incidentally faced resistance from the home ministry – and added that the electronic visa initiative had moved forward several steps from there on.
Innovation is driven by need. India’s tourism outreach has often been innovative because we have limited funds and fierce competition to deal with.
Vinod Duggal
Former Governor, Manipur
India must diversify products and source markets: Harsh Verma Harsh Verma, Director, Technical Cooperation & Services, UNWTO recently shared some profound insights on taking the tourism sector to the “next level”. Outlining the way forward, he believed that it was about time when India looked not only at product diversification but also equally focussed on finding new markets. Excerpts from his address:
It is time for India to look beyond the Golden Triangle and market newer destinations
I
ndia needs to scout for business from the Scandinavian region and look at it as a potential new hub for inbound in to India. He also advocated doing away with the over-reliability on a handful of traditional markets, naming the USA and the UK. He batted for cities and destinations in states playing a more “proactive role” in the entire process of tourism development. He suggested giving “more empowerment” to states and cities to develop markets for themselves as stand-alone destinations. He argued that it was “ultimately” states where Dr. Harsh Verma tourism resources were located, and they were the ones with the offerings. “ownership of resources.” H is recommendation to policy Harsh Verma noted that tra- makers in Ministry of Tourism, ditional Indian tourism products was to “play the role of a referee and had gone “stale” and had been not of a player”, allowing private “overused.” “It is like stale food stakeholders to carry forward the which has been put in the fridge,” mantle of business. He suggested he lamented. He advocated apply- MoT to regulate, conduct research, ing more research for finding and issue guidelines, besides providing nurturing newer tourism segments funding and issue policy directives, to maintain a sense of vibrancy in “particularly with regard to envi-
6
ronmental conservation.” He also asked MoT stakeholders to “create a conducive environment for growth” for private sector initiatives and keep a “vigilant eye” on unfoldings in the industry, ensuring that developments were earnest and done in the right spirit. He asked MoT, despite all its wisdom and initiatives, “not to initiate, plan, develop, market and promote tourism on a pan-India basis.” A ddressing thetravel trade industry, he saidthe industry was the “interpreter of demands”, and thereby needed to understand which supplies had “durability and marketability”, implying that there were some hits and misses by the domestic travel trade fraternity in identifying sup-
plies worthy of marketability in an internationally competitive business environment. Speaking on global churning, he shared some details on growth trends worldwide, asserting that “strong growth momentum” witnessed in 2017 was going to continue unabated in 2018 and beyond. Harsh Verma also shared that global tourism had grown by 7 percent which was “remarkable.” He suggested that upswing in the global economy and robust demand for outbound travel were key reasons in driving this northward ascent. The APAC region accounted for a quarter of global arrivals, and has recorded a healthy 6 percent growth in arrivals, he shared, adding that the
Destination India ◆ May 2018
South Asian region was the fastest growing pocket in the APAC. Reflecting on the domestic market, he mentioned that India had registered more growth in foreign exchange earnings than tourist arrivals in 2017, meaning India had serviced tourists who were “better off financially”. He, however, expressed concern whether the growth was “sustainable” in the long-term and asked if India had requisite products, adequate infrastructure, super-structure, tourist services and facilities, accessibility to destinations and skilled human resource to absorb the growth. He also voiced his concern on the implications of growth “on the country, economy, society and environment.”
Technology online
Innovation is critical to survive in the digital ecosystem Ashwini Kakkar, Vice Chairman, Mercury Travels made some interesting observations in his keynote address. He argued that the ever-evolving digital landscape had made it imperative for companies to innovate and evolve faster, holding on to specialised skill-sets, in order to remain relevant in the marketplace. Excerpts:
A
shwini Kakkar asserted that online companies had been “burning money” over the last few years to acquire a greater market share. He shared that top five companies in the Indian marketspace – including Makemytrip. com, Cleartrip.com, and Yatra.com – had registered losses upwards of three billion USD in 2017 alone. Sharing that IATA’s attempt of introducing a new distribution strategy was intended to “destroy GDSs and old forms of distribution” as it existed, he suggested that corporates, too, were going all-out to reduce distribution costs, assimilating automation into their processes.
Customer loyalty is dead and matters only as much as the last rupee put on the table. Disruptions are rampant and are happening at an unprecedented pace.
Customer loyalty is dead
He unequivocally asserted that “customer loyalty” was dead and it mattered only as much as the “last rupee put on the table”. He noted that “disruptions were rampant”, and happening at a pace like never before. He also stressed that
No market need, ran out of cash, the team was not right, we were outcompeted and price issues, these are the things start-ups need to watch-out for. Artificial intelligence (AI) is going to be one of the biggest factors affecting the industry in the very near term. social media and mobile commerce was bringing unprecedented change in the landscape. He suggested that the customer was becoming a servant of the organisation, as a buyer, who spent hours and days trying to scout a vacation for himself, while he gave his comments and ratings on the service provided to him to act as an advisor to the company. He noted that the profile of the customer had transformed immensely, and the customer had enough “swaying power” to influence buying patterns by the virtue of voicing his likes or dislikes for the company and its services. Giving his take on how smaller agents were going to survive, as they did in the past, fighting the onslaught of multi-billion dollar companies, he mentioned that intermediaries were becoming “dis-intermediaries by newer intermediaries” entering the fray. He illustrated his assertion by noting that companies like Expedia and Priceline were able to charge a commission upwards of “30 percent as opposed to traditional operators charging only 10 percent commission.” He argued that customers were still “spending a lot of time on the internet” and visiting 18 websites before taking a call on buying services online.
Companies changing ploy
Asia on the cusp of driving global tourism footfalls
Ashwini kakkar
Vice Chairman, Mercury Travels
highlights
Trends in the start-up India had generated ecosystem 5,200 start-ups in the Reflecting on the start-up ecosystem, he informed that India was the third largest start-up market in the world, past seven years. “after the United States and China”, and added that India was “far ahead of both the United Kingdom and China.” had generated 5,200 start-ups in the past seven An average of 3-4 start- India years, he shared. “There is an average of 3-4 start-ups happening every single day,” he added. ups happening every He shared that 14 billion dollars were invested in the start-up ecosystem in 2017, indicating that positive marsingle day in India. ket sentiments prevailed on growth prospects. “SoftBank alone invested 4 billion USD in the Indian market,” he SoftBank alone invested supplemented. Travel, tourism and hospitality sectors have invested 3 USD on “brand new start-ups,” Ashwini Kakkar 4 billion USD in the Indian billion said. He mentioned that most number of deals were being sealed in Bengaluru, followed by Delhi and Mumbai. market in 2017. He reasoned that while the industry could look at the scale of investments in the start-up system, it was to “analyse” why the landscape was littered Companies with special important with organisations that “could not make it”. “No market need, ran out of cash, the team was not right, we were skill-sets are favourably outcompeted and price issues, these are the things startups need to watch-out for,” he stressed. poised to survive the upheaval. Challenges ahead
Arguing that companies were re-thinking their distribution strategies and money spent, he made a special mention of Airbnb, stressing that company had jumped “in the fray of distributing hotel rooms” as well from just distributing homestays. He forecasted that Airbnb could be “fighting with the likes of Priceline” in the coming years. Speaking on Expedia, he said that the company had spent a staggering sum of 5.13 billion USD on marketing in 2017. “That is an amazing number. These kinds of responses are going to change the face of the marketplace,” he said.
Taking stock of global churning, he emphasized that major deals were being inked and named Starwood deal, Accor’s acquisition of Swissotel and other brands, and Amex’s buying out Robinson group as some of the biggest examples to supplement his argument. He noted that even in the domestic market, M&A’s were a space to “watch-out” for and highlighted that those companies were dealing in extremely high volumes of cash. He also suggested that mergers and acquisitions was yet another measure to ensure continuity in business and market share and there were innumerable examples of the same.
Mergers and Acquisitions gain traction
Technology driving M&As
He noted that at a time of constant disruptions in the market, companies with “special skill-sets” such as “deep service and deep skills” were favourably poised to survive the upheaval. He further added that some companies had imbibed “deep innovation culture” which was equally crucial in maintaining their foothold despite market disruptions. Making a mention of mergers and acquisitions (M&A), he suggested that it was “playing an increasingly important role” in the industry. “Last year, there were around 300 M&A deals, but only 12 percent of them were in travel and tourism sector,” he detailed, suggesting that numbers were going to grow moving forward.
He described the rise of Asia as a “crucible for world’s tourism” and a major trend in the tourism ecosystem. He shared that, in the next five years, it was being estimated that every third global traveller, both on the outbound and inbound side, was going to come from Asia. Giving a more detailed insight, he shared a prediction that India and China were expected to grow in a direction where “they will account for 40 percent of world’s GDP.” He also mentioned that both the countries were expected to account for 50 percent of global GDP by 2047 but was quick to add that these estimates could go “either way.” “Still, these are some crazy numbers and beg real hard thinking,” he emphasized.
Singling out technology as “the most important factor” in driving M&As, especially, in the past five years, Ashwini Kakkar noted that customer retention was yet another reason why companies were favourably viewing M&As. He added that market expansion, product enlargement and distressed asset purchases were some of the other key reasons for the same. Commenting on the current state of Indian market, he argued that the number of mobile phones in the Indian market, including smartphones – which numbered in the range of 300 million 2017 – were going to lead to an exponential growth of the digital ecosystem in the country in the imminent future. Destination India ◆ May 2018
He specifically mentioned that artificial intelligence (AI) was going to be the “biggest factor” affecting the industry in the very near term. “Chatbots is the second biggest factor, besides payment technology,” he said, noting that these were technologies to “watch out for” in the near future.
What’s next Sharing a brief overview of the changes in the digital ecosystem, he predicted that companies like Expedia were going to “complete all travel booking payments” for consumers while hotel were going to be sold by the hour and not by room nights. “Airbnb will sell over one billion room nights, whether in hotels or in their homestays, aggregating a revenue of over a 100 billion USD,” he told the audience. He also said that population of cars was going to come down “drastically”. “It will be down to 25 percent of what it is today, and these cars will be driverless as most people will chose to never buy a car,” he said. He professed that the quantum of change expected to happen in the next twenty years was going to be more profound than changes in 3000 years of mankind. He argued that future was not an “extrapolation of the past”. – Shashank Shekhar
7
New-age Drivers sports An aerial view of the stadium
Anurag Thakur, MP, Hamirpur
Sports tourism is a most positive disruptor, a force to reckon with A panoramic view of the HPCA stadium
8
Destination India â—† May 2018
Q&A New-age Drivers sports
anurag thakur, MP, hamirpur Hon’ble MP from Lok Sabha and former BCCI chief Anurag Thakur shared an interesting overview of the growth of sports tourism industry world-over, and suggested tour operators to weave in sports as a part of the travel itinerary to cash in on the trend. Excerpts from his keynote at the recently held India Travel Congress: Sports tourism industry: an emergent force to reckon with Anurag Thakur suggested that travel and tourism industry was “best or worst affected” by the advent of disruptive technologies where travellers were planning, sharing, and reviewing their itineraries “with a click of a smartphone.” He maintained that sports tourism was one of the biggest disruptors in the travel and tourism industry and yet “no one was talking about it.” He noted that adventure and sports were important elements of a vacation for younger travellers. Sharing his understanding of the business of sports tourism, he noted that the USA was the “most organised” when it came to sporting leagues. “Sports market in north America was 60.4 billion USD in 2014 and it is expected to grow to over 73 billion USD economy by 2019,” he mentioned. He added that the sports industry was also a major employment generator. Closer home, China’s sports tourism industry was around 31 billion USD a few years ago and had been growing at “30-40 percent y-o-y”, he said, sharing that the industry was expected to value at 130 billion USD by 2030. He argued that Chinese tour operators were beginning to realise the impact of the development as C-Trip, China’s largest online travel agency, had been “registering 400 percent rise y-o-y in their sports-themed tour products”, pointing out the growing clout of sports tourism industry.
The Dharamshala story Recounting his early days as the administrator of Himachal Pradesh Cricket Association (HPCA), he shared that not many believed that things could be turned around when he took over the reins at a young age of 25. “We managed to change the scene in a matter of five years,” he said, sharing that the picturesque cricket ground in Dharamshala – now counted amongst the most beautiful cricket stadiums in the world – was constructed with a small sum of INR 50 crores. “We struggled to get an international match there. We hosted Pakistan to play in 2005 and I remember we did not have even one five-star hotel there. And, only I know how we managed to host them,” he reminisced. The sleepy Buddhist town has come a long way since then, now connected with three daily flights and “at least five five-star hotels coming up in the district.” “One hotel with 119 rooms is being built by HPCA,” he added. Reflecting on the change, he stressed that it was a testimony to how a game could change the circumstances for masses. “It is not about daily flights or hotels, but if you see the number of tourists, quality of tourists and the amount spent by them ten years ago and now, you will see the change,” he asserted.
