Indians are a devout lot. They pray daily with ardent devotion, celebrate festivals with enthusiasm, and visit religious destinations whenever the opportunity presents itself.
A couple of years ago, religious tourism fell within the realm of elders in a family, while the younger generation shunned them, presuming them to be boring jaunts. Mukund Prasad, Director, Leisure Hotels Group (LHG) wanted to change this narrative. Why should a trip to a temple town be limited to visits to places of worship, he questioned?
He knew exactly what he was talking about and how the market needed to be smartly moulded in a different direction. For over four years, the hotel chain has been running camps for pilgrims at Badrinath, Kedarnath, Gangotri and Yamunotri. While many associate these destinations with the Chaar Dham pilgrimage circuit, many remain unaware of the adventure, leisure and experiential opportunities that could engage the entire family.
Hence, it was natural for LHG to pivot into offering leisure, adventure, wilderness and spiritual experiences. After all, it is a crucial player in Uttarakhand’s hospitality sector with a strong portfolio of smart hotels, boutique resorts, luxury villas and bespoke camps in the state’s scenic destinations.
This move paid off rich dividends, especially during the pandemic months. The faithful started visiting temple towns with a vengeance and came with their extended families for some much-needed downtime. Mukund said, “For us, in leisure destinations like Nainital, Corbett, Dharamshala and Rishikesh, domestic tourism has recorded a substantial recovery in 2021. We expect this surge to continue through H1 until June 2022. However, H2 is expected to return to normal business trends, allowing for a pricing correction.”
IT’S ALL IN THE FAMILY
The company, which has interests in sugar manufacturing, real estate, agriculture and is expanding in the crafts spirit business this year with a distillery, started its hospitality journey in 1989 with the Naini Retreat in Nainital. Since then, it has been catering to tourists in Himachal Pradesh, Uttarakhand and Uttar Pradesh at popular locales including Corbett National Park, Haridwar, Rishikesh, Ramgarh, Bareilly, Kausali and Dharamshala.
Today, LHG has 29 hotels, of which it owns 20 and manages nine. It has leased two resorts to Club Mahindra in Naukuchiatal and Corbett National Park, respectively, and has collaborated with IHCL to manage resorts in Corbett and Haridwar. Charting its expansion strategies, it now plans to introduce luxury resorts in high-throughput tourist destinations, including Bhimtal, Nainital, Corbett Park, Mussoorie, Naukuchiatal and Jaipur.
Over the years, the second generation of the Prasad family became actively involved in LHG. Mukund is now ably assisted by his nephew Vibhas and son, Samarth, who are also directors in the company. By channelling their contemporary knowledge with his experience, the trio is scaling the company’s growth through thick and thin.
Their youngsters’ insights came in very handy when the pandemic upended traditional business models, and they decided it was time to all-out with digitisation. After all, in today’s digital-first economy, technology plays a crucial role in hospitality companies’ understanding of dynamic pricing as a critical driver of growth and success.
Aware of this, LHG adopted new-age revenue management technologies to automate various processes to sell its inventory most optimally. “Our journey using such processes started more than a decade and a half ago when we were looking to put our entire inventory online and sell directly to guests. We used to price our inventory based on three seasons; summer high, monsoon low and winter shoulder,” Vibhas explained. The company identified Simplotel as its partner for all things e-commerce –to create websites, optimise online search results, and link its payment gateway to the Axis Rooms channel manager and its Hotelogix reservations network.
As digital-first customers started using online travel booking extensively, LHG consolidated more than 60% of the accommodation market share. It decided to invest in the AiOSell channel manager and an RMS tool to ensure that its inventory is priced right depending upon demand and supply (like occupancy, day of the week, competition, lead time, last-minute timing and market demand).
“By creating our own seamless tech stack, we can offer dynamic pricing that picks off the demand optimally as it comes. Using AI and data analytics as well as machine learning-based algorithms, these tools forecast dynamic pricing based on inventory allocation and revenue management on day-to-day management that results in maximising revenues,” Vibhas elaborated.
RIDING ROUGH WEATHER
2021 was a challenging year for the hospitality sector, and LHG, too, weathered its share of crests and troughs. During the third wave, its revenues fell by 70% in the first week of January 2022 but recovered by 20% the following week.
Reminiscing those problematic days, Vibhas remarked, “During the first lockdown in 2020, the entire hospitality industry was shut down from March 2020 till June 2020. While we were allowed to open our properties in Himachal, Uttarakhand and Uttar Pradesh from June 2020 onwards, there were travel restrictions to enter the state where tourists needed an RT-PCR test to cross the border. Due to these onerous conditions, there was virtually no travel till September 2020.”
As a result, H1 2020 was an absolute washout for LHG. The business began reviving in October 2020, and there was a surge in leisure travel. The hotel chain had robust bookings with firming up rates across most of its leisure destinations. “We ended the financial year with only a 40% erosion in top lines despite being shut for six months,” Vibhas added.
