Gokulam Grand Hotel and Spa, Bangalore, has bagged the ‘Best Business and MICE Hotel South India 2018’ during India MICE Awards held at New Delhi recently. The award is an acknowledgment of its sprawling 25,000 sq ft of banqueting facilities and stellar service.
The star-studded event saw in attendance the best of hospitality, travel, and tourism – across brands and corporates alike. Baiju Gopalan, Executive Director, Gokulam Group, said, “This is the first award for us since we have stepped into Bangalore, a testimony to our spirit and ambition as we expand our footprint to the rest of the country. This encourages us to keep setting the bar high for the brand”.
Akash Gupta, General Manager, Gokulam Grand Hotel & Spa Bangalore said “Bringing the brand to Bangalore was a huge step for us. We have been focussed on judiciously setting the processes right and keep the team motivated. This award comes at the right time, as we are all set to welcome the festive season in high spirits.”
The hotel began its operations in 2011 under the brand name of Movenpick Hotel and Spa Bangalore; a strategic partnership between MSR Hotels Pvt. Ltd and the Swiss Hospitality giant Movenpick Hotels and Resorts. The 182 room and suites’ hotel boasts of well-known F&B outlets namely My Place All Day Dining, 24-hour coffee shop and Obsidian Sports and Music Bar. Pool, Sohum Spa, and Aasman gym are its lifestyle facilities available for guests and patrons. With 25,000 sq ft of banqueting space, the hotel has one of the best MICE facilities in the city.
Since 2011, the hotel has grown from strength to strength and with the new management team coming in, a new growth phase for the hotel is being charted out.
Hotel Branding on Steroids! The untold saga of Indian hospitality
For Indian hotel brands, investing in brand-building is almost like an after-thought and will do it only on gunpoint.
As the headlines and television channels roar of the downside in the economy with every makeshift economist screaming himself hoarse rattling death-rattle statistics of the imminent downside, I wonder why is every hotel chain worth its stretchable dollar wants a pie of the humble Indian market! The answer lies in India’s inert Avatar as one of the world’s fastest-growing big economies and as any smart investor will tell you, market-entry during a downslide will always hold in good stead when the business-cycle turns on its head.
In a country, where inventory is growing through the roof with hotels still going ‘un-branded’ and clocking 90% of all new projects. India is probably one of the last few countries anywhere around the world to latch on to the multi-brand marketing-oriented enterprise. Most mom and pop hotel-shops follow the rest of the Retail-world system in India by being single / family entrepreneur-driven, marketed and managed. The performance and professionalism of family-driven enterprise in India is similar to the standardization of Indian food! There are strictly no standards and is subject to the Owner’s whim, which may swing from one of a hand’s off professionally run to a dynamic busybody with an interfering picking nose! The focus has changed from a hospitality-driven hands-on enterprise to a ruthless technology-focused delivery mechanism. There might even be a cost-benefit analysis and a Revenue Management audit enforced if the Front Office personnel smiles at a guest!
The ability for hotel owners to decipher the advent of technology-driven accrued business will be a key factor in choosing the right Operator, franchise or marketing associate. The discerning hotel owner in India is indeed spoilt of choice, with a plethora of options to go in for. Positioning is key to the preferred brand choice. The options vary from the boutique luxury designer-driven such as Armani and Versace’s, marquis Waldorf Astoria’s and St. Regis’s, the hardworking Vivantas, Sheraton and Marriott’s to the no-nonsense brands such as Lemon Tree and Sarovar’s to the plain vanilla offerings such as Oyo, Treebo and Fab Hotels. The market for sub-brands to create extensions for serviced apartments also add to available portfolio.
For brands, entering the Indian hotel market, the realm of one global service standard will fall short in India. Regular four-star European brands have had to revise their standards for India, where there is a larger than life F&B business on the platter. The ability of International brands to adapt to Indian business idiosyncrasies such as high demand for F&B and meeting spaces will be a good amalgamation of European process with traditional superior Indian hospitality. For E.g., a hotel complex in Bengaluru, with a combined inventory of 550 rooms under a leading European Hotel brand was erroneously advised on having a meeting space of 3,000 square feet!
Other parameters that help the Hotel owner to identify his key source markets will make decision making easier. A five-star hotel in Pune, had to let go of the Le Meridien brand in exchange of a Sheraton as most of its corporate business was American after about a decade of it being in existence, even though both brands were owned by Starwood!
The Indian hotel marketing world, which is now trying hard to be independent and caught between the devil and deep-pocket disruptors such as Oyo and the Airbnb’s of the world. With a bulk of hotels in India being branded after the primary investor’s favourite relative or God, the opportunity for hotels to compete under a professionally run franchise alternative is a trend that will see traction in the coming few years.