We struggled to get an international match there. We hosted Pakistan to play in 2005 and I remember we did not have even one five-star hotel there. And, only I know how we managed to host them.
Look at the valuation of IPL teams now. Look at the amount of employment they generate for the tourism industry.
Sports market in north America was 60.4 billion USD in 2014 and it is expected to grow to over 73 billion USD economy by 2019.
How times have changed Drawing a comparison between his childhood days and now, he suggested that a sea change had come about in the perception of sports as a viable career option. He said that there were apprehensions among people who questioned the rationale behind IPL and “why millions of dollars were being spent on buying city teams.” “Look at their valuations now. Look at the amount of work they generate for the tourism industry,” he exclaimed, sharing that with eight teams in the fray, the total hotel room nights generated during IPL games was close to 30000 roomnights! He noted that the larger gamut of stakeholders, from F&B operators in stadiums to hoteliers, suppliers, and others, were getting benefitted from the undertaking. He mentioned that IPL’s success had played a crucial role in driving many other leagues in different sports, such as boxing, kabbadi, hockey and others. “It is just the beginning,” he optimistically added. Anurag Thakur, however, rued that the tourism industry was “failing to sell sports events”, whether it was Indian cricket team’s matches or IPL. He advised industry stakehold-
Whether it is adventure, religious or heritage tourism, or the overall scenic beauty, it is all there in Himachal Pradesh but we are unable to do much in that regard.
ers to tailor-make tour packages combining sports engagement with sight-seeing. “We have a lot to show. We go to Rajasthan, if matches are held in Jaipur, and the next match is after three days, can we take them to Udaipur and other destinations? There is much to see in Jaipur as well,” he said, stressing that such a package needed to be looked at too.
Catching them young: Imbibing the values of tourism The MP believed that imbibing the essence of India by travelling to different destinations was an important activity for young students. He shared that he had started an initiative by roping in a school in Delhi and taking “class 9 students to stay in a remote village in Himachal Pradesh”, giving them an opportunity to interact with local students studying in government schools. He suggested that the experience provided a “fresh perspective” to students from urban centres such as Delhi.
On connectivity to Shimla, Manali and beyond Anurag Thakur stressed that connectivity was vital to growth of tourism and explained that owing to long travel duration between Delhi and Himachal, tourists were losing “precious time” and the key was to ensure shortest possible travel time to drive tourism. A hill-top between Kumarhatti and Kandaghat was identified for creating a “full-fledged new airport” when his party was in power in the state, he revealed. He hoped that the state government, with the help of the central government, will go ahead with the plan. The parliamentarian shared that the central government was going to provide “crores of rupees” to Himachal Pradesh and other hill states to initiate helicopter service under the Regional Connectivity Scheme (RCS). He said that travellers could land in Chandigarh and fly to Shimla and several other destinations within the state on subsidised fares, reflecting on future possibilities. Giving an overview of road connectivity, he explained that work on the new four-lane highway from Chandigarh to Shimla was in full-swing and the road till Solan was going to be completed in the next eight months. “The road till Shimla will be completed in the next year and half,” he added. He shared that the airport in Manali was faced with a twopronged challenge of “changing the course of the river and negating the problem of the airport being in the middle of the valley.” He suggested that attempts to identify a new location with better visibility and round the clock aircraft landing facility were being undertaken. Speaking on connectivity from Sundarnagar to Kullu, he shared that the tender had “already been allotted” and work was on in full pace. He assured that one could reach Manali from Chandigarh in four hours’ time. “The whole project will be completed in less than two years,” he added.
A clarion call to the industry Making a pitch for collaborative measures with the industry, for the state, he suggested that Himachal Pradesh had a “lot going for itself”, with several segment offerings waiting to be tapped. “Whether it is adventure, religious or heritage tourism, or the overall scenic beauty, it is all there but we are unable to do much in that regard,” he bemoaned. He noted that if the industry was willing to come forward and “do something”, he would be “happy to initiate such undertakings.” He also revealed that he was going to hold a tourism conference in Himachal Pradesh “very soon” and asked the industry to share their experiences and expectations with policy makers. He also suggested that the industry could brainstorm on assimilating technology to make the entire travel experience more seamless and hassle-free for travellers. He assured the industry of full support and cooperation. – Shashank shekhar
Destination India ◆ May 2018
9
Aviation trends & insights
with non-stop flights, good news for tourism & business with Ukraine UIA is flying non-stops between Delhi and Kiev five times a week, with an eye on tapping the Indian outbound to Europe and beyond.
W
ith an eye on tappi n g t he I nd i a n outbound flying to eastern Europe and beyond, Ukraine International Airlines (UIA) kicked off its first flight connecting the two capitals, Kiev and New Delhi recently. Igor Polikha, Ambassador of Ukraine to India, called it a “historic occasion” for bilateral relations between the two countries, suggesting that the development would boost political, cultural and tourism ties. He added that it was a” truly unique event”, stressing that India and Ukraine had long enjoyed healthy bilateral relations and better connectivity was a step further in that direction. The top envoy added that there had been a significant rise in
the number of Indian students seeking higher education and the trend was “on the rise,” expressing hope that tourism numbers would head north, and more Indians would take to the eastern European nation after the launch of direct flights. He noted that Kiev was a hub to connect with over 40 countries via UIA’s extensive network in the USA and Europe. The newly launched connection will initially offer flights five times a week, with “plans to have daily flights”, Sergey Fomenko, Executive VP Commerce, UIA said. He shared that the Ukrainian flag-carrier will operate Boeing 767-300 on the route and will target to fill 80,000 seats this year. “In a year and half, we plan to phase out our Boeing 767-300 and operate Boeing 777s,” he shared, adding that
Ukrainian envoy (third from left) with Subhash Goyal and UIA officials launching the service UIA had acquired Boeing 767s on lease and is being operated for longhaul flights since the past five years. Subhash Goya l, Chairman, STIC Group asserted that UIA was perfectly poised to cater to Indians flying to the entire European region, and Ukraine was a “wonderfully kept secret” waiting to be explored. He
reasoned that Ukraine was strategically located in the middle of Europe and could be used as a hub to travel to distant corners of Europe and the USA. “Ukraine also offers excellent investment opportunity for Indian businesses and provides a very costeffective setup,” he said, indicating that MICE segment was an impor-
tant element of travel between the two countries. He also suggested that UIA’s network was expected to add weight to Delhi’s standing as an aviation hub, and “would bring international tourists into India” from numerous destinations serviced by the Ukrainian carrier. – Shashank shekhar
India expected to remain the fastest growing major aviation market
I
n FY2017/2018, India continued its run as the fastest growing major aviation market in the world. Domestic traffic for the 12 months, ending March, is expected to be up 18% year-on-year to more than 120 million passengers. This represents domestic traffic growth of close to 75% in just three years. The result could have been higher still, were it not for the grounding and delayed induction of IndiGo and GoAir aircraft earlier in the year, due to issues with the geared turbofan engines on A320neo equipment. LCC domestic market share stands at approximately 66% and is expected to approach 70% within the next few months. International traffic is on track to increase more than 10% in FY2017/18 to approximately 65 million passengers. CAPA estimates that the natural
highlights Indian carriers are expected to induct around 130 aircraft in FY2018-19 IndiGo will induct most number of aircraft Consolidated net loss for the industry is likely to be in the range of US$350-375 million RCS is catching on with Indian carriers, however, viability of under-capitalised regional operators remains a concern Several of the largest foreign carriers have exhausted their entitlement. Indian LCCs are expected to deploy 25 narrowbodies on international routes in FY2018/2019 growth rate of the market is in the range of 12% to 15% and is being constrained by bilateral restrictions. Several of the largest foreign carriers operating to India - including Emirates, Qatar Airways, Singapore Airlines and Malaysia Airlines - have exhausted their seat entitlements, especially to the metro cities, and are unable to expand capacity. Many carriers are achieving year-round average load factors of 85% to 90%, suggesting that traffic is being displaced during peak periods. CAPA estimates that India’s airlines will post a consolidated net loss of USD 350 mil-
10
lion to USD 375 million in FY2017/18. This includes an estimated USD 62 million to USD 78 million of compensation received by LCCs from engine manufacturers due to aircraft delays and groundings. All Indian LCCs, except A irA sia India, are profitable, and are expected to report a combined profit of USD 450 million to USD500 million. In contrast, FSCs are projected to lose USD 825 million to USD 850 million, although most of this is accounted for Kapil Kaul by Air India. Vistara is also loss making, while Jet Airways will either report a modest profit or be closer to break even. Fleet expansion plans started off strong in 2017 with SpiceJet’s order for 105 Boeing 737 M A X aircraft and 50 options. As the year progressed a key feature was the level of activity related to regional equipment, with IndiGo placing an order for 50 ATR 72s, while SpiceJet ordered 25 Bombardier Q400s, with options for a further 25 aircraft. However, regional airline Air Costa, which had an order for 50 Embraer aircraft, suspended operations in 1Q2017. In 2018 Jet Airways is expected to place an additional order for 75 narrow-bodies and to make a decision on its wide body plans, including the ten 787s on order that it has repeatedly deferred. Vistara will likely order 50 narrow-bodies, together with a modest initial order for less than 10 widebodies, which may increase later. IndiGo and SpiceJet could place orders to support international expansion, including widebodies, and we do not rule out the possibility of a turboprop order by GoAir. Air India’s fleet plans are currently on hold pending its proposed privatisation. India’s airlines are expected to induct an unprecedented 124- 130 aircraft in FY2018/2019, with IndiGo accounting for close to half of this number. However, there may be some delays and deferrals due to engine-related issues. These estimates exclude equipment operated by small regional carriers. Metro cities are best-placed in terms of
demand, to absorb the sheer volume of capacity scheduled to come into the market.
Indian airlines have an opportunity to expand their international footprint However, slot constraints are emerging at some metro airports, particularly during peak hours, which may start to impact airline domestic networks and schedules. Meanwhile, incumbent airlines including Ind iGo, Spic eJet, Jet Airways and Air India, are showing more interest in taking advantage of the concessions available under the Regional C onnect iv it y Scheme (UDAN) to operate services to smaller towns and cities. However, the viability of undercapitalised, independent regional operators remains a concern. With the capacity of most foreign carriers constrained, Indian airlines have an opportunity to expand their international footprint and several of them are likely to do so. Indian LCCs are expected to deploy 25 narrow-bodies on international routes in FY2018/2019. The induction of re-engined equipment, which extends the ideal operating range of narrow bodies from four hours to six hours, introduces a number of new route opportunities from India, particularly in Southeast Asia and mainland China.
FSCs are projected to lose USD 825 million to USD 850 million, although most of this is accounted for by Air India.
Projected Indian airline industry net profitability in FY-2019 Industry profitability is expected to be similar to the current year, with consolidated losses of USD430 million to USD460 million. The proposed privatisation of Air India will be a highly complex transaction. However, if successful, it has the potential to make a significant and positive, strategic impact on the airline itself and the industry as a whole.
Destination India ◆ May 2018
BriefNews ◗ Air India
acquisition is a risk, not justified for IAG, says CEO
International Airlines Group has called its bid to participate in buying 76 percent stake in Air India “a market speculation.” The group CEO William Walsh suggested that the bid could be a risk which was not “not justified” at this stage for International Airlines Group. “We could probably look at it, but I have always dismissed the idea of Air India while government ownership is involved. What the government is saying now is a million miles away, and better than has been said in the past. But I do not think it would be enough to encourage us to look at it,” Walsh said. Suggesting that International Airlines Group was keen on “restructuring”, he noted that there was some “appetite”. “I would want to see some evidence of restructuring. So, I think it would be a risk that would not be justified at this stage. The answer is no,” Walsh said in response to a query from an analyst. For the uninitiated, International Airlines Group is one of the biggest aviation companies in the world and is the parent company of British Airways, Aer Lingus, Iberia and Vueling.
Aviation trends & insights
Vistara’s expansion is priority for SIA, says country head David Lim David Lim, General Manager India – Singapore Airlines suggested that outbound to Singapore was robust and SIA, despite its already vast network in India, serviced by three different brands, was open to adding more destinations to its network. He also suggested that corporate travel to Singapore was growing steadily.
