The Hindu Business Line : On Fortune’s path

A few years ago, seasoned players in the country’s hospitality sector realised that the future would be largely driven by two emerging patterns in the market: one, that mid-segment hospitality was the fastest growing in the country and two, t hat the future of hotels was in branding. This was also strengthened by the fact that internationally, 85 per cent of all mid-priced hotels are affiliated to a chain, while in India that number is only about 15 per cent. Of course, the scenario is undergoing a change thus fuelling the growth of the industry at a pace never seen before, resulting in the birth of the upscale affordable luxury hotel chains.

Falling into the ‘affordable quality’ genre is Fortune Park Hotels Ltd, a subsidiary of ITC Ltd. Says its General Manager (Operations), Rohit Malhotra, “In India, people are breaking away from traditional methods and lifestyles. This changed mindset is creating a huge demand for hotels that provide quality at affordable rates. And this is the philosophy that drives the growth of Fortune Hotels.”

The chain, he says, follows a balanced approach towards growth, expansion, brand extensions and aims at providing the same assured quality of product and service across all its brands. “The Fortune brand is now spread across the length and breadth of the country, offering full-service properties without compromising on quality – all at a very people-friendly price.”

Explaining the philosophy behind ‘value hospitality’, Taposh Chakroborty, Principal, Boutique Hospitality Consulting, a Bangalore-based hospitality consulting firm, says that in a fast developing country with strong fundamentals like India, ‘conventionals’ are overtaken by ‘changes’ rapidly on the strength of is economic growth. “Affordability is the key to these changes. If a demanding product like hotel accommodation and its various facilities is first made affordable and then offered with increasing frills and values, then the product stays in the limelight for a longer period. And if it keeps on delivering its promises, then it becomes a brand.” Fortune Park Hotels has identified locations across the country, where hotels in all its sub-categories could be set up. The extension brands of Fortune include Select, Park, Inn, Resorts, Apartments, Faith, Spot, Stop, Lodge, Indoville, and Adventure, each catering to different needs. Fortune Park Hotels now has 46 properties (out of which 25 are up and running) and 3,747 rooms across 38 cities. “The vision is to have at least one Fortune hotel every 180 km,” says Raju Louzado, General Manager, Fortune Select JPCosmos, in Bangalore, one of the latest to be launched in the chain. Malhotra says the focus of Fortune Hotels is holistic in its development. “The properties are being set up in major metros, mini metros, State capitals and business towns. As each property takes root, it opens up possibilities at another level in a neighbouring hub of development. As each hotel is created to suit the business needs of a particular environment, it leads to a perfect economic fit.”

The business model followed is simple: Fortune selects local partners in each city who bring in the infrastructure including the property, and Fortune operates and manages the properties under its brand umbrella, but does not follow the franchisee model.

For every property that gets a Fortune tag, about five are rejected due to several factors. It takes about 5-6 months to select a partner, says Louzado. The criteria include a good working relationship, viability of the project (based on a market survey done by an outside consultant), the property itself and its location. “In fact, the partner needs to have at least 36 licences in place before the agreement is signed,” says Louzado.

Fortune has standardised the number of rooms that its sub-category properties would have. For instance, Select should have a minimum of 120 rooms, Park 90-100 rooms, and Inn 30-50 rooms.

With land becoming a high-priced commodity today, Louzado says Fortune is looking at a combination of brownfield, greenfield and operational hotels to reach its target of over 100 properties and 6,000 rooms in a few year’s time. “This is part of a well thought out strategy,” says Malhotra. In fact, it has just flagged off its 25th hotel in Hyderabad. The other hotels slated to open this year include Fortune Resort Grace in Mussoorie, Fortune Park Vallabha in Hyderabad — the second Fortune in the city, and Fortune Select Metropolitan in Jaipur.

As with all international chains, Fortune ensures standardised experiences and services. For instance, airport transfer, wi-fi connectivity and non-smoking rooms are common to all Select hotels. Even the group’s F&B is branded across all its hotels: For instance, the coffee shop is called Zodiac, the Indian specialty restaurant is called Nakshatra and Oriental Pavilion is its oriental restaurant.

The average room rate across Fortune hotels is around Rs 4,200, but in Select and Park, it ranges from Rs 6,000 to Rs 8,000 depending on the location and demand. The pricing is crucial in the hospitality sector now, especially as “five-star deluxe chain hotels are struggling to keep pace with dwindling financial infrastructure of the BPOs and IT companies,” says Vikram Mago, General Manager, Fortune Select Trinity, Bangalore. Fortune is also riding high on the changing dynamics of the hospitality industry. Affordable luxury will work best not only with customers but also for the business, agrees Louzado. It is possible to start a hotel in this segment in two years, and expect a return on investment in another two years. “Not everybody in the five-star segment can afford growth, as the gestation period is very long. The growth is in the mid-market segment,” he says. As there is no big spread of F&B options, overheads can be capped here. This means that 80 per cent of the property’s revenues comes from rooms, he adds. And just by being part of a chain hotel, these hotels would have all the advantages of a systematic distribution network, central reservation systems, sales and marketing support across the country. In Chakraborty’s opinion, Fortune has understood this well and is aggressively promoting the concept. Given the mindset of both the investors and the end-users, it could well be a win-win situation, he says.

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