Growing up in a modest, middle-class family in Odisha, Salil Panigrahi knew he had to conform to the social expectation of getting a good education and a job immediately thereafter. While training to be a Chartered Accountant 26 years ago, he did an articleship in Oberoi Hotels & Resorts’ finance department. While conducting audits of hotel companies, he grew fascinated with intrinsic details of the hospitality industry, especially its people-centric nature and charming facets including beauty and thoughtfulness.
After this stint, he joined the Six Senses Group in the Maldives, little knowing that this shift would transform his life, anchoring him to the island country. In addition to leading the finance department for the luxury brand, he was responsible for functions like project management for resort construction and product launch. This gave him a deep insight into resort operations.
Armed with this knowledge, in 2003, Panigrahi shifted gears to entrepreneurship and formed EoN Resorts, a company that engaged in resort development and consultancy for luxury resorts in the South Asian archipelagic country. “At EoN, we spearheaded the launch and growth of several iconic resorts, including Constance Halaveli and Six Senses Laamu,” he recalled.
Nine year later, Panigrahi embarked on his next business growth phase by launching Atmosphere Hotels & Resorts. “We sought to fill a gap in the region for a resort brand that offered tranquillity, fun and value
coupled with our extensive sales and distribution network in Europe. However, in recent years we began receiving guests from newer source markets like China, Middle East, India, and even the USA,” he stated.
INDIAN AT HEART
While launching Atmosphere Kanifushi in December 2013, Panigrahi called the company an Indian Ocean hospitality brand based from Maldives, which bemused many. However, he was clear about this positioning. After all, the Indian Ocean is the company’s origin and its first resort ascribed to this geostrategic direction and reach.
“The archipelago of the Maldives, our North Star in more ways than one, helped shape our company philosophy, which is ‘Joy of Giving’. The Indian Ocean is bountiful and this spirit of generosity is directed into every aspect of our guest experience. It signifies the instinct to do more for others, and intuitively create a sense of home. From a unique design, streaming natural sunlight, intriguing interiors to curating seascapes with exquisite fresh cuisine, Atmosphere offers awakening of all senses,” Panigrahi elaborated.
As it opened more resorts, Atmosphere Hotels & Resorts created three brands – The Ozen Collection, Colours Of Oblu, and By Atmosphere. Between 2013 and 2019, it launched five resorts in the Maldives – Atmosphere Kanifushi, Oblu Helengeli, Oblu Select at Sangeli, Ozen Llife Maadhoo and Varu by Atmosphere.
The latest addition is Ozen Reserve Bolifushi in South Malé Atoll with which it launched its uber luxe brand – The Ozen Collection – in late 2020. It will also introduce two resorts by the end of 2021 – Oblu Xperience Ailafushi and Oblu Select Lobigili in Malé Atoll.
Now, Panigraphi has set his sights on projects in South Asia. He has two upcoming resorts in a charming beach town on Sri Lanka’s south coast – Oblu Select at Tangalle and Ozen Retreat Tangalle, which are scheduled to open in 2023. “We are also exploring opportunities in the Indian subcontinent. With the recent appointment of Souvagya Mahapatra as our MD for India, Sri Lanka, Nepal and Bhutan, our ambitious growth plans are infused with renewed vigour given his expertise in the target destinations,” he optimistically added.
ONE ISLAND, ONE RESORT
Currently, there is a crisis of confidence underway in the hospitality business, as the economy remains in shambles. This is likely to produce some longer-lasting changes. While admitting that it is uncertain what the future will bring to countries globally, Panigrahi is confident that Maldives will continue to be a naturally self-isolated paradise with its unique ‘One Island One Resort’ concept.
Atmosphere Kanifushi was the first resort launched by the company in Maldives in December 2013.
“I am sure that it will always provide maximum security and tranquillity to travellers. Therefore, Maldives is well on track to woo tourists in the post-pandemic world, and perhaps even see an increase in demand because of its unique geographical advantage,” he opined.
Nonetheless, every five to seven years, the hospitality industry witnesses a cyclical change for various reasons, like the pandemic in 2020, putting hotel owners under immense pressure. They have to navigate partly fixed costs like insurance, property tax, interest payments and salaries along with semi-fixed costs like energy and flexible expenses like F&B.