David Lim
T
he airline covers key metro cities along with Ahmedabad. 98 Weekly flights and 11 destinations is a substantial enough presence. Where else do you see SIA expanding in the coming months? India is one of the fastest growing aviation markets in the world with Indian air traveller numbers (domestic & international) steadily rising. This is also reflected in SIA group’s expansion within the Indian market, in the last four decades. Currently India is served by three airlines – Singapore Airlines, SilkAir and Scoot from the SIA group portfolio. Together, these airlines connect 14 Indian cities to Singapore with over 140 weekly services. We will continue to study new destinations and are open to connecting other Indian cities to our network. Vistara, our joint venture with Tata Sons is growing steadily in the Indian market. As it is managed separately, the Vistara team will be best able to elaborate on their expansion plans. You said that SIA will continue to study destinations. Are there any destinations in particular that are likely to soon join the SIA network? Where is the next wave of connec-
InBrief ◗ Zoom Air eyes new connections to Yangon and Chittagong
Zoom Air is planning to expand its network to cover international destinations like Yangon and Chittagong from Kolkata, a top official of the airline carrier has shared. “We are planning to operate flights to international destinations such as Yangon and Chittagong from Kolkata. These destinations are likely to be connected with one or two destinations in the North East,” CEO and MD of Zoom Air, Koustav M Dhar told news agency PTI. “We will be able to introduce international flights from Kolkata, because from now on, we will park two aircraft in the city at night,” Dhar noted. He suggested that routes on the international sectors were yet to be finalised. “The options are Kolkata to Yangon via Guwahati and Kolkata to Chittagong via Guwahati. We are looking at these routes since there is a demand,” he added.
tivity coming from? We do not have any immediate announcements to make on the next Indian destinations to join the SIA network. We currently connect to the following cities through our portfolio of carriers: Singapore Airlines: New Delhi, Kolkata, Bengaluru, Chennai, Mumbai and Ahmedabad SilkAir: Kolkata, Bengaluru, Chennai, Visak hapatnam, Thiruvananthapuram, Coimbatore, Kochi, Hyderabad Scoot: Amritsar, Chennai, Bengaluru, Kochi, Lucknow, Hyderabad, Tiruchirappalli. In terms of specifics, what sort of load factors is the SIA clocking, cumulatively? On a global level, we recorded a load factor of 82.2% in March 2018. We are unable to share route specific data as it is commercially sensitive. How is the outbound to Singapore shaping up in the recent months? What are some key trends therein? How is the leisure side faring? India is the one of the three highest source markets for Singapore in 2017. Both leisure and corporate travel to Singapore have been steadily growing. This is testament to the increasing number of weekly flights to Singapore in the last few years. Additionally, India also features in
We will continue to study new destinations and are open to connecting other Indian cities to our network. Our priority is the further expansion of Vistara. However, we will keep our options open with respect to the proposed divestment of Air India. the top five markets for tourism receipts in Singapore. Media reports suggest that Singapore Airlines is in the fray to buy Air India. Your comments. Our priority is the further expansion of Vistara. However, we will keep our options open with respect to the proposed divestment of Air India. Singapore Airlines ha s bee n ranked as the world’s best airline by TripAdvisor. What are your
comments on this, and how will you further leverage this in the Indian market? To reiterate our CEO – Mr Goh Choon Phong’s comment – “The award is a validation of the hard work and dedication of our thousands of staff all around the world, who focus their attention every day on ensuring that Singapore Airlines remains competitive on a global level. Our business model is based around three main pillars – product leadership, service excellence
highlights Currently India is served by three airlines – Singapore Airlines, SilkAir and Scoot from the SIA group portfolio Vistara, a joint venture with TATA Sons is growing steadily in the Indian market and network connectivity. We are continuing to invest heavily in all three areas to ensure we have industry-leading offerings that meet and exceed our customers’ expectations, both on the ground and in the air.” Singapore Airlines will continue to make holistic efforts in India and other markets; to align our product and service offerings to the customer’s travel needs. – Shashank shekhar
Domestic passenger growth InBrief in March 2018 records ◗ Aditya Ghosh quits IndiGo, highest ever monthly rise Rahul Bhatia is the
T
he domestic passenger count has gone up considerably in the first quarter of 2018, as per DGCA findings. The data put out by the aviation body reveal that the passenger traffic in the period of January to March in 2018 rose by an impressive 23.87 percent. In terms of numbers, total domestic air passenger count had risen to 10.7 million in February. “Passengers carried by domestic airlines during January-March 2018 were 33.79 million as against 27.279 million during the corresponding period of previous year thereby registering a growth of 23.87 per cent,” the DGCA said in its monthly domestic traffic report. The data provided by DGCA reveals that IndiGo continued to record best ‘on-time performance’ with 84.1 percent punctuality rate from four key gateways of Bengaluru, Delhi, Hyderabad, and Mumbai, narrowly beating SpiceJet which clocked 83.9 percent. Other major carriers, namely Vistara and Air India (domestic) stood at 83 percent and 76.5 percent, respectively. In terms of load factors, however, SpiceJet has taken a clear lead from the rest. While all domestic carriers have recorded significant load factors, indicating robust capacity utilization, Spice Jet continued to record prolific load factors in March and clocked an impressive 95 percent load factor. IndiGo and GoAir followed Spice Jet with 89 and 88 percent load factors respectively. Commenting on the
interim CEO
highlights The air passenger traffic has grown by an impressive 23.87% between JanuaryMarch 2018 33.79 million passengers travelled between JanMarch 2018, compared to 27.27 million in the same time-frame in the previous year IndiGo recorded best ‘on-time performance’ with 84% punctuality rate from 4 key airports SpiceJet has clocked the highest load factor in March, followed by IndiGo and GoAir
Destination India ◆ May 2018
development, Shilpa Bhatia, Chief Sales and Revenue Officer, SpiceJet said “clocking 95 per cent occupancy in the traditionally lean travel month of March is an achievement that we are proud of,” speaking to a leading daily. She added that “for three years in a row, SpiceJet has f lown with the highest load factors in the Indian aviation market. For 35 months in a row our loads have been in excess of 90 per cent – a feat unparalleled in global aviation history and a milestone that we are proud of.” Given the strong momentum in the first quarter of 2018, it is expected that passenger numbers will continue to grow unabated, especially with the summer travel season around the corner.
In a major shake-up in the domestic aviation industry, Aditya Ghosh has decided to step down as the President and whole-time director of InterGlobe aviation. InterGlobe aviation, the company which operates IndiGo airlines, is considering appointing Gregory Taylor as the President and CEO, subject to regulatory approval, it said in a statement to the stock exchange. Meanwhile, Rahul Bhatia, Co-Founder of IndiGo, will look over company’s affairs as the interim CEO and continue as the Director of the company. Aditya Ghosh has had a dreamrun with the domestic carrier and was appointed the President of IndiGo back in 2008, at an age of 32! For the uninitiated, he oversaw legal aspects of acquiring 100 A320s, before being appointed the CEO of the company. During his eventful tenure, he oversaw unprecedented expansion in routes and frequencies – IndiGo operated over 1000 flights by December 2017 – remaining well ahead of its rivals. We are yet to hear any specifics about Ghosh’s next move, but in a letter to IndiGo employees, Aditya Ghosh had said “it’s now time for me to step off the treadmill and get ready for my next new adventure.”
11
Cities & States new delhi
Delhi as a World-Class Tourist City: Insiders bat for concerted effort The session titled “Delhi as a World-class Global Tourist City” saw serious deliberations on positioning Delhi as a destination meeting world-class standards. The session was moderated by Kapil Kaul, CEO, CAPA India and panellists included, JB Singh, Saeed Sherwani, Kishore Singh, Sourish Bhattacharya, Jitendra Singh, Sharupa Dutta, Suresh Nair, Vivek Yadav, and Gagan Khosla. Panellists listed out several measures to ensure wellrounded development on multiple fronts. Here is a list of steps suggested by the panel: Need for an institutional framework to guarantee policy implementation with legal underpinning. It is necessary for a transformational change. Need to rope in students from history and other related disciplines to create more awareness around city’s heritage and culture among locals and tourists alike. Multiplicity of accountability must be done away with. Delhi must have more accommodation choices, across budgets, throughout the city, for a viable consumer experience. Hotels are a key part of city infrastructure and must be treated as one by the government. Must find ways to instil passion for heritage and history. These subjects must find more space in the mainstream of public discourse. PPP model an apt medium for conserving heritage. Find ways to create more synergy among stakeholders from within the government and private sector. There must be some institutional mechanism set up by the government to promote private initiatives in different spheres of
activities, including food, history, art, and such. Individual efforts must not get lost. Cycling, food festivals, and other such engagements must be given more prominence as they add more dimensions to a city’s tourism profile. Delhi tourism website must showcase different initiatives, private or otherwise, and act as the central repository of information on happenings in the city. Focus on strengthening ancillary services such as quality souvenir shops and cafeterias to create more traction around city’s museums and art centres. Need for more cultural exchanges within the domestic circles to promote art and heritage. Tourism industry stakeholders need to converge to moot the way forward. Delhi International Airport should showcase finer elements of city’s tourism bouquet. Tourism pegs can be soft marketed to a much larger audience, given Delhi airport’s global air connect.
Hotel WelcomHeritage Haveli Dharampura, Delhi
Apathy for heritage conservation threat to chandni chowk, says Vijay Goel, union Minister
V
ijay Goel, Union Minister of State for Statistics and Programme Implementation, was critical of the multiplicity of authority and unnecessary complicated procedures in resurrecting heritage structures. He argued that urgent steps were needed to salvage the remainder of Chandni Chowk before its heritage was lost forever. He also had a strongly-worded advice for the industry – it was time for action and not speeches and seminars. Heritage had been an integral part of his life, he noted. He shared how his association with Chandni Chowk was cemented after he was able to win the parliamentary constituency after a tough political battle with Jagdish Tytler. He evoked his bygone days and pointed towards the stark difference between the glory days and the current state of Chandni Chowk – which was engulfed in dangling wires, congested roads and several other pressing issues. He alleged that “unauthorised construction” had killed the area. He went on to note that the 460 years old Chandni Chowk was home to thousands of Havelis, and “today, only a handful of them could even be called Havelis”. He shared that the entire area
12
had several fountains once upon a time and all of them had now been “sadly replaced” by public toilets. He explained that as no property owners allowed construction of toilets on their property, the government was forced to use public spaces for creating such facilities. He lamented that the area was now only home to people of two kinds – one who were old inhabitants of the place and had emotional connect with Chandni Chowk and other who owned property in the area and had considerable stakes involved. He noted that “greedy builders” were converting havelis into commercial properties and urgent action was needed to save the remaining havelis from a similar fate. He did not shy away from insinuating that the tourism industry was caught in a maze of seminars, lectures and speeches, and delivery on the ground was missing. He also argued that government authorities were stymying private initiatives. He elaborated his argument by sharing that his experience of resurrecting the ‘Haveli Dharampura’ and how despite being the owner of the property, he had to take multiple permissions from different government authorities. He pointed out
that the entire process was geared towards creating more hurdles than making the process more conducive for heritage preservation. Proposing a way forward, he suggested bringing in more limelight to the area to make people aware of the heritage that lied in tatters.
460-years-old Chandni Chowk was home to thousands of havelis. Today, only a handful of them can even be called a haveli. He shared that one of his initiatives – Chowdvi ka Chand, a festival to celebrate the legacy of Chandni Chowk – was well received and lakhs of people visited the area to get a glimpse of the Old Delhi bathing in full moon night. He argued that such initiatives were critical in bringing Chandni Chowk into the centre of public discourse.
