As Marriot opens its new Courtyard property in Pune, area vice president Rajeev Menon, general manager Deepak Manocha and owner of the property Atul Chordia outline how the hotel plans to succeed during difficult economic conditions.
MARRIOT HOTELS AREA VICE PRESIDENT
Associated for more than eight years with Marriot group, Rajeev Menon came to India two years ago and set up his base in Mumbai from where he controls four important regions —India, Pakistan, Maldives and Malaysia.
Menon is very actively involved with 24 new properties that Marriot will be launching between now and 2012. Recently the company opened its mid-market brand Courtyard by Marriot at Hinjewadi in Pune.
“Hinjewadi is remained very viable business option from an international branded hotel point of view. There is no other hotel in this market and customers had to travel 16 km into Pune to stay. Pune like India is a decade long growth story, says Menon.
He says the city of Pune has become an important destination for many global business houses thanks to the completion of Pune express highway. “We are seeing big players like HSBC, Barclays and Volkswagen setting up shops here, some of them at Hinjwadi,” says Menon.
But the city is already facing an oversupply situation which has resulted into drop in average room rates for hotels.
“The rate we have opened the hotel with is Rs8500 which is part of our Marriot 10-year celebration. Customer can use Rs1500 in many which ways in food and beverage and other parts of the hotel. We have not seen price resistance at that level. It’s a well priced product for the market and we are very confident that it’s going to do well,” he says.
As India is witnessing growing demand for mid-market products, the brand Courtyard by default is seen to be perfect fit for the market. “You can say that but, for us, we have huge machinery that does lots of research and business analysis about market before entering. So I don’t think excellence is by default, you got to work on it.”
Given the India’s huge potential, a number of companies have started to look at the domestic market. “We realised that the demand trend is changing in India. So we launched a very extensive 10-year campaign which is targeted to various market segments,” he says.
Menon thinks they have a very structured approach towards the expansion in India. “We have gone to gateway cities and then expanded to secondary locations. Our focus is pan India and across our five brands. But Courtyard is just a natural fit in the most markets across the country.”
The company’s expansion has not suffered much due to the recession as lots of these hotels were planned almost three years ago. “So when the global recession came, we are closed to completion.”
He admits that about 10-15% of the project actually has not started and that can be pushed back a bit but other projects are happening on time.
COURTYARD PUNE GENERAL MANAGER
Deepak Manocha was part of the pre-opening team at the JW Marriot in Mumbai. Now Manocha has been entrusted with the responsibility to navigate the second Courtyard in India. But he takes charge at a time when the Pune market is facing oversupply.
“Yes, there are lots of talks about an oversupply in the market but we have to wait to see how many of them really see the light at the end of the day.”
He says the rates in the market has more or less stabilised. “We hope with our quality service, we will be able to have a good start and then build it up step by step.”
“The coming of Courtyard by Marriot is an entry of a true international brand into the city of Pune almost after 10 years or so. So what we bring about into the place is something which is well tried, test and experimented in many other locations all across the world. As a product, it’s a fresh prospective and as a concept it’s a new prospective,” he says.
Manocha thinks in today’s time, every market is a market one needs to try but his focus is obviously going to be the business traveller which also expands into MICE segment.
“Business wise we are tapping each and every other segments. We are reaching out to all the MICE people who actually run those businesses. Our source markets like Mumbai, Bangalore and Delhi already have sales and marketing presence. Our sales and marketing team in all across Asia pacific are talking to our customers. We are very confident to be able to carry on Marriot brand.”
Manocha explains that Courtyard has been developed keeping in mind what business customer wants in today’s time.
“Today, if business traveller travels alone so there are spaces and places in the hotel which has been designed to have him his ‘Me Time’. The hotel has internet facility and wireless internet connectivity everywhere around. Places where they can ‘grab and go’— the Momo to Go concept is there. Market like Hinjwadi does not have quality eating option. So we started our Momo restaurant. Now people have true international eating destination,” adds Manocha.
COURTYARD PUNE OWNER
Atul Chordia is one of the biggest names in the construction industry in Pune. His company Panchshil Realty is into developing convention centre, IT parks, SEZ and 5 star hotels. He has already opened two service apartments with Oakwood group. Courtyard is his first venture with Marriot with two more to follow.
This has been one of the toughest times for developers but Chordia says he manages to sustain because of his strong fundamentals.
“This has been the worst recession in the economy which we had never judged or seen in the past. As Panchshil group has always been a very conservative player, we didn’t go overboard. We didn’t go out of city and buy crazy real estate. And that’s the reason we could sustain and you can see all our hospitality projects are also getting completed on time. We have not shut down any hospitality or any other construction also.”
Panchshil has very large inventory of 40 lakh sq feet on rentals. Chordia says he didn’t face problem in raising funds for hospitality projects since they have good tie-ups with nationalised banks in the country.
“For all our properties, we have kept our debt-equity ratio to the banking norms. We don’t see going wrong anywhere. The problem happens when your debt-equity ratio is wrong, when you borrow more.”
“The real estate was bought at the right time. The projections are looking good even at the lower market. We still can pay off the banks because we didn’t borrow too much,” he added.
Chordia says the Pune market will get better because Pune is an industrial city, a service capital, an education capital. “The city will not fail any businessman. It’s just matter of time. and we will see the economy turning around soon. We are optimistic because we have the population. Everybody needs a house, food, needs to travel.”
At a time of recession when people are looking at cost cutting measures, Chordia says, “No cost cutting in hospitality. If you cut cost you cannot get the right product.”
Chordia has spent Rs55 lakh a key for the Courtyard hotel. His company is not going to be very aggressive on expansion. “We are not going in a big way like the other developers. We are going one city at a time. We have identified 3-4 cities. Over the period of next ten years, we would like to do another 5-6 assets in different locations.”
His JW Marriot project has been delayed by two years which will now be completed by 2012 instead of 2010. “We have delayed that project by two years because we feel a Pune market will not support a JW Marriot. We are actually wanted to align JW Marriot with the international airport.”
Chordia says one should have the best product and the best location to sustain during these times.