The pandemic did affect Atmosphere’s revenue plans too, as there was immense pressure on revenue with a lower inflow of tourists and stringent lockdown measures implemented almost across the world. However, Panigrahi anticipates that post-pandemic, the customer sentiment reversal will bring good news with a surge in pent-up demand and the Maldives will benefit from the eventual increase in travel.
“In terms of our revenues, we have been reasonably profitable over the last year. Managing our costs is, and has always been, a constant process, which needs us to always stay hyper-vigilant. We have been creating new cost structures, negotiating with vendors and remaining flexible with partners, while ensuring that we never compromise on the value we offer to guests. In these turbulent times, we must not only react in time to every adversity but also anticipate and plan for the future,” he stated.
SHELTERED FROM THE STORM
Many industry people believe that the breakeven point for luxury resorts barely changed from pre-pandemic times, especially in destinations like Maldives. The island nation with its pristine beaches and
Instagram-friendly locales became a much-sought holiday destination for Bollywood celebrities, especially after India entered into an air bubble agreement with the island nation.
Actors including Katrina Kaif, Mouni Roy, Tiger Shroff, Disha Patani and Rakul Preet Singh soon splashed their social media with photos of tranquil skies and sprawling sea, much to the delight of the hospitality players in the region.
With Ozen Reserve Bolifushi, Atmosphere launched its latest uber luxe brand – The Ozen Collection – in 2020.
Atmosphere saw a marginal increase in its breakeven point with about a 10% increase from pre-pandemic times. Talking about this, Panigrahi recalled how Maldives was the first Asian destination to reopen for tourism following the global shutdown. “When the country’s borders reopened on 15th July 2020, all resorts resumed operations with immediate effect. We had a successful festive season with very high occupancy, and our occupancy rates continue to be encouraging,” he happily stated.
OPTIMISM ABOUNDS
As he prepares to expand Atmosphere’ operations across Asia, along with his team, Panigrahi is clear about one thing – building long-term relationships. So, it is no surprise that the company has been in constant touch with all its partners, even during the lockdown.
“Consistent engagement with a personal touch is one of our strengths and the reason behind our deep market penetration and loyalty from our trade partners. It is also the secret behind our continued growth in Maldives. As a result, we have been consistently receiving a disproportionately higher share of the tourists coming to the country,” he added.
Talking about whether hotels linked to a third-party brand with a franchise or management contract drive top line much better as compared to independent brands, Panigrahi pointed out that there are several factors specific to each destination, in the hospitality sector, that contribute to and impact the running of a profitable business. Speciality hotel management companies bring several advantages compared to independent, single hotels.
“The key benefits are group marketing and utilising the wider distribution network. Additionally, when dealing with partners, a brand can bring substantial group bargain power. Branded hotels benefit on quicker market penetration due to greater brand recognition and reduced cost of distribution,” he elaborated.
The pandemic exposed the DNA of hotel companies, especially how they treated their people during tough times. Panigrahi stated that relationships with its colleagues, partners, and guests are at the heart of the company. “As always, and even more during the pandemic, we remained invested in caring for our colleagues and their families. This is not just in terms of finances, but also by emotionally and constantly
seeking to keep overall levels of motivation up and helping each other remain mentally and physically resilient,” Panigrahi said.
This is because of his unshaken belief that family always comes, especially in uncertain times. Putting this belief in action, Atmosphere placed its workforce at the front and centre of all operations since the pandemic struck. Panigrahi believes in Richard Branson’s famous quote that when you take care of your colleagues, they will take care of your guests and the business will take care of itself.
“Because of this emotional connection, we received an overwhelming level of support from all our colleagues. They remained positive through these tough, always giving it their 100% and more.” This positivity reflected in the guest experience, which resulted in repeat business and excellent ratings on travel platforms.
For instance, travellers ranked Ozen Life Maadhoo number six on TripAdvisor since the destination reopened in July 2020. This amply proves Panigrahi’s conviction that if your employees believe you have their back, they will back up your business to the hilt. By letting the organisational culture reflect this management ethos, he ensures that problems are addressed before they become too big to solve.
In times of duress, this proactive approach has helped Atmosphere prepare better for the future.