Destination India ◆ May 2018
Vijay Goel
Central Minister for Parliamentary Affairs
Cities & States new delhi
PPP model a good way of conserving heritage; confront bad publicity on war footing
S
K Misra, former Principal Secretary to the Prime Minister, was fulsome in his praise for the diversity and depth of offerings of the city of Delhi. He called Delhi “a city with amazing lineage and home to diverse offerings”, apart from rich ancient heritage. He listed out some of the city’s top draws and made specific mention of elements such as cuisines, shopping, monuments, among others. Taking stock of the big picture to bring the city at par with the best cities in the world, he suggested decongesting Delhi and adding more amenities to bring more seamlessness to the movement of people. He also mooted roping in larger number of trained guides and students from history and other related disciplines to add to the knowledge quotient of travellers and locals alike. He further noted that heritage walks had gained prominence in the recent past and given its rising popularity, focus on lesser known monuments would bode well in further spreading awareness and driving tourist numbers. SK Misra favoured private investments by corporate entities in adopting at least one heritage structure, besides undertaking PPP (Public Private Partnership) initiatives for the same. He also observed that GOI (Government of India) was beginning to discover the benefits of PPP initiatives in conserving heritage. He asserted that Delhi’s museums were at par with the best in the world in terms of content and visitor experience could be further enhanced and more tourists could be attracted through proper arrangement of cafeterias and souvenir shops. On the road ahead, he advocated that government
S.K. Misra
Former Principal Secretary to the PM
Ramp up execution skills for transformational change
R
eferring to a presentation made by CAPA, presented to the Delhi government on behalf of ITB, Kapil Kaul shared that there was still a palpable sense of transformational change, with the PM having mentioned the ‘T’ word, during and after the elections. He suggested that tourism was still being considered as one of the “key pivots” to bring transformational change in the economy. He conceded that much had been done, but much more needed to be done and candidly noted that while the PM had given the “necessary strategic lift” for tourism but the industry and agencies involved were yet to be seen as “ready to grab the opportunity”. “The PM continues to motivate us and give us the strategic lift required to push inbound tourism numbers but unfortunately, as an industry, there is sub-optimal input,” he stated. He added that while there was “tremendous intent” among government officials and ministers, execution of projects
was an issue. K a pi l K a u l re a s one d t h at a t r a n s for m at ion a l c h a n g e in the landscape was not possible unless projects led by the government on PPP basis were able to develop the required execution sk ills. “Otherwise, at best, we a re look ing at Kapil Kaul incremental benefits and not the transformational change desired,” he argued. Making a mention of “governance premium and governance discount”, he noted that Kerala’s growth was example of governance premium. “But here are a lot of examples of governance discounts which basically leads to what we do not intend to do,” he said. He hoped that, based on the research on
inbound, CAPA would be able to present an “institutional framework ” w it h a legal underpinning to guarantee execution of u nder t a k ing s. “It would help us move closer to the transformational change in the near-term or the mediumterm. Speaking on transforming Delhi into a worldclass city, he outlined that the city needed “4-5 critical infrastructural requirements” which was deemed necessary for the framework, besides addressing capacity constraints. Listing out key areas, he made a mention of governance, leadership structure, collaborative structures, and outcomes, among others.
Budget hotels equally a part of city’s infra
S
aeed Sherwani, MD, Sherwani guest houses, budget segment and Hospita lities asserted that mid-segment hotels were equally budget and mid-segment hotels, part of a city’s infrastructure and along with guest houses, were indisneeded to be viewed in the same pensable components of the larger spirit. offering of any world-class city, and He shared that guest houses were the government needed to review its yet “semi-legal entities” and drew a policy pertaining to granting infracomparison with other professionals structure status to hotel projects costsuch as lawyers and doctors – who ing only over INR 250 crores. could legally use their basements for He argued that any global city their offices, while such a privilege needed to provide visitors a cross was denied to a restauranteur. range of accommodation, from He shared that “even back in budget to luxury, to ensure that a 1970s” there was dearth of adequately discerning guest had the option to priced land for hotels in the capital, choose from the range of available Saeed Sherwani which forced people to illegally conaccommodations. He also suggested vert their private spaces in to smallthat it was essential to change the policy to drive large time accommodations, calling them guest houses. He volumes of travellers and ensure meeting their accom- further shared that with the Asian Games of 1982 looming modation needs. He noted that the existing policy, as large over the government, worried over the shortage of per RBI guidelines, was detrimental to holistic growth budget and mid-segment accommodation, it encouraged of the hospitality industry and was of the opinion that private players to come up with such accommodations. Destination India ◆ May 2018
could conduct a “Delhi Heritage Festival” to further amplify Delhi’s offerings in domestic and international markets. He suggested creating a ‘Delhi Tourism Masterplan’ to ensure timely implementation of plans and active convergence of stakeholders.
Private investments by corporate entities in adopting atleast one heritage structure will go a long way in conserving heritage. GoI is beginning to discover the benefits of PPP initiatives. Focus on popularising lesser-known monuments will bode well in further spreading awareness and driving footfalls. SK Misra also made a mention of “pressing issues” such as women safety and rising pollution, stating that “word of mouth publicity” of those factors was acting as a major deterrent in pushing the numbers north. He advised the state and central government to “confront these issue” on war footing.
Institutional accountability must
J
B Singh, President, Interglobe Hotels stressed on the need for institutionalising the process of accountability, judicial or otherwise, to ensure that projects such as Aerocity were completed on time and viable returns were ensured to businesses investing large sums of money. He noted that given the number of agencies involved in the process, especially concerning hotels, it was difficult to pin accountability and “it kept shifting.” He was of the opinion that
J.B. Singh
Owing to multiplicity of authority and lack of accountability, deadline of the project kept extending, pushing several hotels to the brink of being declared NPAs. Aerocity was a “grand plan” but a tale of missed opportunity in terms of execution. He recounted his experience of being involved with Aerocity, touted to be a unique initiative, and shared that an integrated township was conceptualized and large hotel companies made substantial investments, and “did a great job at it”. However, the undertaking had been marred with delays, costing hotel companies’ copious amounts of money. He shared that hotels had already been constructed, keeping in mind the original deadline of 2010, and systems were put in place and “it continued like that for many years” but owing to multiplicity of authority and lack of accountability, deadline of the project kept extending, pushing several hotels to the brink of being declared NPAs (non-performing assets). He bemoaned that hotels in Aerocity were yet not able to provide travellers a truly seamless experience and asked hotels to converge and collaborate to ensure top notch visitor experience and growth in businesses. He lamented the absence of a fulsome visitor experience with the omission of elements such as retail and F&B, beyond the hotel premises, and stated that even after eight years past the original deadline, Aerocity was yet representative of a “construction site”. Speaking on the importance of Aerocity in the milieu of the larger tourism offering of the city, he noted that “Aerocity was uniquely poised”, and there was a need to create the micro market of Aerocity in totality and link it to other parts of the city. It was crucial in terms of providing an elevated customer experience but also in boosting the GDP of the city as a hub of economic activity, he asserted. He also mentioned that the “offtake of Aerocity” was very good, thanks to its location, linking two key business centres of Delhi and Gurugram. However, consumers were yet bereft of a seamless experience, he suggested.
13
Cities & States new delhi
Industry representatives share their perspective on transforming Delhi into a world-class city for locals and tourists alike
create visibility for culinary offerings in the city
S
ourish Bhattacha raya, by Tourism Australia in proFounder Director, Tasting moting their culinary offerIndia Symposium noted ings, he batted for a similar that while much was happenapproach and said that Delhi ing in the realm of food in the was home to not only a rich city, not much of it was being culinary heritage but a vimarketed and showcased on key brant present which needed websites, central or Delhi govto be showcased to the world ernment’s. The ‘Incredible Inat large. dia’ website needed to act as the He was critical of the absence central repository of information of an institutional mechanism pertaining to such undertakings for promoting private initiaat the local level, providing visitives and made a mention of SK tors and locals a centralised inMisra’s assertion that a number formation dispensing platform, of heritage walks were happenthus taking a lot of worthy ini- Sourish Bhattacharya ing in the city, suggesting that tiatives to a grander audience, a similar number of culinary he said. He drew comparison with the Hong Kong walks were also being undertaken but “those indigovernment’s central website and substantiated his vidual efforts were being lost in the crowd”. argument by sharing that major and minor culinary He quipped that food attracted more serious related events and initiatives were being showcased eyeballs from senior journalists than even politics on the digital platform, lending them high visibility and noted that “there were passionate discussions – a mechanism absent in the Indian scenario. about food”. However, those discussions were Talking about the spectacular success achieved sadly not translating in to action on the ground.
Need more cultural exchanges to boost art and culture
K
ishore Singh, Director, Delhi Art Gallery batted for collaborative efforts by stakeholders from within the art fraternity and shared that the conversation to bring individual initiatives on to one platform was already underway. He added that “there were great dialogues and discussions happening “within the art fraternity” and the need was to create more cultural exchanges. He further noted that unfortunately it was happening only with international centres as “those were Kishore Singh the bridges they were building.” He suggested that more was needed to be done within the fraternity, domestically, and shared that the discussion was currently limited to only art fraternity and did not rope in stakeholders from the larger travel and tourism industry. Kishore Singh suggested that locals in the city did not take pride in their heritage and culture and argued that despite “fantastic art galleries and museums”, people rarely visited them. He illustrated his argument by naming National Gal-
lery of Modern Art and Kiran Nadar Museum – which were “great repositories of art and heritage” and yet there was little traction for them among the local populace. He further mentioned that while Indians were comfortable queuing up for a considerable period of time to visit “world-famed” art galleries the world-over, such an enthusiasm was missing when it came to celebrating homegrown centres of art. He also alleged that Delhi’s locals were “a spoilt lot” and preferred to only talk about the great heritage of the land but stopped short of celebrating them, pointing out the prevalent dichotomy. He shared that “much was happening around, on a daily basis,” but most of the locals were too entitled to check the listing to figure out what was happening in the city, and “people were themselves to be partially blamed” for the current scenario of the state of art and heritage in the city.
Create necessary infra to promote cycling in the city
G
agan Khosla, Entreprecycling on National Highways neur and cycling enthuwas “much safer than cycling siast, was of the opinion in Delhi”, implying that much that people in Delhi wanted needed to be done to improve to cycle but there were many the current state of cycling factors hindering this choice. infra in the country’s capital. Unruly traffic, polluted air and He illustrated his argument by honking cars led most of the peosharing that despite a general ple to refrain from undertaking sense of apathy among local cycling. He called cycling a “simpopulace for cycling, Dubai ple joy of life” and noted that had managed to create an enDelhi did not have the needed viable infrastructure, creating cycling infrastructure. dedicated roads for cycling. Mooting the way forward for He noted that if Dubai could the capital, he suggested reducing manage to create such an infra, the number of cars on the streets Gagan Khosla what was holding Delhi from and restricting their speeds to doing something similar, sug“create some traction” for tourists to cycle in the city. gesting that it was more a lack of willpower in Sharing his experience of traversing the length implementing policies than anything else on the and breadth of India on a cycle, he shared that part of the policymakers.
14
Air connect must to drive new city points
S
uresh Nair, Country Manager, Air Asia Berhad argued that Air Asia was making a consistent effort to market destinations “all through the airline network”, thereby aiding in driving footfalls to destination or cities. He illustrated his argument by sharing that Air Asia had only recently commenced operations between Jaipur and Kuala Lumpur, but Jaipur was “being sold as a destination at each of Air Asia’s key network such as Japan, Australia and the likes”, as much as four months prior to the launch of the service. He noted that it was in airline’s interest to create the market before coming in to India in order to drive numbers. Suresh Nair He explained the role played by Air Asia in marketing destinations, stating that the airline was “opening destinations to all of the airline’s network and offered “ridiculously low fare to create the buzz around them”, and argued that low fare created more likelihood of travel than higher fare. Sharing his thoughts on how airlines could do more to market the available world-class products, he stressed that airlines were pivotal in creating new destinations and added that robust connectivity was crucial in developing a destination. Suresh Nair further added that along with boosting the profile of larger cities, air connectivity was also creating demand for much smaller destinations such as Phuket and Dannok.
DIAL keen to work with all segments
W
ith the Delhi International Airport in operation in full swing, Delhi’s connect with the world at large had grown substantially, Jitendra Singh, Head, Airline Marketing & Route Development, Delhi International Airport Limited (DIAL) noted. He said that the Delhi airport boasted of a mega food court which provided an opportunity to travellers to taste diverse cuisines, both Indian and international, thereby acting as a platform to exhibit India’s and, more importantly, Delhi’s rich culinary offering. He also shared that the airport was on course to conduct a ‘Festival of Jitendra Singh Biryanis’, further implying that the airport was a conducive location for soft marketing of offering such as cuisines. He added that DIAL had been organising similar campaigns in the past to promote different cuisines. He assured tourism industry stakeholders that DIAL was “open and willing to work with the industry for mutual gains”, and stressed that more programs could be worked out in conjunction with the larger tourism industry. He outlined Delhi airport’s “capability”, noting that the airport could service “as many as 9 Airbus 380s simultaneously”, indicating that the city’s airport infra was robust and global in terms of service. He shared that Delhi was connected to only 97 destinations when DIAL took over, and currently the capital was connected to 135 destinations – 71 of them being international – meaning that the airport had a key role to play in staging the capital as truly global city.
