Chander Baljee is a strong believer in serendipity; a well-founded belief if one examines his life’s journey.
His family runs the popular Baljee’s restaurant in Shimla since 1953, and a visit to the hill station is incomplete without dropping in to enjoy some piping hot sweetmeats.
Chander joined the business in 1972 to help his father and brother open an upmarket restaurant, ‘Fascination’ on the premises. Soon, it became the go-to destination for the city’s young crowd and tourists. A chance conversation with a regular customer, who was then the Deputy Director at Mysuru’s Tourism Department, proved to be a life-changer. “This gentleman would visit our restaurant for tea and urged me to visit the southern state for business. I simply agreed,” Chander reminisced.
Most would dismiss this as just another polite chat with a client. However, when the Deputy Director wrote to Chander about the expiry of Hotel Metropole and Vrindavan Garden Hotels lease and that the state government was re-opening bids for both properties, the latter decided to pursue this opportunity. Despite the palpable opposition from his family, he travelled from Himachal Pradesh to Mysuru to submit tenders for the hotels.
“When we did not get these projects, my host suggested I consider leasing ‘Hotel Stay Longer’. After some negotiation, we got the property and I have been in Bengaluru ever since,” Chander laughingly said.
Incidentally, Hotel Stay Longer, rebranded later as Hotel Harsha, is still part of Royal Orchid Hotels (ROH) portfolio. Even more interestingly, Hotels Metropole and Vrindavan Garden are also part of the company’s network.
“After a period of almost 30 years, the lease tenders for both hotels reopened. I was determined on getting it after missing the first time around. Both these properties have been part of our portfolio for the past 16 years,” Chander proudly stated, proving once again that destiny did play a key role in his life as an hotelier.
BUILDING A BUSINESS, BRICK BY BRICK
When he came to Bengaluru, Chander had just INR 5 lakh as capital. Of this, he used INR 3 lakh as deposit for the Hotel Stay Longer, and spent another INR 1.30 lakh on refurbishing and upgrading the furnishing and cutlery.
“I had around INR 65,000 to spare when I started the hotel and the monthly rent was INR 25,000. Letters of Credit (LC) from banks were non-existent, it was tough to get utilities like gas cylinders and business was not great either,” Chander recalled, while talking about the challenges he faced back then.
However, he refused to throw in the towel, exit the hospitality business and move back to Shimla. It is his fervent conviction that tough situations toughen up tough people. Neither did he give up on his ambition to expand the business; despite lack of capital to build or buy another hotel being a constant constraint.
Once again, fate dealt him a favourable hand. “The Karnataka Government issued a tender for a land parcel on Bengaluru’s old Airport Road next to the Golf Course. I bid the highest price and won. People told me that I was crazy to invest on the place located on the city’s outskirts and that putting up a hotel there was reckless. However, I did not have the money to invest in a city-based hotel,” Chander stated.
So, he deposited INR 5 lakh with the government for the land, which unfortunately got into some litigation issues that dragged on for almost 14 years. However, this misfortune turned out to be a blessing
in disguise; while the hotel project was delayed, that part of Bengaluru showed signs of development and
urban settlement.
Chander took loans from various sources, sold some properties and finally opened the Royal Orchid Hotel in 2001. This hotel was initially conceptualised as a 4-star property, a step up from Hotel Harsha, which was a mid-segment establishment. However, following some intelligent value-added engineering, Chander launched it as a 5-star hotel.
“The first couple of years were very difficult as there was not business. However, from 2003 until 2008, Bengaluru saw an IT business boom, and we flourished,” Chander said. During those heydays, the property commanded INR 9500 average room revenue (ARR) with 80% to 85% occupancy, garnering the company a neat INR 35 crore profit.
GOING PUBLIC
Over time, ROH went for a brand refresh and decided to segment all its properties under the ‘Regenta’ title. Proper segmentation and distinction of its offering was necessary to ensure its partners and customers knew the nature of the property.
While Regenta is a full service upscale hotel, Regenta Central stands for a full service midscale hotel, Regenta Place for a limited service midscale hotel and Regenta Inn for a limited service value hotel. Regenta Resort is a full service midscale resort, while Regenta Suites is for select service serviced apartments.
2006, ROH went public to fuel its growth plans. The IPO was oversubscribed and the company raised more than INR 100 crore. That is when the company went into an expansion overdrive. “Some of it was reckless and we started several projects simultaneously. Had the market not tanked in 2008, we would have probably been amongst the topmost front-running hotel chains,” Chander rued.