Souvagya Mohapatra, Head – India, Sri Lanka, Nepal and Bhutan, Atmosphere Hotels & Resorts
Souvagya Mohapatra was associated with Mayfair Hotels & Resorts for over 27 years, where he helped
the company grow from two hotels to 12 properties. For five years in row, he was part of Hotelier India’s August Powerlist. Additionally, he was part of the executive council of industry associations like Federation of Hotel & Restaurant Association of India, Confederation of Indian Industry and Federation of Indian Chamber of Commerce & Industry.
He plans to implement the best practices he learned through these associations to augment Atmosphere’s
growth in the region.
What key insights from your association with Mayfair Hotels & Resort will you leverage to explore opportunities for Atmosphere in India?
Be it identifying business opportunities, conceptualisation, procurement of right materials, determining project viability, execution of projects, designing the overall operational SOPs for new properties or ensuring compliance with statutory requirements, the experience that I gained throughout my journey with Mayfair was tremendous.
Now, as Atmosphere Hotels & Resorts looks to expand its footprint in India, I can make use these experiences in an impactful way. Apart from strategising the sales and marketing strategy for better RevPAR, business expansion has been my forte. In my new role, I will leverage this ability to boost Atmosphere’s growth and expansion in the region.
Your proficiency was operating hotel properties. Will Atmosphere need a different business approach, especially in India?
There would certainly be subtle variations in business approach. Apart from HNIs and long-staying guests, we shall focus more on destination wedding and the MICE segment in Sri Lanka, Nepal and Bhutan, and especially India. Since MICE generates great F&B revenue, we shall align our offers accordingly to cater to this segment.
This apart, given the huge emerging middle class of these countries, we shall formulate our operations to target this base. Apart from minor changes, we don’t need to effect any major alterations as by and large, the market forces that remain at play in the Indian subcontinent remain the same.
Which regions will you initially focus on and which Atmosphere brands will debut there?
We already have two active projects in Sri Lanka and our immediate priority is to complete them. Our development team is already identifying properties in potential destinations like Goa, Kerala, Hyderabad, Jaipur, Kolkata, Guwahati, Bangalore, Ahmedabad etc. Preferably, our Ozen brand will debut here.
Will you focus more on management contracts since hotel companies are keen on an asset light model now?
Management contract is our strongest business model and most of our upcoming properties will be under this template. Yes, hotel companies are keener now on asset light model, but management contracts remain the most preferred arrangement for operational control.
While this model remains our preference, we are open to accommodating the concerns of hotel owners for a beneficial association. However, we shall focus on having our own properties at certain locations provided we get good support from state governments.
How can flexible management contracts benefit owner-operator relationships?
Instead of flexible, a better negotiated management contract that aligns both party’s expectations will benefit owner-operator relationships. An equitable and fair agreement goes a long way in ensuring smooth operation of a property and ensuring harmonious owner-operator association. So, it is not the flexibility per se, but the understanding and clarity in communications while working out the terms and conditions that matter the most.
My mantra is to evaluate the right investment opportunity in a region by following few steps. Firstly, identify what the destination can offer to a prospective tourist. Secondly, what makes it stand out from other places. Thirdly, assess its connectivity via air, rail and road with major cities. Lastly, gauge if a favourable business ecosystem backed by a supportive policy framework exists. If all these boxes are checked, the place is ripe for investment.
However, great business decisions are often based on intuition. Hence, despite the above criteria, if we get a good resort where we see a great business opportunity, we shall definitely go for it.
Do you see hoteliers shifting from standard management contracts towards franchises or hybrid arrangements?
Earlier with fewer operators, things were tilted in their favour, which has changed. With increased competition, owners are in a favourable position while negotiating deals for their property. In traditional management contracts the renewal was largely automatic. Newer contracts have a clause for qualified renewal i.e., it would be renewed only if the operator meets certain thresholds like better RevPAR, better occupancy, etc.
Will global brands take a greater risk as a business model to get more owners in their portfolio?
Yes, they would do that to enhance their presence in India through the franchise model, as it’s a key market. Also, given the sheer size and scale of their revenues and operations, they would certainly be able to offer a more lucrative deal to operators vis-àvis our domestic brands.