Getting better at working together
S
Sharupa Dutta
Destination India ◆ May 2018
harupa Dutta, Producer-Zee Jaipur Literature Festival argued that Delhi had a “lot going for itself ”, thereby providing a perfect backdrop to undertake festival related initiatives. She, however, noted that “a vision” with each stakeholder on the same side were some of the key prerequisites to driving such undertakings. She further asserted that the “process of working together” was an ongoing learning and the industry was getting better at it with each passing year. She believed that each city had a distinct character, personality and cultural underpinning.
Hotelscapes HICSA 2018
Sentiments positive on growth prospects at HICSA: Manav Thadani HICSA 2108 concluded recently. Held under the Hotelivate banner for the first time, this edition was geared more towards one-on-one interactions with an eye on more profound insights on subject matters, says Manav Thadani in an exclusive interaction. Excerpts from the interview:
From (L-R) Achin Khanna, Arne Sorenson, Manav Thadani and Hyatt CEO Mark Hoplamazian pose for shutterbugs.
G
iving an overview of the recently concluded HICSA 2018, held for the first time under the Hotelivate banner, Manav Thadani suggested that there was a “general optimism” among attendees and panellists on growth prospects. “There was a general feeling in the room that room rates were going to go higher, somewhere between 7-12 percent this year,” he said. When asked whether he reckoned that an upswing in business was around the corner, he asserted that “the market was already in an upswing”. He pointed out that hotel stocks had been performing well and “hotel stocks had gone up in the past few days”, supplementing his argument. He noted that owners of hotels were concerned about their ROIs and there was pressure from owners on big brands to “do more”. He also mentioned that domestic leisure markets were doing “very well”, and similar
The Accor team in attendance. Gaurav Bhushan, seen in the middle, in a discussion with Jean Michel Casse and Thorsten Kirschke.
From (L-R) Neeraj Govil, Manav Thadani, Arne Sorenson and Deep Kalra.
highlights
sentiments were echoed during the discussion. Reflecting on the change in HISCA’s program structure, he noted that “more number of one-on-one interviews” were incorporated in the first-day of proceedings. “It ensured that there were very insightful ideas put forth,”, he explained. Interactions involving Puneet Chhatwal, Arne Sorenson and Patu Keswani were particularly well taken to and attendees were “excited to hear from them”. In terms of numbers, HICSA 2018 registered 460 participants, he shared. “Around 28 percent of them were owners and 30 percent of them were brands. Importantly, more number of architectural design firms participated because India is increasingly becoming an interesting market for them”, he added. A few hotels were awarded with the ‘Hotel of the year award’ at HICSA 2018. No Lifetime Achievement Award was handed out because it is given out every alternate edition, he informed.
General optimism in the market on growth opportunities Owners concerned on ROIs and expect more from brands Domestic leisure market continues to remain strong Room rates expected to go higher in 2018. 7-12% growth expected. Hotelivate to open an office in Singapore and 4 partner offices in the USA.
why can’t we to divorce the brand, if it does’nt work for us any more: Manav Thadani at hicsa In a one-on-one with Kapil Chopra at HICSA 2018, Founder Chairman, EasyDiner and Manav Thadani, Chairman, Hotelivate reflected on the reason behind breaking away from HVS. Excerpts from the conversation: Kapil Chopra: My question to you is, why Hotelivate? Manav Thadani: I think we wanted to expand and sometimes you understand your region better. It was very important for me and my team to get that growth going. We dominated the space in the Indian market, so the only way to grow is outside India. We have opened an office in Singapore; we are doing something in the USA, even though they are partner offices. We wanted to get a real opportunity. It was there on paper but not in spirit. Kapil Chopra: So, it means it is actually going to be more global now, for you? Manav Thadani: I do not think much has changed. The red became a bit yellow (referring to the newlook logo of HISCA 2018). I respect competition. 20 years ago, we were an unknow brand when we came in to India. We have built the brand. I have had people like Natwar and Achin who have been with me for many years, and some of these guys are more popular than I am. I think, it is about the team at the end of it. I think as a team we moved together and that made the difference. Kapil Chopra: My question to you is that do brands matter? Manav Thadani: I think brands
matter for sure. Kapil Chopra: For many years, I have seen you connect right brands to the right owners. Yet you thought of moving away from a big brand like HVS and launching Hotelivate. So, who is the brand? Manav Thadani or Hotelivate? Manav Thadani : The Hotelivate team, actually. At the end of it, brands are important, but I also believe that they have a shelf life. Those who have seen me negotiate a management contract, I have often said that the owner must be given the right to change the brand if the brand does not work. Maybe you pay a penalty. We are allowed to divorce our partner if we do not get along with them, why cannot we be allowed to divorce the brand? Kapil Chopra: I see great timing. Consultants tying up with consultants, is it building a moat or part of a conscious strategy? Manav Thadani: I think it is a part of what’s the globe is changing. For HVS to grow, it took 37 years and it grew organically and it worked. Today, with technology, I do not think you necessarily need to grow organically. We will go organically in the APAC. We have an office in Singapore. If we have more offices in
the region, most likely they will be Hotelivate offices, but I do not have an interest, and I am being honest about it, of being a company that can compete successfully in America. So why not tie up with a company which is successful in that part of the world and have that strategic alliance? Taj has it with Shangri La. Will Taj ever be a Shangri La in China? No. Will Shangri La ever be a Taj in India? No. But they have done a strategic alliance. I see no reason why consulting firms cannot do that. Kapil Chopra : Hotelivate is a classic coup. Now is the pressure of meeting the pay-roll? Does it get stressful? There is no back-up, nothing. Manav Thadani: I have seen so much of it. Over the years, we have created the best leaderships in the country. They head the best hotel
companies. When they left me, they have given me enough sleepless nights. I think you find ways and means to de-stress. Kapil Chopra: Let us talk about the conference now. What do you think about the investment cycle in India right now? Manav Thadani: I am pretty bullish about the investment cycle. I have seen three downturns and two upturns. This is my third upturn. Upturn started towards the late 2016. 2017 was very decent; 2018 should be better. I am not so sure about 2019, because of the elections. It can go either way. If you look at the supply-demand situation, it is certainly in favour of hotels doing better. The problem has been that rates have not moved up in city hotels and brands are not recognising what the real problem is.
Destination India ◆ May 2018
Kapil Chopra: If you were to buy land in the current market and construct a hotel, is it economically viable ? Or is it viable on historic land assets? Manav Thadani : It is certainly more viable on historic land. You need to be a lot smarter in building hotels than how they have been traditionally built. We have to be clever about it. I think the biggest challenge is that owners, with the help of consultants, often get carried away and create a product which is over-specked, and brands love it. That is why you have every brand in Asia over-specking their product and it is difficult to make money. Why do we not bring technology in to place where there are fewer employees involved? Why does the ratio have to be two-plus employees per room? If we use technology that can happen.
15
Hotelscapes interview Taj Dubai
Rambagh Palace, Jaipur
The Taj Mahal Palace, Mumbai
Taj to ensure development pipeline to 50% of current inventory; 8% EBIDTA improvement with service excellence
Photo Credit: ed yourdon
Puneet Chhatwal at the BITB India Travel Congress: K.B. Kachru (extreme left) and Ritesh Agarwal (extreme right) are also in the picture
16
Puneet Chhatwal CEO & MD, IHCL A majestic view of The Pierre, New York, an iconic Taj hotel
Destination India â—† May 2018
Q&A Hotelscapes interview
Puneet Chhatwal, MD & CEO, ihcl He has been on the saddle since September last year. Now with six months behind him as CEO & MD of India’s most iconic hotel chain, Taj Group of Hotels, Puneet Chhatwal is making tangible difference to all aspects of the business. He was recently delivering a keynote at the BITB India Travel Congress in New Delhi. We bring you excerpts that piece together his vision on Indian tourism and where he hopes to take the Taj Group of Hotels. Individually, in the domestic market, Taj Group must be the biggest player in the inbound space. With your properties in Kerala, Goa, Rajasthan, Delhi and Mumbai, how is the inbound happening for the Taj group? How is it shaping for the industry in general? I think, firstly, we must differentiate between inbound on business and inbound on leisure. We are very pleased with the overall development. I think, from a business perspective, the buoyancy in the market and the capture rate of our brand in that segment is phenomenal. When it comes to leisure, I think tourism has a long way to go. There is a lot that can be done and the Indian sub-continent, as a destination, can be promoted much better than it is being today. We will have to change the way we think on certain things, and the way we attract business. I will give you an example – most destinations that guarantee the Sun, and with the influx of Dreamliner aircraft, are getting Europeans in big numbers, and getting them to India to get a little ‘brown’ should not be such a big deal. However, this market is used to all-inclusive kind of resorts. In India, we do not have that. We do not want to be in that business; with our brands we have not looked at it. We may look at collaborating with players like TUI or Thomas Cook and add value to all these destinations (where Taj Hotels is present). But most of the Indian destinations have not gone this route, so we have a challenge here. For another, worldwide, it is much easier to fly and drive – we in India still have a long way to go; I do not think, anytime soon, we too will have the German Autobahn. There is improvement in infrastructure and that will help in the growth of tourism. And we have much in the pipeline but we are not there yet! Secondly, a lot has happened, around the globe. It is important to remember that we in India are not working in isolation and that the rest of the world is also not standing still. Something is happening all the time in other parts of the world. So, we will get impacted by external demands and pressures and trends. But what is encouraging for me, returning to India after 30 years, is that infrastructure has improved a lot. Finally, the perception of a destination at the macro-level and at a micro-level matters remains critical to tourism, at least internationally. At the macro-level, there is safety. A lot more people will come to a destination, than they come now, if it is perceived safe. And that has not been the case with India in the past. We have had a lot of bad and embarrassing news; at least for me – someone who is an Indian origin - I had very uncomfortable moments when confronted with such news by friends and colleagues. Somebody very seriously asked me – when there was flooding in Mumbai, and there was a stampede at one of the railway stations – that are you sure you want to go back? I said, Yes, I do! I think such news gets highlighted much more, so it is very important not only for us as a nation but as an industry to manage news, and that that good news also travels. I think the balance is not there, even though a lot has happened on the business front. That is very positive and encouraging for our iconic assets, the palace experiences, safaris, and others. In a destination such as Mumbai, I had never seen something so iconic like the Taj Mahal Palace in my entire career. So, all in all, it is positive, but there is a lot to be done, still.
Do you feel any pressure between inbound and domestic, within the system, as a co-relation of the overall business? No, I do not think so. I think it will be a wrong business model to have; to work under pressure for certain kind of numbers. The only one pressure that we have put ourselves under is by making public statements that we want to become the most profitable hospitality company. Where the profit comes from – whether they come from inbound or business meets, or by us changing the way
we do our business or by changing the business model, that is up to us. There is no other pressure on us.
Worldwide, it is much easier to fly and drive – we in India still have a long way to go; I do not think, anytime soon, we too will have the German Autobahn. There is improvement in infrastructure and that will help in the growth of tourism.
Our number one priority is to execute Aspiration 2022 to make IHCL the most iconic and profitable company in the subcontinent. As part of the strategy, we have a fiveyear plan in place which aims at driving our development pipeline to at least 50% of our current room inventory across all brands.
Our focus is on simplifying structures and processes; and this applies to everything from our hotel portfolios to our company structure. By 2022, we are aiming to increase room inventory to over 23,000 rooms in all categories.
Where do you see the domestic segment heading? Hotel industry stakeholders have often noted that there is dearth of branded supply in India. Your comments. I think the absolute numbers will grow. There may be a shift in the percentage of different segments. And that is very normal. It will happen as the society evolves and India becomes a more mature market from a developing one. The second thing, I think the whole industry sometimes gets carried away by branded vs. unbranded supply. So, until a few years ago, in Europe we used to say that, look the USA has 80 percent branded and 20 percent unbranded supply and in Europe there is only 60 percent branded and 40 percent unbranded supply, so that is another evolution when people start to embrace brands. It does not mean that the sarais, Havelis and different kinds of accommodation do not exist in those markets. So, one thing is about brands and the other thing is a healthy balance between demand and supply.