During this time, ROH had various projects that were half way in the works, including a 5-star property in Hyderabad. While it managed to get it running, political issues cropped up in the state as with Telangana demanding a separate state. This led to frequent strikes and lockdowns, affecting the business. “We had made this project with a lot of love and effort. However, we had to take the difficult decision to sell it and cut down our debt, else we would lose out,” Chander lamented.
The hotel’s sale reduced the company’s debt tremendously. This incident helped him recognise the merits of sticking to an asset-light strategy. “That is how the idea of a management company came up,” he claimed.
He also realised that most management companies struggle initially because their incomes rarely match their expense, leading to loss. Fortunately, ROH had a couple of its own hotels with sales offices across the country. This gave it the edge of having a full-fledged in-house training on HR, sales and marketing, unlike other hotel management companies.
“The business did incur standalone losses. However, once you reach a certain critical mass, you start making profit. We put all our hotels under a subsidiary called Royal Orchid Associated Hotels. As a profitable company, ROH provides the best technology any hotel company can offer, whether it is digital marketing, social media or HR training,” Chander stated, proudly adding that it has deployed Salesforce for all its partners.
OPPORTUNITY IN ADVERSITY
While many have rued the pandemic for disrupting their established business models, it came as a blessing of sorts for ROH. For starters, the company used the time to change its way of doing business completely, beginning with pruning of overheads.
Chander is quick to point out that this did not involve laying off the service staff, since this can ultimately impact service quality, compelling the company to rehire more manpower. “We decided to reduce costs by 30%. Also, we took a conscious decision that once normalcy returns, our overheads should be 30% to 40% lesser than the earlier numbers,” he added. “We managed to do this when business restarted in October 2020. While our ARR was lower than before our outgoing was also lesser; so we did not suffer as much.”
Another major initiative that the hotel chain undertook was multiskilling of its workforce, which again lowered its costs. It also recruited trainees through the Presidency College of Hotel Management – a hospitality institution established by ROH in 1994 –offering them lots of online training. During the pandemic, the institute released a free 3-month training programme for FOH, housekeeping and F&B departments, which anyone across the country can register for.
The hotel chain also continued with its expansion plans during the pandemic. With 60 hotels in its portfolio, it wants to establish 100 hotels by 2022. Chander knows that these hotels will need sound leaders spearheading the operations. Hence, the company initiated a training programme for managers of various departments at its existing properties. They learn a range of topics, including engineering, accounts, social media marketing, guest relations and revenue management.
“We already have a sturdy pipeline of general managers. Four HODs were recently recruited as general managers in our newly opened hotels,” Chander stated. This benefit is advantageous to the company is various ways. To begin with, the individual knows ROH’s policies, protocols and processes, and can easily replicate it in the hotel they join in a senior position. Secondly, promoting personnel within the organisation at an enhanced salary is still more viable than hiring a general manager from external resources. This works as a win-win for the hotel and its employees, who get the assurance of a career roadmap.
In fact, this prudent approach towards cost management has ROH in good stead as compared to several international chains. “International brands have high costs since they employ general managers at several times the salary that we pay. Even otherwise, they charge high fees, which owners find difficult to manage in contemporary times,” Chander pointed out. “If these brands are unable to deliver business, they claim it is not easy for a hotel with a foreign flag. If the business is doing well, they credit their brand. And when the market is down, they invoke the force majeure clause.”
He stated this from personal experience, because he too had decided to go for a master franchise for Ramada in India long ago. “I quickly converted my first hotel into Ramada to see how they deliver. I realised that the fees I paid them was more than the business accrued from them. Since the contract was for 10 years under the US jurisdiction, I decided to continue till the end of the contract period,” Chander recalled.
This experience prompted him to set up his own brand, ‘Regenta’; a decision that has boded well for the company. During the pandemic, it opened eight hotels and has another 20 in the pipeline. Some projects were delayed since 2020 following the infrequent lockdowns. Chander is, however, confident of reaching the 100-hotel milestone by next year.
This confidence is merited since many hotel owners are under duress and keen to partner with brands that offer better terms and conditions along with realistic and regular return on investment. ROH fits this bill, especially since it chose to work on management contracts.
“This will ease cash flow issues, because there is no per property cash outflow, while there is a fair bit of income. We avoid spending on hotel upgradation unless it is necessary, which ensures that the returns on investment are quicker,” Chander added.
If ever one needed reasons to stay upbeat in these challenging times, and even otherwise, a quick read of Chander’s life is strongly recommended. His innovative approach to problems and unstoppable determination continues to inspire hope, as he scales hurdle after hurdle with a never-say-die attitude.