The advent of Oyo has sure created considerable heart-burn for hotel owners with fluctuating fortunes, ranging from euphoria to frustration. Hotels have an option to opt out of the marketing network and invest on marketing and creating an online platform for accruals. The ability of the franchise to bring in quality control and standards, training and vendor management, OTA solutions with revenue management systems will help Independent hotel owners decide on what adds value to their brand/business model.
The entry barriers to create a brand is not a rocket-science but surely will need enterprise, professionals and adherence to standards over the long run. There is also a trend to go multi-brand with guest amenities varying as per the chosen brand or the booking platform, on which the inventory was booked! Was checking in an Oyo in Mumbai and was surely fascinating to see the front-office grabble with the correct guest amenity, which went to my room along with my luggage and the bell-boy!
The objective, in this case, is clear and revenue-driven. There is no clutter or ambition to create their own brand! It is almost like a city taxi service model, which has been adapted to this hospitality enterprise. The hotel branding eco-system is in for a major shake-up in India. The lure of changing brands and categories have shaken the market like never before with multiple options on offer. The era wherein, the brand owner brings in the intellectual capital and hopes to cash in are clearly over. The discerning hotel owner is now spoilt for choice by the sheer variety of offers and models available to him. With 95% of all hotels across the world being independently owned and operated, the opportunity to create and attach brands is no doubt, magnificent, but on a long term, the ability to sustain and manage the brand or the asset-owner will endeavor in creating bespoke value.
‘Good Problem to have!’
Just reading around, on what hotels in India are projecting in this downslide, you will be left with an analogy of a ‘Good Problem to have!’
- Indian hotel brand Lemon Tree Hotels is aiming for 12,000 rooms in its inventory by 2021.
- Tier-II cities are expected to account for 45% of the country’s total room additions in the branded category by 2021
- The number of hotel rooms in India is anticipated to go to 3.33 million in 2023 from a measly 18,000 in 1995/96, as per ‘The Ultimate Indian Travel & Hospitality Report’ complied by Hotelivate in association with CAPA and WTTC India Initiative.
- India’s latest media darling Ritesh Agarwal of Oyo talks about having his hotels in 800 cities around the world with 500,000 heads resting their heads on the Oyo pillows every night!
- Indian Hotels that manages the Taj Brand recently announced its tie-up with Singapore’s sovereign wealth fund GIC to set-up a Rs.4,000 Crore investment vehicle to acquire luxury, upper-upscale and upscale properties.
- India’s leading rating agency ICRA envisages a top line growth of 10-11 per cent in 2019 than the earlier expectation of 8.5 per cent.
Meetings, Hotels and Associations – Split Wide Open!
The world of industry and trade associations has always played to the gallery when it came to fuel the Indian MICE ecosystem. The plethora of associations in India, with over 100,000 registered bodies, bring unbridled challenges and opportunities alike! A market that swings from a highly organized and professionally managed segment to being downright chaotic! The stakes are high, when its stakeholders make up the numbers like only India can sustain.
The industry is complex, multi-layered and a lifeline for convention destinations!
Managing associations to deliver events also comes with an innate skill of man-management, where you play the guide, devil, and soothsayer. Committees get formed, WhatsApp groups get activated (which appears to be the latest model of superior communication technology to add to the chaos), venue checks leading to more meetings, all in the heavenly manna to facilitate a fool-proof execution!
The process of hotel reservations gets into the act, with bidding hotels plying their trade to play the venerable host. Activating a MICE business for a hotel means an enormous balancing act with the Revenue Managers attempting to play god, while the Head of Sales gunning for the volume game. A welcome change with hotels and with MICE gaining traction is having to dedicate specialized sales personnel to handle the needs of this sector. The earlier, one-size-fits-all mechanism is thankfully a thing of the past! Most American hotel brands in India have already taken the lead of creating a MICE Sales Head at most stations. It’s just a matter of time when Indian brands such as the Taj, the ITC, and the Oberois join the bandwagon. With more hotels being built on a multi-use platform, with retail, commercial and residential inclusions, the value of an event space marketing team will only get more credible.
Hotels have long got away with not paying any remuneration or commissions to Professional Conference Organizers (PCOs) and event management companies who facilitate the event. The Food & Beverage component in India forms a big part of the event experience and the PCO has to be incentivized. Most hotels claim that it would be against ‘Hotel Policy’ to incentivize accrued Food & Beverage business; but, without remunerating the via-media, it would be a matter of time the PCOs look for alternatives! Hotels have off-late preferred to eliminate the agency and go the full hog direct with the association. As a global trend, the hotel and airlines industry is probably the only industry that wants to do away with the channel partner model.