You talked about branded vs unbranded. Within brands, is there a different role being performed by Indian brands and foreign brands? Brand by definition is something which has the capability of travelling across the national borders. That is why we say that Taj is a very iconic brand, but we do not say that Ginger is very iconic, because Taj can be anywhere; it can be seen in London and New York. But domestic brands are equally relevant, and I hope that people who create these statistics include these domestic brands when we count branded vs. unbranded supply.
Do domestic brands have a different role to play, or are they they playing differently? Well, they always play. Domestic brands have a better understanding of Chattisgarhs and Raipurs. And at least this is the story so far. How this will change is another matter.
What are your priorities within IHCL the Taj Group - which segment, which property? Our number one priority is to execute Aspiration 2022 to make IHCL the most iconic and profitable company in the subcontinent. As part of the strategy, we have a five-year plan in place which aims at driving our development pipeline to at least 50% of our current room inventory across all brands. Our objective is to scale up inventory, multiply our portfolio with a view to bolster profitability and improve margins.
You talked of pressure to make yourself the most profitable company - where when will this happen and how? Our strategy is three pronged: Restructure, Reengineer and Reimagine our portfolio to achieve 8% point EBIDTA margin improvement by 2022. This will be driven by a deep commitment to service excellence as well as implementation of revenue and profit-driving initiatives. With respect to pure margin enhancement, our focus is on simplifying structures and processes; and this applies to everything from our hotel portfolios to our company structure. By 2022, we are aiming to increase room inventory to over 23,000 rooms in all categories and enhance our geographical footprint in India and key growth markets abroad. By building on our position as India’s most iconic hospitality brand, IHCL’s focus will be delivering enhanced customer experiences, and strengthening market leadership in each of our segments. – navin berry
Destination India ◆ May 2018
17
Hotelscapes forum
hospitality gains india traction, builds upon domestic appeal The session titled “Can hospitality whip up numbers and how?” saw senior representatives from key domestic and international hotel chains exude faith in the domestic segment. They suggested that while there were incremental gains on the inbound front, the domestic segment was going to be the lynchpin for the foreseeable future.
Domestic leisure segment has become an important part of business for hotels in India and the trend of focussing on the domestic market – which started a decade ago – was going to continue unabated in the near future. A robust domestic leisure segment is rubbing off on to the corporate segment as well and is acting as a useful development in driving demands. Indian stakeholders needed to do more to bridge the gap between what was being marketed as “Incredible India” and the actual experience of a traveller.
A hotel’s relationship with the travel industry has turned transactional, and there is little communication between the two. There is a need to step up communication to put a concerted step forward. Assimilating local elements of culture and food into their offerings have become important for hotels to succeed, especially, in tier-2 and tier-3 markets. Bilateral initiatives to promote destinations have fared well for India and France. Such initiatives with other countries can push overall tourism numbers and create the needed outreach.
International markets are voracious consumers of content, says Jakhanwala
Domestic segment helping hotels stay insulated from cyclical upheavals
A
D
shish Jakhanwala, CEO, SAMHI hotels suggested that international markets where eager consumers of content, and India’s attempts of international outreach were being lapped up, irrespective of how India was being perceived. It was a question of creating the requisite product to drive inbound, he believed. He pondered and asked panellists whether hoteliers believed that the “return on investment” from the domestic segment was much higher than “trying to put that capital” in attracting more inbound traffic. “In reality, we have such an inventory to sell. The consumption and capability of the Indian traveller is increasing,” he argued. He added that destinations like Goa were being “largely driven by Ashish Jakhanvala the domestic segment.” He enquired from Jean Michel, seeking his comment on where would he like to spend his one dollar, given to choose between domestic and international inbound market? He suggested that they had “come to learn in life” that there were two kinds of consumers – a product consumer and a content consumer. He stressed that the international market was a major “consumer of content.” “The Tourism India Campaign, whether it is positive or negative, is very well consumed,” he said, adding that but when it came to the product, most in the panel believed that their dollars were better spent on leveraging the domestic market, pointing out the obvious dichotomy. Speaking on hotels marketing ‘brand India’, he mentioned that Marriott had ran “a very successful campaign” by the name ‘Shaadi by Marriott’. He enquired from Dipak Haksar, given ITC’s massive hotels based on Indian-themed architecture, whether the hotel company had launched any India-centric campaign in international markets. He also noted that there was some expectation in the audience from hoteliers on spending some dollars for the “sake of promoting India”.
18
ipak Haksar noted that the lines between a corporate and a leisure traveller was blurring faster than ever, and while there was an upswing in the number of domestic leisure travellers, hotels needed to cater to the expectations of multiple segments. He argued that hotels were “fast realising” that leisure domestic travellers were not only paying well for the services used but were also ensuring decent occupancy rates for hotels on weekends and other such occasions when business travellers were not around. Speaking his mind on the state of inbound travel, he suggested that “ADRs had simply not grown” to levels it ought to have, because of intense competitiveness in the market. He cited the examples of Agra and Manesar where the ITC group had “invested heavily” and for multitude of reasons – Manesar was not a part of the Golden Triangle Dipak Haksar and strong supply in Agra had stunted ADRs – ADRs had not reached expected levels. He expressed hope that the domestic leisure segment would “stand up” and get counted in driving volumes and rates in the same measure. Dipak Haksar was of the opinion that both domestic and inbound leisure were equally important for businesses but the inbound segment, unfortunately, had not lived up to the promise as yet. He asked the industry to brainstorm on the reason for the trend and noted that there was a need to provide incremental services in F&B and other such elements to drive footfalls. He also insinuated that stakeholders in the hotel business were “under-cutting” one another. Speaking further on international inbound, he reflected that brand building in international markets was a long-term and investment heavy process and if hotels were not sure on bagging returns commensurate to investments, domestic was a better segment to take stock of. Giving a sense of ITC’s engagement in promoting India in global markets, Dipak Haksar shared that ITC was a regular participant in various trade shows, domestic and international, besides marketing hotels in several international publications featuring the luxury segment. He noted that these were “ongoing activities” which had turned out to be very successful.
Destination India ◆ May 2018
Hotelscapes forum
Hyatt continues to strive to be locally relevant
P
eter Fulton unequivocally asserted that the domestic leisure segment was important not only for the Hyatt group but also for the larger hospitality industry in general. He argued that a “healthy mix” of footfalls from both segments was important for a hotel to “insulate itself” from the upheavals of the market and cyclical nature of the business. He was unambiguous in asserting that the top priority in terms of investment would be strengthening their presence in the local market, as the hotel group was built to “be locally relevant”. Expressing confidence on the resilience of the India market, he asserted that his top priority would be boosting presence in the local market, rather than around the inbound segment.
Peter Fulton spoke on his experience of market behaviour, globally, and gave the example of London, asserting that the domestic segment travel was “huge” and an important element of industry’s business in many major cities of the world. He compared the trend to India and believed that the trend of focussing on the domestic market – which started a decade ago – was going to continue unabated in the near future. Peter Fulton suggested that India was in no way “over-selling” its cultural aspect as it was the mainstay of its tourism profile. He named Dubai tourism to explain how best a destination was marketed in the international arena and pointed towards their journey from 2001 to 2017, sharing that Dubai
Corporate travel yet the mainstay
W
Peter Fulton was struggling to get past the five million mark in 2001. He added that Dubai success story was a result of a “concerted effort” by each core stakeholder working in tandem for greater gain.
Goa has emerged as the leading destination for Indian tourists and its hotels are firmly focused on the domestic market.
it h t he recent acquisition of Fairmont, Swissotel and Raff les, the domestic le i s u re s e g me nt had steadily gained prominence in India for the Accor group, Jean Michel Casse noted. He did, however, agree that the group had established itself as a “corporate hotel” Jean Michel Casse and shared that a “majority of business in India” was stemming out of the corporate segment, with some blend of leisure segment in the total footfalls. Jean Casse believed that while Accor Hotels had not run a campaign selling Indian cities and destinations, they had approached the issue from an entirely different perspective. He highlighted that India did not account for even one percent of global MICE market and therefore the hotel group was focused on marketing MICE business in the country. He listed out some of the major initiatives taken by the hotel group and mentioned HICC in Hyderabad and stated that it was a step in that direction. He also shared that a similar initiative was being attempted in Aerocity in Delhi, in conjugation with other hotels in the vicinity. He added that these steps were “some of the steps” that the hotel group had taken to drive businesses, instead of running a campaign for the “sake of promoting India.” He expressed his “inability”, even after spending so many years in India, in deciphering why international inbound had not grown to the levels commensurate to India’s stature and product offerings. He noted that ‘Incredible India’ was an amazing campaign but the difference between what was being marketed and the actual experience of a tourist may have caused a dent in overall numbers. He shared that a bilateral initiative to promote India and France in each other’s local markets was paying rich dividends to both, as France had climbed up to be the number one destination in Europe for the Indian outbound while the campaign had also resulted in ensuring that over 40 percent of total inbound in to Rajasthan was coming from France.
Hotels and travel trade need to talk more Domestic leisure market critical to our business
A
lot of Marriott properties were located in the large metros, some years ago, and were “focussed on corporate guests”, but with a stronger distribution network and larger number of brands in the larger umbrella of Marriott, “leisure had become critical” to the group’s success, Neeraj Govil noted. Giving further insight, he stressed that while the group was focussed on the inbound segment, domestic leisure segment had acquired a similar importance in the scheme of things. He added that the domestic market was the “big thing” and a number of Marriott hotels were positioning themselves to cater to the needs of domestic
Neeraj Govil
the domestic segment on board was quantitatively higher than getting the inbound, Neeraj Govil pointed towards the changing profile of the domestic traveller, noting that the segment was “easier to get to” and had a stronger capability to pay for services. He illustrated his argument by naming Goa and Kochi as markets and noted that the domestic segment was not only driving demand but also paying for ancillary services such as F&B and spas, contributing immensely to the overall business of the hotel group. He went on to add that the domestic segment wanted to “indulge” and if hotels had the right product and marketing tools, the segment was going to be crucial to businesses. He also suggested that Marriott’s strategy was to be locally relevant, indicating that Marriott was conscious of the product placement in the local milieu. Sharing his experience of running the “Shaadi by Marriott” campaign, he shared that the campaign had gone international, in the APAC region, and a number of hotels in the region were keen on piggy riding the campaign to “pull the domestic segment in to outbound”. He detailed that the campaign took 18 months to put together and the focus was going to be driving F&B segment in the domestic market, in the imminent future. He believed that a hotel was not going to be relevant, especially in the tier-2 and tier-3 markets, unless it had local elements of food and such in its repertoire.
A domestic traveller is not averse to paying good money for services. A robust domestic segment is useful in driving corporate demand as well. tourists. He attributed the development to a growing tendency of domestic travellers who preferred driving down to close by distances and were not averse to “paying good dollars”. Neeraj Govil reflected that a robust domestic leisure segment was rubbing off on to the corporate segment as well and was useful in driving demands. When asked whether returns on investments in getting
Destination India ◆ May 2018
R
ohit Kohli noted that the importance of a market for a hotel was based on the profile of the market itself, and the quantum of footfalls, leisure or business, was dependent on the profile of the market. He stated that inbound travel a llowed hotels a fair amount of leeway, given the lead time, to plan their yields better. Giving his perspective on how d if ferent hotel brands had faired in promoting inbound travel in to India, Rohit Kohli asserted that it was not a competition a mong dif ferent Rohit Kohli hotel groups but a competition between “India and the rest of the world”. He alleged that a hotel’s relationship with the travel industry had turned “transactional”, and there was no communication between the two. He argued that while hotels were sharing daily statistics with each other, including ADRs and ARRs, there was no sharing of ideas. Mooting a way forward, he asked hotel representatives to “build on local connections”, involving major and minor local stakeholders to collectively push a destination. He asserted that the industry did not need the government if it could streamline local stakeholders and work in tandem. He shared the example of Kumarakom and how hotels got together to promote the destination, reaping the benefit of collective promotion in terms of higher footfalls and occupancy rates at their hotels.
19
Hotelscapes interview
Outdoor wedding venue at JW Marriott Sahar
JW Marriott Jaipur Resort & Spa
marriott in india is 101 strong, to open 18 hotels this year Arne Sorenson, President, marriott at hicsa 2018 On acquiring Starwood, Arne Sorenson, President and CEO, Marriott Inc. stressed that the deal made more sense for the hotel company with each passing day. He noted that India was an under-appreciated destination and needed better marketing. Excerpts from his one-on-one with Manav Thadani, Founder, Hotelivate. The big acquisition
Marriott’s acquisition of Starwood received “tremendous attention” from the industry, Arne Sorenson said. He shared that Starwood had put up for sale in early 2015, and Marriott had shown no interest in the bid. He was convinced that it was the right strategy to acquire Starwood and the move was aimed at competing with “digital disruptors and a global world.” “For us, it was about the size of the loyalty program and size of choices we offer to our customers, and we thought Starwood really brought powerful things in that space,” he explained. Sharing his understanding of challenges post the buyout, given the divergent culture of two brands, he insisted that there was “more in common” in two companies than different. “Both were manically driven to win,” he added.
