Easy availability of land at good locations coupled with reduction in construction and operational cost are some factors why the hotel industry is moving towards dual-branded properties, says Kaushik Vardharajan, Hilton’s VP for Development in India
By Vinita Bhatia
Have you see an uptick in the development of dual branded hotels – where two brands are developed at one property – in India?
It is definitely growing and I think you will see more of such properties. However, it is not a solution for every market or location. Take the case of our Hilton Hotels and Resorts brand hotel and Hilton Garden Inn brand hotel that are located within the Manyata Embassy Business Park. It makes sense because we are talking about a large business park with a wide variety and profile of people who work there, and visit the area as business travellers. So, when one looked at such a diverse group of guests, it was logical to have hotels at two different price points at the same location, because then guests have a choice to pick where they want to stay, depending on their budget.
So, basically the location and profile of target guests is what one should keep in mind while planning such properties?
Yes, the most important thing that we look at while planning dual-branded properties is whether that market needs those kind of hotels. Of course, from a construction point of view, one also looks at what one has the ability to do – for instance, combine all the back of the house spaces. From the capital cost perspective, one does not have to build two independent hotels or two different back of the house areas, plants, machinery, laundry rooms, etc., which means those costs can be combined into one single space. Similarly, from an operating outlook, there will be one single team running both hotels.
So, there are lots of synergies from construction and operational viewpoints that help one to save cost and effort. Hence, I think there will be an increasing trend for dual-branded properties, especially in locations where these kind of dynamics work.
When you talk of these locations, do you mean metros and tier-1 cities?
Largely, yes.
What about tier-2 cities in India where several industrial areas are developing and a lot of intra-city trade is taking place? Do you see the dual-branding concept evolving over there too?
Not everybody is so focused on tier-2 cities because a lot of demand already exists in tier-1 currently. It comes down to the fact that if there is a diverse demand mix in a tier-2 city that requires hotels in both price points, and we have an owner keen to focus on both at the same time, then it makes perfect sense for us to look at those opportunities.
Is your upcoming dual-branded development at Manyata Embassy Business Park your first foray in this concept in the country?
Yes. We were amongst the pioneers to try this strategy in other parts of the world. So, it is definitely not a new concept for us from a global perspective. Hence, it is definitely something that we understand well and we already operate dual hotels globally.
How do you ensure that a concept, which has worked in another region, will work in India as well?
As a hotel company, we don’t take a concept or a trend that works in one market and try to replicate in another region, and especially not in a country like India. We look at doing what we believe will work in India, because I agree that something that has worked in 15 markets might not necessarily work here. And that is my job.
And how do you try to create a distinction for two different brands in a dual-branded concept located in the same location to appeal to their respective market audience?
Globally, we have 14 brands, and every time a brand is created, significant amount of effort, research and planning goes into it to prevent exactly what you mentioned, which is cannibalisation across brands and confusing the customers. We make differentiations in terms of the physical product itself and services we offer at each hotel. So, it is my job to ensure that we don’t create dual branded mix of hotels where the two brands are very similar to each other.
In the case of Manyata, for example, one property is Hilton Hotel, which is our flagship upper upscale brand, and then we have Hilton Garden Inn, which is our mid-market focused product. Both have differences in room specs, facilities available, level and type of services provided to guest, F&B offerings, number of restaurants, etc., which underlines how clearly different they are as products. Of course, they are also positioned very differently from a price perspective, which in the end is what matters and will diminish the confusion between the two brands.
What is your portfolio in India currently?
We are currently present in 11 cities with 15 operational properties and have 18 hotels in the pipeline. We plan to open Conrad in Bangalore and the Hilton Garden Inn in Lucknow, which means we will then be present in 12 cities.
Are most of your properties greenfield or brownfield assets?
We are an asset-light company. Our core focus is management and that is the route by which we grow and expand within the country. Majority of our hotels are greenfield projects, where we sit down with the owner and create the property from scratch, ensuring that it is completely customised to serving the need that we see in that market. We will continue to, of course, look at conversion and rebranding opportunities selectively for our different brands.
Many hotels have created brands to appeal to millennials with minimalistic designs, trendy communal spaces, funky colour schemes, seamless WiFi connectivity, etc. Does Hilton plan to introduce such properties in India any time soon?
If you are specifically talking about lifestyle brands, we recently launched Canopy by Hilton, which checks all the boxes you mentioned. Every hotel company looks at the larger target audience in a market while designing a property and we have the ability to influence the look and feel of a hotel through the design and architecture. So, if we are building a hotel in Goa, the character for that property will be very different than if we are building the same brand in Mumbai. There are aspects of the interior design process that we can influence, for instance, the F&B outlets, the lounge area, etc, to focus on a certain type audience.
So, it is not that because we are building a Hilton or Hilton Garden Inn, we are not focusing on the target segment you said. We do have Canopy and we will look at bringing it into India when opportunities present themselves.
Do you have a timeline when you will introduce Canopy by Hilton in India?
It depends on the opportunities on ground. We will continue to explore them and have discussions and when the right time presents itself, we will sign up. We do not want to be in a situation where we say that we will put so many dots on the map just because it is part of a plan. This doesn’t work and it risks diluting the brand portfolio and the guest experience.
I have no intention of rushing our pipeline through. We will do it smartly whenever the right opportunity is there. The perfect market for Canopy would be Mumbai, Bangalore, Delhi or Goa; so I am exploring those for the brand.