One of the key challenges for the association business in India is that it is highly information challenged. There is no single authority, where association or industrial events such as annual conventions, symposiums, trade fairs, and conferences are calendared. Even the India Tourism-supported Indian Convention Promotion Bureau does not have such data on its site. The next question: What will a city convention bureau bring to the table? Every city already has a plethora of associations representing the travel trade. Convention bureaus bring the MICE industry as a focus. The Ministry of Tourism still considers MICE as a niche segment along with Adventure and Pilgrimage. The convention industry is no longer just a mere niche segment, it is part of the city’s economic cycle.
Creating a marketing body to get more events to your city will help, nurture and market MICE investments in the city. There have been a couple of bureaus in place but run more like private clubs, with ridiculous high-entry barriers. Open the bureau to every stakeholder the industry begets. Having a thriving and energetic bureau will only add tremendous value to the city’s and state’s marketing efforts. The bureau will bring prominence to the segment. You catalyze marketing growth and focus on what you presently have and not necessarily be a wailing board! Professional bodies have now emerged to manage associations across sectors, and this will add tremendous value to create an enhanced meeting opportunity eventually.
Aerocity in New Delhi with a formidable line-up of hotel brands have recently formed the Aerocity Convention Bureau, which is a fine example of destination marketing for MICE. This brings scale while pitching for an event. The attributes of the destination such as an inventory of over 5,000 rooms, varied meeting venues, shopping arena, etc all within a walking range help highlight the destination as a cost-effective and convenient one to discerning event projects. Similar high-venue density regions such as Whitefield in Bengaluru or South Mumbai (consisting of Nariman Point, Colaba, and Cuffe Parade) or New Town in Kolkata should have their own marketing body.
The marketing aspect of Business Tourism is a non-starter in India. Other than a couple of city-based convention bureaus (which are run more like a private club with exorbitant entry barriers), they seldom have a structure to help pitch for an international event in India or assist in creating a bid document. Being one of the fastest growing markets in the world and India being on almost every marketeer’s wish list, we should not lose events being hosted in India for the sheer lack of ‘bid document’ expertise. There are more than a dozen international association and MICE events and you have hardly much participation from any of the Indian state tourism departments or its stakeholders. It would add value to be part of at least a couple of events to start with. This will help set a city-based convention bureau. Business travel in the form of events brings taxes and employment to the state and with every MICE traveler contributing almost twice as a leisure tourist, this is surely a segment to put one’s moolah in.
Research bodies have always been a trendsetter for conventions hosted in India, with the medical and pharmaceutical industries right behind them. A partnership mechanism to create a sustainable eco-system will enhance its organizational and marketing worth.
Meeting Infrastructure: China has 92 purpose-built exhibition sites spread over three million square meters. India has just 12 exhibition venues that occupy barely 2.6 lakh square meters of space. India is 40% of China in terms of the size of the economy, but in the exhibition’s infrastructure sphere, we are only 9 percent of what China does. Germany, on the other hand, has over three million square meters of exhibition space, which considering India’s exhibition industry, is on a different planet altogether. With longer gestation periods, no convention centers make money on the quick run. It is up to the City Municipal Corporation to ensure that we create world-class convention facilities. With increased footfall, increased tax revenues and adding a new employment engine, the city eventually benefits more.
With so many mega industry bodies like FICCI & CII, who now have changed their avatar from being trade bodies to be in the business of organizing trade fairs and event managers, surprisingly, you do not yet hear a call from them to compel governments to create a ‘Convention & Exhibition Infrastructure’ policy. When governments become your biggest clients, it makes more business sense to be quiet. The Indian industry, irrespective of their sectors and verticals, need meeting infrastructure more than the lamenting tourism industry. The current ‘Make in India’ mania is useless, if we do not have avenues to display and exhibit to a global audience.
The Indian Association industry network is a vital cog in the wheel of the Indian MICE ecosystem and needs a lit bit of TLC and a big kick in the rear to push it to new heights!
Exploding room inventory and dipping weekend occupancies: City hotels get meeting-friendly
The global business consultancy, Cushman & Wakefield, reported that the Indian hospitality sector will add 52,000 new hotel rooms in the next five years. This will lead to a rise of over 65 percent in total hotel inventory in India. The National Capital Region (NCR) alone is expected to contribute around one-third to the total expected hotel rooms supply during the period.
Diminishing occupancies, increasing inventory, too much reliance on corporate business has taken the wind out of its sails.