Loyalty program foil against ‘disruptors’
He argued that the “power of choice” to the consumer in Marriott’s loyalty program was company’s “fundamental tool” to deal with ‘digital disruptors’. He stressed that ‘disruptors’ could not offer what Marriott could, sharing that Marriott was not letting them offer participation of people, coming through those channels, in Marriott’s loyalty program. “If you want to get those benefits as a customer, you have to remain within our ecosystem,” he asserted.
Inbound in to The USA has taken a hit Arne Sorenson, President & CEO, Marriott Inc. with Manav Thadani at HICSA 2018
20
Ref lecting on the change in sentiments since Trump administration had taken charge, he suggested that he “thought” that President Trump understood the hotel business well. He noted that hotel industry was a job creator, all over the world, and it was one of the “great things” about the industry. “I think President Trump understands Destination India ◆ May 2018
this,” he said. He insisted that Trump administration’s political stance of “America First” could be described as “overtly darkly or overtly optimistically” but its focus was “essentially inwards.” He called getting real-time statistics a “challenge”, sharing that international trips in 2017 was up by 7 percent while the USA had registered “zeroish” inbound. “It looks like the USA grew a little bit less than the rest of the world grew in international travel,” he reasoned. He suggested that hotels needed to have a “balance” in meeting customer’s expectations and what was being offered by them. “In India, guests expect a lot more in F&B than in the United States. There are traditions here that are important,” he said, adding that he was also not in the favour of having five restaurants across all properties. He iterated that hotels could not take away all F&B offerings and still expect to “deliver a hotel experience” to its customers. “Even within our systems, we have examples where we have cut too much in an effort to drive profitability and have ended up compromising the customer experience,” he candidly admitted.
India must continue to market itself
India is a “fabulous destination”, Arne Sorenson said, commenting on inbound tourism. He mentioned that India was home to multiple cultures, diverse regions, variations, and great distinctive food. He stressed that India gave a “real sense” that one was at some place different, adding that the country was “under-appreciated” as a destination around the world. “Inbound to India is way too small compared to how compelling this place is,” he said. Adding that “it was partly because India is a difficult place to come to”, he noted that it was important that India continued to market itself around the world.
Q&A Hotelscapes interview
neeraj govil, area vp, marriott From one hotel in 1999 to a portfolio of over 100 hotels, Marriott has come a long way in India. Looking at the road ahead, Marriott was going to continue its robust supply by adding yet another 18 hotels to its inventory in 2018, shared Neeraj Govil, Area VP- South Asia, Marriott Inc. What is driving the business so strong? And how? In some cities, you have 2 JW properties, reasonably close to each other, as you do in Mumbai. How does this work? India is one of Marriott International’s largest markets in Asia Pacific, with the second most number of properties and rooms after China. As we recently opened our 100th hotel in India - Sheraton Grand Bengaluru Whitefield, we continue to see robust demand in many micro markets within our gateway cities in the country. Marriott International now has significant brand portfolio strength, whether it is in the luxury, premium or select service tiers and this coupled with our geographic distribution allows us to offer our customers the choice of choosing a brand that is relevant to their reason for travel. Our strategy continues to be focused on elevating the positioning of each of our 15 brands, evaluate the feasibility of introducing new brands and ensure that they have definitive and distinct nuances making them unique thereby enabling our guests choose the one that fit their needs and expectations the best. Demand especially in virgin markets seems to be on the upswing with domestic travel growing at a healthy pace, our endeavor is to maximize the opportunity and expand our portfolio to match the growth trajectory. Coming to your question on our JW hotels in Mumbai, both JW Marriott Juhu and JW Marriott Sahar operate in the same city and both enjoy locational advantages aside of their unique features, keeping the brand integrity intact – which makes them both leaders within their respective competitive sets. Our strategy is engineered to ensure that we have unique selling propositions in each of our hotels that become enablers for coexistence. Growing our loyalty base is another key area of priority. We just announced the merging of our 3 programs – Marriott Rewards, SPG and Ritz Carlton Rewards. This means an enhanced program for our members with exclusive benefits that are unparalleled thereby giving an edge over our competitors.
Which cities are the big drivers of numbers for you? I mean, more than the others? We are bullish on India in the short, medium and long term. I believe that the Indian hotel sector is in the initial stages of an upswing; the quarter just gone by has seen very pleasing growth for us and I believe that we will continue to see further consolidation in 2018 and 2019. ‘BRAND India’ is certainly more attractive globally; indications are that the country is attracting more Foreign and Domestic investment. We have had a progressive budget; tourism is key focus for the government; infrastructure spending is up, and domestic travel is at unprecedented levels. India’s GDP is projected to grow at a higher rate than most of the rest of the world. All these augurs extremely well for the Indian hotel sector. Almost all the markets we operate in are seeing robust demand, led by Mumbai. We have witnessed dynamic growth across all segments and markets and whilst metros continue to witness rising demand, the real business opportunity and drivers are the new emerging markets across Tier II and III cities. We now have presence in cities like Vishakhapatnam, Mahabalipuram, Sriperumbudur, Raipur, Amritsar and Srinagar.
Which are the big brands that are performing? How is the story of the brands playing out in the Indian market? Do you see any tweaking between them, if necessary especially after the merger with Starwood? Are you going to introduce any new ones? All our brands continue to perform well given their unique identities and distinct positioning. Today we have a healthy mix of business hotels and resorts. The growth cycle continues to accelerate at a very high momentum. Our endeavor has always been to offer ‘the right brands at the right place’; we recently opened the JW Marriott Jaipur Resort & Spa – a gorgeous ‘palace like’ property in the city of Jaipur. The market demands a luxury offering to cater to high-profile leisure travel and destination weddings. Similarly, we opened a ‘Fairfield’ branded property in Sripereumbudur given the size and business requirements of the city. Our fastest growing brands fall in the select serve category – Fairfield by Marriott and Courtyard by Marriott continue to be growth engines for us. Having said that, the pipeline for all our brands is equally robust and we remain very optimistic on the opportunity that is India. We are committed to launching new brands if the market demands it.
Especially for hotels that you took over, like the Meridien Gurugram, how are these performing after the take-over? What is story like before and after, for that hotel?
We are very optimistic about India and given our aggressive development strategy we will be quite disappointed if we cannot achieve the next 100 over the next few years. Ambitious but certainly not impossible! We will open 18 new hotels this calendar year as we continue the momentum.
All our brands continue to perform well given their unique identities and distinct positioning. Today we have a healthy mix of business hotels and resorts. The growth cycle continues to accelerate at a very high momentum. Our endeavor has always been to offer ‘the right brands at the right place’.
other hotels in this pool. As you can imagine, each set of circumstances in unique and each hotel needs a specific strategy to be executed to achieve success. We have a very capable and focused team of associates that are working towards getting to be market leaders in their competitive sets. Marriott has built a reputation for quality, service excellence, innovation, and integrity. Our strength lies in our talented associates, global distribution system, unparalleled loyalty programs, and innovative global sales and marketing strategies thereby giving our guests and owners the confidence to put their trust in our brands. Our name on a hotel is a promise and commitment to excellence, great product quality and unmatched service.
Do you think the next 100 can come in the next ten years, or are you targeting even less time? How strong is the pipeline for new hotels? Like how many, with what number of rooms, already signed and in various stages of development? Marriott International has 101 hotels in the country with the largest room inventory across 15 brands and 40 locations. We have 50 plus hotel in various stages of construction and several more in discussion. Considering we opened our first hotel, The Goa Marriott Resort & Spa in 1999; this growth is quite unprecedented. We strongly believe that rapid urbanization coupled with growing demands from the Tier II markets and resorts make India a strong market for expansion. We are very optimistic about India and given our aggressive development strategy we will be quite disappointed if we cannot achieve the next 100 over the next few years. Ambitious but certainly not impossible! We will open 18 new hotels this calendar year as we continue the momentum.
What does it mean for you to now be the largest chain in India, with maximum number of rooms? As an industry, where are we heading in terms of distribution opportunities and cost? Is there any trend that you specially wish to mention? There is something to be said for size and scale and we are starting to realize the true opportunity by leveraging topline sales and cost synergies. Marriott International as a company has a lazor sharp focus on ensuring we are delivering robust margins for our owners and other stakeholders without compromising on quality, product or service. The faith invested by our ownership community is a huge testimony to that effort. Our distribution network provides huge opportunities for economies of scale and cost benefits given our strategic partnerships and a mature sales organisation. Our organisational and leadership structure has been in a state of evolution and today it makes me proud to say that we have a structure that is focussed on driving results, productivity and excellence that gives a distinct edge over our competitiors. The talent pool that Marriott attracts given the career opportunities, culture and international exposure results in a set of individuals who are exceptional in their areas of expertise and have complete alignment with the ‘result-oriented‘ approach that is core to how we operate at Marriott.
One last word, on inbound tourism, one wishes we had more foreign tourists. And yet the present supply, at least most of it, seems to get gobbled up by Indian occupants. Would you agree? What can we done to become a bigger inbound destination? Increasingly, across the country, the ratio of Indian against foreign is getting skewed towards the domestic. At the end of the day, does this even really matter? India makes a very compelling story with its massive domestic market and Marriott in India nets about 70% of its business from domestic consumers. As domestic travel increases and Indian travelers continue to demand more sophistication in terms of both quality and experience, we have significant opportunity to grow our brands across the spectrum in gateway cities, tertiary markets as well as in resort destinations. As far as inbound tourism is concerned, it is safe to say that it has shown an upward trend. Given the political stability in the region, South Asia has emerged as the second fastest growing market for inbound tourist arrivals, providing many opportunities for development of internationally branded hotels across segments. To give an impetus to the growth of inbound tourism, I think improving the visa policies and working to improve the cost of traveling to the region would help do that. Additionally, infrastructure, information and technology improvements would help enhance the travel experience for anyone visiting India. Safety continues to be a huge talking point and is a big factor that determines the influx of tourists. Given the recent developments, the governments needs to take a tough stand establishing measures that guarantee a sentiment of a safety and ease of travel once here. – navin berry
The hotel you have singled out is going from strength to strength as are Destination India ◆ May 2018
21
Hotelscapes news updates & trends
Tourism vital for growth, GoI must recognise it: SP Jain, Pride hotels
GoI’s stance on GST rates involving 4 and 5-star hotels needs a serious reconsideration, said SP Jain, CMD, Pride Group of Hotels. He suggested that the government needed to be more proactive in recognising tourism as a crucial driver for national growth and bringing tax rates at par with the best performing nations would add to India’s standing as a destination.
H
igh taxes hampering growth, businesses While there may some appreciation for the government, from certain quarters, for having done away with the multiplicity of tax structure by introducing GST, high tax slabs for four and five-star hotels were detrimental to the growth of the hospitality and tourism industry, stressed SP Jain. He insinuated that the government had “not yet recognised tourism as a vital asset for generating employment and foreign exchange earnings” – which was evident with high tax rates. He noted that countries neighbouring India had put in place far more conducive tax structures and were reaping the benefit by attracting larger number of tourists. Sharing his thoughts on the caveat around providing a hotel with infra status, he lamented that the ceiling of INR 200 crores was arbitrary and supplemented his argument by noting that a project costing lesser than INR 200 crores was equally an infrastructure project in creating value at the grassroots. He argued that policy makers were viewing hospitality industry, 4 and 5-star hotels in particular, as “matters of luxury” which was contrary to their contribution towards national growth. Domestic travel continues to drive footfalls Speaking on the trend in footfalls at the Pride Hotel Group, S P Jain stressed that the domestic segment of travel had seen “considerable growth” in the past few years and it was being reflected in the quantum of India travellers visiting Pride Hotel properties. He, however, was quick to add that as an Indian hospital-
ity company, Pride Hotel Group was offering “specialised service” to India travellers, indicating that the hotel group was largely geared towards serving the domestic segment. “As much as 70 percent of our total footfalls are domestic travellers, including business travellers. We get around 30 percent footfalls from foreign tourists in our upscale brand Pride Plaza and around 15 percent international traffic in our 3-star brand, rest is all driven by domestic travellers” he detailed. Giving his take on tourism minister’s plan of doubling international inbound and foreign exchange revenue from tourism in the coming three years, S P Jain exuded confidence, noting that “it was very possible” to achieve the milestone and stressed that India’s perception as a destination in the past few years had steadily improved. He argued that disruptions like terrorism were happening the world-over and no nation was immune to such disturbances. He also attributed India’s growing stature in international arena to “enhanced outreach and political stability.”
and Puri and plans to launch a property in Manali in the coming two months. “The property in Manali will be a 4-star plus hotel and will have 55-60 rooms. The renovation work is on in full swing and it will be done soon,” he shared. While the property in Manali is aimed primarily at catering the leisure segment, the newly
We get around 30 percent footfalls from foreign tourists in our upscale brand Pride Plaza and around 15 percent international traffic in our 3-star brand, rest is all driven by domestic travellers.
