BY CONRAD EGBERT
Heading up the largest hotel group in one of the fastest growing economies in the world, couldn’t possibly be an easy task.
But American Raymond Bickson, CEO and MD of the Indian Hotels Company, makes it look like a cake-walk. Hotelier India catches up with the man who seems to have become the American Dream not only for the hotel chain, but for India’s hospitality sector here and abroad.
Sat in a glass-enclosed lounge, post a dramatic two-hour launch of the new Vivanta brand, and now with questions flying at him from all angles, you’d imagine Raymond Bickson would be stressed-out, a little nervous and terribly impatient. No such thing! On the contrary, he wore his famous ‘Aloha’ smile, was enigmatic and appeared as cool as a cat.
Hawaii-born Bickson, who currently has his plate full with branding exercises, new hotel openings and even the visit of US President Barack Obama to India next month, took the bull by the horns when he joined the Indian Hotels Company Ltd (IHCL) seven years ago, to restructure the brand.
The Taj Group, which has been around since 1901, making it 109 years old, is IHCL’s luxury brand that has, quite recently, dipped its fingers into other hotel segments.
Today, the group comprises four brands including the Taj, which serves the luxury market and what the group is mostly known for; Vivanta by Taj, aims at what they call the upper-upscale segment; Gateway, which is their three-star addition and lastly, the very basic Ginger brand. Vivanta by Taj has been their most recent launch.
“In order to be able to go into other areas, we had to split up the brand,” says Bickson in an attempt to explain the new branding plan.
“For example, when we thought of setting up a hotel in Guwahati in Assam, we realised a five-star deluxe brand like the Taj couldn’t be present, due to the existing hotel rates in that region. We were simply not affordable; but the Gateway which charges about `2000 per day could exist, along with the other brands that were already present and is still competitive,” he said.
Bickson whose background is strictly luxury seemed a perfect fit for the Taj brand. He attended the famed École Hôtelière Lausanne in Switzerland and worked at renowned hotels including Hôtel Plaza Athénée, Paris, New York’s The Mark and Mandarin Oriental Hotel Group.
With such vast international experience, Bickson brought with him a great understanding of how international brands work. So with international hotel chains like the Four Seasons and the Shangri-Las entering India, Bickson was quick to realise that home-grown operators, like the Taj, need to look overseas to protect their market share and diversify their brand on home territory as well.
“Establishing ourselves in markets outside this region is part of our international strategy to grow as a brand and also to maintain and grow our market share; about 25% of the market in India belongs to the Taj,” says Bickson straightening out his characteristic yellow tie with a smug look on his face. “Some of the new projects are management contracts, some are joint ventures and in some we have our own equity.”
He adds, “Our Ginger brand changed the landscape of hospitality in India; Gateway is the biggest brand right now in the upscale segment. We’re the only company in the world that has 12 real palaces as part of our portfolio, so when we say ‘Taj Resorts & Palaces’, you can rest assured, it is really a palace,” he explains.
Swiss financial services major Credit Suisse recently ranked the Taj among its list of 27 Great Brands of Tomorrow. It was the only hotel company to be featured in this list.
IHCL has already begun its expansion with the luxury Taj brand into foreign markets with properties such as the Taj in San Francisco and Sydney; it recently reopened the Pierre in New York after a US $105 million restoration. In Beijing, China, it has a managed property called the Temple of Heaven, just outside the Forbidden City, while their most recent addition to their portfolio is the Taj Palace Cape Town in South Africa, which is a world heritage site.
At least 38% of new hotel projects in India belong to the Taj Group with 50 projects on the design board and some in the development stage. This year, 15 hotels will be opened without counting acquisitions.
When Bickson took over the Taj Group in 2003, IHCL had 61 hotels and 8300 rooms. Today it has 104 hotels and 15,500 rooms but with the addition of 44 new hotels and 12,000 rooms, the total figures goes up to about 140 hotels with 38,000 rooms.
According to Bickson, IHCL has opened one hotel every six weeks for the last seven years, but how long will this pace continue and is there an end in sight?
“We’re going to sustain the growth path for at least the next 10 years,” says the Taj chief. “We want to double our revenues to $2 billion. Before the downturn, in 2007, we had crossed the $1.4 billion mark. We were India’s first billion-dollar hotel company.”
Whether it’s through acquisitions, setting up new hotels, or managing old ones, the growth strategy will not slow down.
“We’re focusing on both acquisitions, as well as setting up new hotels right now,” says Bickson. “We’re always scouting, domestically and internationally in cities in the US, the UK, Germany, France, Australia and Singapore.
“As for a management contract, it’s a different animal altogether because the expectations of the owners are very different,” he says.
At the moment 45% of IHCL hotels are operated through joint-ventures, 40% are management contracts and 15% are owned in part or full by the company. India is a fast paced economy, which is growing with incredible opportunities.
Franchise agreements did control the brand’s property so earlier foreign companies stayed away. But now, those who were late in going into China are looking at India, so much so, that 41 brands in total have entered the market.
“We’re looking at having 400,000 hotel rooms in the next 10 years to support the expected five million tourists. There are more hotels in the city of Las Vegas than in the whole of India,” he laughs.
“India needs more hotel rooms desperately. The country is completely sold out, pretty much, five days a week. India is a destination as good as, if not better, than Thailand, Singapore or Dubai, but we need to sort a few things out in order to really tap into our full potential.”
A lack of good infrastructure and government support has been among the biggest problems for the past few years according to hoteliers, with many petitions being made through associations or other hotel bodies to sort this out, but with little effect.
“Travel and tourism is the largest employer in the world,” says Bickson. “10-15% of global GDP is generated by the travel and tourism industry. China rakes in 75 million tourists a year; New York attracts 42 million and Italy 45 million. In India not even 5% of the GDP is generated by the travel and tourism industry. All other travel destinations are easily doing at least 8% of GDP,” he muses.
The global capital investment in travel and tourism for 2010 is around $1.5 trillion with tourists who visit India spending some $10 billion per year.
“I lived in China in 1987,” narrates Bickson, “and I can tell you today, it’s not the same. China used to have spittoons, but today they’re planning 127 international airports.
That’s progress. Who do you think came up with the ‘Incredible India’ campaign? It came from the travel and tourism industry; Biki (PRS Oberoi) and I were among the few that drove this together.
The visa on arrival – again our idea. The government needs to take control and drive this industry. India is not friendly for the MICE market either and then VAT being charged on room rates, despite us offering corporate rates, doesn’t make any sense.
And this is where Malaysia’s example of a private-public partnership working brilliantly, comes in. Their tourism slogan, ‘Malaysia Truly Asia’ was absolutely fantastic and it did wonders for the country. We need that kind of support.”
Facts
– IHCL is in debt of about 4600 crore with a funding requirement of some 1900 crore over the next three years, which would make its debt-equity ratio 1:1
– In 2007 IHCL tried to buy US hospitality chain Orient-Express, but due to bad markets conditions, the deal fell through
– IHCL’s parent company is the mammoth Tata Group which accounts for about 6% of India’s GDP and owns luxury car brands Jaguar and Range Rover.
New Taj properties to open next year
– A Taj Exotica* in Tangiers
– Taj Exotica Dubai, Palm Island
– A Taj golf resort in Doha
– Falaknuma Palace in Hyderabad India
– Taj Exotica Resort & Spa Phuket
*The Taj Exotica is a subset of the Taj luxury brand for exotic resort destinations.