The aggression showed by all and sundry in creating wealth in form of building hotels has resulted in the present glut. The last few years have seen India’s city hotels rise out of nowhere and touch record (average room rates) ARRs and occupancy rates, and, soon, the inevitable fall from grace. Some, who justified the prevailing rates due to ‘India Shining’ syndrome, have now conveniently disappeared. In an era of higher occupancies due to limited inventory and a growing economy, what surprises more is the utter lack of foresight to plan for the increase in inventory compounded with a slowing economy. Indian city hotels continue to disregard opportunities to create new markets for their properties.
Indian city hotels, other than those in Delhi, have successfully driven out the leisure market and chased the MICE segment to Bangkok, Colombo, and Kuala Lumpur. In comparison to occupancies from Monday to Wednesday, weekend business in hotels fluctuates wildly. It would be interesting to see the hotels provide their ‘variations in occupancies’ figures, as eagerly as they flaunt their ARRs.
The positives from spiraling rates in the early part of the decade have resulted in the mushrooming of alternative accommodation like service apartments, guest-houses, and homestays. Some service apartments offer excellent value for money and have given three-star and four-star properties a run for their money. Companies are also creating their own in-house accommodation options. And truth be told, hoteliering can be outsourced and learned, in order to provide services in a professional manner.
Hoteliers should take a cue from markets such as Bangkok, Singapore, Dubai, and Kuala Lumpur, where it pays to create a larger ‘source market base’ and use sounder yield management techniques. Unlike other industry sectors, like the FMCG, Pharma or the Banking sector, Indian city hotels have been extremely shy of creating and nurturing new market segments, especially targeting MICE!
It is surely not rocket science that Indian cities at most times are down by 60-70% from Thursday to Sunday, i.e., this would be over a minimum of 200,000 unsold room nights. There has been virtually no effort being made by any of the major hotel associations to help hotels tie-up with tourism boards, deal with major MICE networks or even travel companies to help create a transparent room rate mechanism combined with a sound promotional strategy that would help generate business from varied markets such as MICE or leisure.
With the expanding hotel scenario, all and sundry see themselves as a hotel owner and the International Hotel brands see an opportunity to fix their brands and get professional management to one of the world’s fastest growing hotel construction markets. In the world changing hotel ownership dynamics from traditional hotel owners and operators to the new real estate developers, who go by the name of ‘Asset Creators’! In a new-found love of creating wealth, hotels are now a big part of the scheme to generate recognition and accrued valuation to raise more funds to expand their real estate ambitions. In such an era where the hotel ownership is myopic towards any long-term business plan, management is pressurized to cater to the whims of making quick money, without a desire to create a market, which involves a bit of patience and hard work!
Leafing through newspaper articles which announce hotel projects in India (especially the ones announced by real estate biggies), it’s quite surprising that some of them have not even moved from the drawing board stage for about a year. The announcement of new hotel projects with leading world hotel brands adds value to the project’s real estate component and gets the necessary ‘pre-public issue’ attention from media. Word is soon bound to get around and hotel brands will get tired of attaching their brands to projects on the drawing board. As more and more hotel builders go in for multi-use models, creating MICE infrastructure will add immense value to their bottom lines.
The new age city hotels have created a system of milking the already drained ‘Corporate Cows’ or the homegrown revenue manager’s diktats. The revenue manager’s role (primarily an imported concept), was introduced into the Indian hotel system by the big multinational chains to maximize revenue. The revenue manager is accorded with powers to supersede the sales team’s control over evaluating clientele and negotiated rates. Conflicts of interest between the revenue manager’s short-term goals and the end result of creating a long-term sustained business relationship are one of the key factors for hotels to refuse to look for alternate sources.
Apart from the corporate MICE that are always welcome, Indian hotels across sectors have a large portion of revenues arising from Food & Beverage and taking into consideration the penchant for your countrymen to use hotels for weddings, anniversaries, birthdays, retirement send-offs, kitty parties and even child-naming ceremonies, the market for MICE will not go out of fashion in a hurry. Irrespective of the size of the hotel or its star category, it would help if an event venue is incorporated, especially in India. Some European hotel brands, which do not have MICE as part of the standard design plan, are now customizing to take on the Indian desire to celebrate. It does not make so much difference to add an event venue, even if you do not wish to manage it on your own. While doing business in India, there is always ‘Outsourcing.’
Of late, there has been a concerted effort by leading hotel brands such as Marriott, ITC Hotels, Hilton, and the Taj to create separate marketing teams to reach out to the MICE segment. Marketing MICE requires different skill sets that do not necessarily align with that of the revenue managers. Hotels should create a business model, where Event managers, associations and professional conference organizers (PCOs) are partnered with and considered as part of their distribution strategy. And yes! Commissions are important. They work in most international markets and will do good in India as well.
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