The second wave caught the company unawares. Since most of its properties are in Uttarakhand and Himachal Pradesh, the first quarter of every financial year (AMJ) becomes the most crucial quarter due to summer holiday travel demand.
“We lost two crucial months (April to May 2021) of the first quarter of summer travel due to COVID-19,” Vibhas stated. “After the decline of the second wave, we restarted business from a low base all over again. RevPAR increased proportionally in the month of JAS 2021. However, we have seen a sharp decline in occupancies and RevPAR, due to the current third wave.”
During this massive crisis, LHG retained its 1000-strong staff and did not furlough any employees. However, there were some months where it was compelled to cut pay to meet its financial liabilities and obligations.
Mukund believed that LHG’s human capital was its biggest asset. “We do not impair the internal culture of the organisation for extra profitability,” he emphasised. “We would like to maximise our business, but not at the expense of our culture, teamwork and the integrity of our people.”
THE TIDE IS TURNING
Doing some tea leaf reading looking at the current trends, it seems that travellers are once again putting off leisure travel till the third wave passes by completely. The Prasad family, in the meantime, is adapting to changing customer preferences and marketing dynamics by adopting a principled way of working. This is because they believe that guests have not lost their inhibitions; rather, hotels have to gear up to provide a stress-free holiday by implementing appropriate safety measures.
The triad has noticed that recent travel demand is determined more by proximity from the source market, and guest choice is extensively determined by natural environments like hills, forests, riverfronts or beaches. “The destinations need to offer experiences for activities, excursions and sightseeing within a cocoon of safety, away from the city pollution and stress of communicable infections,” they voiced in unison.
Vibhas is elated that LHG’s brand promise is built around easy accessibility, curated experiences, value for money and a well-sanitised resort that follows stringent safety protocols. Now, they are announcing these attributes loud and clear to their target audience, who are seeking leisurely holidays in the lap of nature.
The strategy is paying off, and the group has seen a trend where a majority of guests are booking more extended stays of two to three nights at their properties. During the lockdown, some of their villas and cottages saw 5% of bookings averaging seven to 10 nights stay.
Samarth explains the reason behind this shift in travel preferences. “With individuals favouring health and well-being, they are paying greater attention to local communities, local experiences, and a growing interest in off-the-beaten-path adventures. Since international travel is still unsafe and options are limited, travellers opt for shorter vacations within driving distance. However, once the restriction on regular foreign passenger flights is lifted, substantial outbound travel is expected,” he opined.
Mukund stated that now the group will use a full-funnel omnichannel promotion strategy that blends brand awareness and performance marketing. “Our forte for well over two decades is creating guest experiences in our resort destinations that are centric to our customer demographic. The experience has been built around activities, entertainment, dining and local flavours keeping these in sync with the ambience and locale,” he explained.
THE PROMISE OF YOUTH
After the success of its first upper-upscale resort in Rishikesh, Aloha on the Ganges, several years ago, Mukund, Vibhas and Samarth gathered to introspect on newer avenues that could be explored. Following a no-holds-barred deep-dive discussion, they decided to foray into a new upscale hybrid ‘youthstel’ under the ‘The Hideaway Bedzzz’ brand in 2020. The project was delayed slightly due to COVID-19’s onset, but it got rave reviews from guests when it opened.
One of them is Rohan Wasal, who called it the ‘Taj of hostels’. After staying at various branded hostels, he called his experience at The Hideaway Bedzz a notch above the rest. What clinched the deal for him was the double space in lockers, cleaner and bigger beds, two balconies in dorm rooms, with three toilets and bathrooms, respectively. The view of the Laxman Jhula and Ghat from the terrace, which is also within walking distance, were added bonuses.
Vibhas is thrilled to receive this kind of guest feedback, as this brand was envisaged to offer value for money along with a smart-stay experience. It validates their decision to enter into the co-accommodation space, which is currently largely unorganised. “We have since taken the concept to one of India’s oldest living cities, Varanasi, with the launch of The Hideaway Bedzz (Varanasi) in October 2021 with plans to expand to other cities on the cards,” he added.
When LHG started out in the hospitality business three decades ago, it used to build and operate hotel assets. “For the other hotels that we do not own, we are expanding through the management route by taking third party properties on management contracts. This hybrid strategy is currently helping LHG with its expansion plans,” Vibhas claimed. Both generations of the Prasad family have set their sight on this ‘asset right’ model, which the trio believe is here to stay. They are gunning unitedly on exploring opportunities in this space, which will help LHG scale up quickly while building trust with co-stakeholders and customers. Their motto in life is simple and is derived from Aristotle’s famous quote – “The end of all labours is to earn leisure.”
