The Hindu Business Line : Royal Orchid Hotels to continue looking for acquisitions

Mumbai, Dec. 30 The year 2008 has been full of challenges for the Indian hospitality industry. The global recession negatively impacted foreign tourist arrivals, which grew in the range of merely 1.5-2 per cent in September-October compared to 10-11 per cent growth witnessed in August. Travel advisories against India that were issued by foreign countries in the wake of the Mumbai terror attacks last month, made a dent in the peak holiday season about to begin. However, as a silver lining, Indians have not lost their love for travel yet. Travel within India by domestic tourists is still vibrant and the travel industry feels that there is more potential to it.

In light of the above, Mr Chender Baljee, Chairman and Managing Director, Royal Orchid Hotels, tells Business Line in an e-mail interview how 2008 panned out for the hospitality industry and what is in store from 2009:

How would you describe the year 2008 for the hospitality industry? 2008 was a year of transition, from the boom times to the bad. It ended on a sour note with the terror attacks in Mumbai.

What are the expectations from 2009?

We expect the effects of the recession to sink in, leading to some subdued leisure and corporate travel. However, we have prepared ourselves for the same. We are also hopeful of opening several new hotels this year, including Royal Orchid Suites, Whitefield and Royal Orchid Central, Ahmedabad.

2009 is also going to be the election year. As part of the industry what are your expectations from the new Government?

We are hopeful of getting infrastructure status for the hotel industry.

Apart from unforeseen incidents such as terror attacks, what are the other challenges that the hospitality industry needs to brace for in the coming year?

The economic slowdown will affect us all, and we need to gear up for it. However, there are positives as the market for talent has eased considerably and we are able to find good talent at reasonable costs now.

What were the corporate developments that took place in Royal Orchid in 2008 and what does the year ahead hold for you in terms of expansion, diversification, acquisition (if any), marketing etc?

In 2008, we acquired a beachfront resort in Goa, and rechristened it Royal Orchid Resort. We acquired a beachfront property in Dar Es Salaam, Tanzania, marking our international foray. We acquired properties in Jaipur and Hyderabad for the development of 5-star hotels. We acquired a property in Ahmedabad for the development of a four-star hotel.

We acquired the Royal Orchid Central hotel in Bangalore. Finally, we also signed a partnership with Parsvnath Developers for the development of 10 hotels over five years. This has been a year of hectic deal making, where we grew to 12 operational hotels and cemented a pan-India presence. We have been awarded the Best Regional Hotel Brand award by Galileo-Express Travel World, the Oscars of the travel industry, and we are happy that our achievements have been rewarded.

The year ahead is one of further development activity, where we will continue to look out for acquisitions. We are also focussing on management contracts, and expect to make significant announcements on this front soon. Our sales offices, many of which were opened in 2008, are likely to help us grow our presence nationally and internationally. Finally, we would be looking at a nationwide corporate ad campaign towards the end of the year to build brand awareness.

In retrospection of the recent terror attacks in Mumbai, how different or similar would the definition of hospitality be in India in 2009 and in the years to come?

Obviously, security has now become even more important than before. We need to change the perception of hotels as soft targets for terrorists, to havens for international travellers. Therefore, we will work towards this.

Are you in particular and the industry in general looking to have certain amount of budget demarcated for security measures? Is it likely to become a recurring expense of sorts?

Security is not likely to be a significant line item, even with the increased measures. However, we are implementing all the necessary measures to get ‘airport’-like security for our guests and staff.

The Oberoi and Indian Hotels have already appointed security advisors. Has an external security advisor become inevitable for the hospitality industry?

We are in talks with several such advisors, but are considering training our internal team for rapid response, as ultimately the in-house team has to respond to a crisis, and they must be trained appropriately for the same.

What other possible changes can we see in the industry in the coming year?

The advent of technology is one that people expect every year. I think 2009 is the year where technology in guest rooms will stand out.

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