Pride group to expand to Manali, Mumbai and South Goa After having thrown open the gates of Pride Plaza in Delhi for consumers – it is the largest property of the Pride Plaza group and has an inventory of 385 rooms – the hotel has recently unveiled new properties at Indore
S.P. Jain
Managing Director, Pride Group of Hotels
launched property in Indore is geared towards the convention business and features a 35000 sq. ft. lawn, we were told. “Pride Hotel and Convention Centre Indore features 80 rooms for now but we plan to expand it to 200 rooms in the future, depending on the response we get from the market,” SP Jain explained. He added that Indore had been doing “very well” in terms of business and the market was growing steadily, thanks to increasing propensity
of people to spend more. Further, the group was eyeing a property in Mumbai and South Goa in the coming two years, he shared. “We are planning a 300-room hotel in Mumbai. Also, we have seven acres of land in South Goa which we will use to open a three-star property located near the Leela Hotel,” he added, giving us a detailed insight in to the Pride Hotel group’s plan ahead. – Shashank Shekhar
hospitality gets a raw deal under new GST regime: WTTC(II) Karnataka Sunder Advani, Chairman, WTTCII recently made a strong pitch for scaling down GST rates, arguing that high GST rates would eventually drive tourists, domestic and international, to foreign shores. He also batted for targeted marketing campaigns.
T
ourism had not been accorded the deserving attention, consideringthat the industry was supporting 26 million jobs and accounted for 9.4 percent of the nation’s GDP, Sunder Advani suggested. He“hoped” that the government would support the industry with some incentives, insisting that tourism was a “vital part” of the nation’s economy. Tourism industry was not an “elitist industry,” he proclaimed, suggesting that the industry was consistently being classified as being “elitist”. He added that diamond and jewellery industries were also “elitist” by that measure and yet were being charged only 3 percent GST while hotels were being taxed at 28 percent! He also compared tax slabs with the aviation industry, noting that the hotel industry had being handed out a harsh deal. He reiterated that it would deter international inbound into India, especially as neighbouring countries were being taxed a comparatively meagre slab of only 6%. Chairman, He believed that India had a “competitive advantage” because of lower labour rates and the country could register much larger number of inbound travellers than “nine million tourists.” He noted that India was comparatively less expensive, and tourists had “much to see and do.”
to maximize outcome. Explaining, he stated that merely marketing that “India is a great country” was not going to drive traffic. He believed that India had better beaches than Hawaii and Bali, but they were not being adequately promoted. He added that the industry needed to market what any traveller could realistically expect at the destination. He also advised for “more immigration offices” to provide tourists with a more hassle-free experience, besides supporting general augmentation in infrastructure. Sunder Advani recommended setting up an agency to manage image perception. “We need to have an agency to tackle every bad news about India,” he said. He suggested that it would act as a “damage control mechanism.”
High GST rates will kill the industry
Sunder G Advani
Targeted campaigns critical for India Listing out of some of the key challenges, he suggested creating targeted marketing campaigns in specific markets, after employing detailed research
22
Appreciating the e-visa mechanism, he said it was “a great initiative” but much more could be done. He mentioned that Thailand and Singapore were charging 6 percent GST while India was charging 28 percent GST – which was driving not only foreigners but even domestic tourists to their shores. “It would absolutely kill the industry,” Sunder Advani stated. He reasoned that an increase in tax rates did not mean growth in revenue and mentioned that President Trump had reduced tax rates from 25 to 21 percent in the USA, eying investments, and business. He batted for India taking a similar route.
WTTC India
– Shashank Shekhar
Destination India ◆ May 2018
Tourism gets a new director in Ramu B.
R
amu B. took charge as the new director of Karnataka tourism. The 2010-batch IAS officer had earlier served as the District Collector in Chamarajanagar. He said his priority in the new role would be to improve the marketing of Karnataka tourism. “One State Many Worlds” is all about selling an experience. I need about some months to study and understand the kind of experience we are trying to market,” he said. “The officials of tourism department have prepared some plans and I too have some ideas. We will implement them in the due course which will give boost to tourism industry in the state”, the newly appointed director said.
India Outbound trends
South Africa pushes Indians beyond key tourist hubs: acting India head One of the ongoing key focus areas for South Africa tourism is to create adequate awareness around some of the lesser explored destinations, beyond key tourist cities of Cape Town, Jo’Burg, Durban and Pretoria, says Alpa Jani, Acting Hub-Head, MEISEA – South African Tourism. Also, despite facing water shortage, Cape Town is open for business and tourism. Excerpts from the interview:
highlights
Cape Town is an important city and hosts high percentage of Indian outbound. Unfortunately, it has been reeling under water crisis on an unprecedented scale. How is SA Tourism combating the negative publicity around it, and the crisis in general?
In 2017, Mumbai contributed 37% to overall arrivals Oudtshoorn, Knysna, Plettenberg Bay, Port Elizabeth, and the Drakensberg region high on SA’s radar
South African Tourism are focusing on Water Wise Tourism and our ‘Save Like a Local’ campaign encourages tourists to take onus and not needlessly waste water.
Alpa Jani It’s important to note that Cape Town is open for business and tourism. We would like to reiterate that there is adequate water for tourists’ essential daily needs and no tourism activity has been impacted. Water is a precious resource the world over. Many leading nations including South Africa consciously propagate conservation and mindful usage of water through varioussustainable tourism practices. We at
InBrief ◗ New media
campaign to focus on Jerusalem and Tel Aviv
Israel tourism is going all out to attract larger numbers of Indian outbound. The Israel ministry of tourism has rolled out a new media advertising campaign to boost its outreach and presence in key cities. The focus of the campaign are Jerusalem and Tel Aviv. The advertising campaign incorporates media platforms, including television, print and digital space. The integrated advertising campaign is being called ‘Begin your journey to Israel’. Commenting on the development, Hassan Madah, Director, Israel Ministry of Tourism – India & Philippines noted that Israel had recorded strong double-digit growth in tourist arrivals from India in the past three years. “In order to keep this momentum going and to tap into the upcoming summer holiday season, we have launched our advertising campaign,” he said. He added that the campaign highlighted reasons why Indian travellers should choose Israel as their next holiday destination.
We understand that adventure tourism is big among Indian outbound travellers. Are there any new segments that are finding traction among the Indian outbound? Along with adventure, we find that wildlife is big among Indian outbound travellers visiting the destination. With over 300 adventure activities and counting, South Africa is undoubtedly the adventure capital of the world. The country has options across world-class climbing, surfing, diving, hiking, horseback safaris,
mountain biking, river rafting – and just about any other extreme sport you can name, and all supported by dedicated and authorized operators. Indian travellers, we have noticed, are very activity driven while travelling. Hence one of our key focus areas this year is to go beyond the immensely popular Cape Town, Durban, Johannesburg and surrounds and create awareness about new destinations such as Oudtshoorn, Knysna, Plettenberg Bay, Port Elizabeth, the Drakensberg region and the Panorama Route within the consumer and trade spaces. These are picturesque areas where travelers can pack in a lot of action into shorter time-spans. In terms of market specifics, what are some of your key source markets within India? What are some
plans around furthering market outreach in the near future? Mumbai, Delhi, Gujarat, Bangalore and West Bengal are among our key source markets. In 2017, Mumbai contributed 37% to the overall Indian arrivals to South Africa while Delhi was at 22%, Gujarat at 11%, Bangalore at 8% and West Bengal at 7%. We are focusing on increased development from mini-metros and tier II markets in India like Hyderabad, Amritsar, Chandigarh, Ludhiana, Vadodara and Pune. South African Tourism had, some time ago, rolled out an extensive program to educate Indian travel agents about South Africa and its offerings. How has it impacted the outbound? Learn South Africa (Learn SA) is one
Indians now seek unique experiences, says Ignacio, Director Tourism, Spain The Indian traveller is getting more sophisticated by the day, scouting for unique cultural and culinary experiences, he said. Spain too has been training at garnering a bigger chunk of sophisticated travellers as a part of its global, and India, tourism strategy. These developments are “a perfect match” for Spain Tourism’s India outreach, he shares. We understand that the T he nu mber of Inluxury segment has been dian travellers coming doing fairly well in Spain. to Spa in in 2017 wa s Has the trend reflected 1,410,000 – which means on the Indian outbound an increase of 33.6 peras well? cent in the number of Spain has been attracting travellers in 2016. We lots of tourists. We attractdo not deduce monthly ed over 80 million interf ig u re s. T he cu mu lanational visitors last year. tive figures for 2018, till So, for many years now, now, sug gest t hat t he we have been concentratoutbound to Spain from ing more on increasing the India is extremely strong. quality of experience than Yet another phenomenon an increase in numbers. for Spain has been the That has been a global rise of ‘ bleisure’ travel. strategy for us and that is Mi xing bu siness and what we use in India. We leisure – how is that segbelieve that there is a big Ignacio Ducasse Gutierrez ment unfolding among segment of travellers in InIndian outbound? dia which is looking for luxury options and we MICE, including all kinds of groups, are very get a lot of tours from that. important for us. We have estimated that about However, more than the luxury segment, we 30 percent of the total Indian outbound come are trying to attract the sophisticated traveller. from MICE tourism. Spain is a very enjoyable Someone who is looking for something else; country, so the leisure side is very important someone who enjoys the gastronomy; enjoys for people that organise these MICE trips. Even Spanish wine and culture. And I think this is for more business-oriented groups, one can plan also the trend in India. I think that the Indian very nice escapades, even for a few hours. There traveller is getting more sophisticated with each is a combination and a growing one. We are passing year, so it is a perfect match there. working with three international groups for – Shashank Shekhar What is happening in terms of numbers? the same. Destination India ◆ May 2018
of the most ambitious projects undertaken by South African Tourism in 2017. The 2017 version of Learn SA had new, exciting and useful sessions that aimed to help ensure a profitable South Africa business and repeat customers for travel agents who attended the training. To further motivate the agents, also on offer for the first time ever was a unique chance of being invited to participate in marketing activities supported by South African Tourism. The sessions were structured to ensure that travelers enjoy many new, exciting, tailor-made itinerary options as a direct result. Since an average Indian books less than 2 month in advance, we highlighted capacity issues in Cape Town in November/ December. It helped the agents market activities beyond Cape Town, on the Garden Route. We also gave special attention to smaller towns like Dullstroom, Hermanus, Knysna, Oudtshroon. The program also helped the tour operators to better plan their South African products by showcasing the enormous amount of options and variety that they can include while product planning, thus helping build stronger relationships with customers. As a result of Learn SA, we also witnessed an increase in demand for new geographies in the destination. Our efforts resulted in more than 1810 travel agents being trained across 17 markets. The training of trade agents has helped better sell the destination and our India outbound numbers for 2017 bear testament to the fact. This year we hope to surpass our achievements of the last year – which with 97,921 arrivals (Jan – Dec 2017) was a great year for us. – Shashank Shekhar
InBrief ◗ Vienna eyes
stronger footfalls from Indian shores
Buoyed by growing number of Indian travellers, Vienna, the capital of Austria, is aiming a 15 percent growth in footfalls in 2018. Speaking to news agency PTI, Vienna Tourist Board Public Relations Manager Isabella Rauter said “last year has been an exceptional year with over 58,000 Indians spending nearly 128,000 bed nights in Austria. It was 11 per cent increase over 2016.” She noted that “growth momentum has begun” and “this year we expect the tourist arrivals from India to be 15 per cent higher,” she said. Vienna has emerged as a favourite destination for group and family travellers, along with MICE segment in the past few years.
23
See You Next • 26 October 2018 • Mumbai