High GST makes Indian hotels expensive vis-à-vis international competitors: Puneet Chhatwal

Forum Gandhi Mumbai | Updated on September 12, 2019

Indian Hotels CEO says policies should be conducive for private sector investments

Nearly two years since he took over the reins of Indian Hotels Company Ltd, Puneet Chhatwal is confident of meeting the targets he had set out while embarking on a transformational strategy called Aspiration 2022. Under this plan, Chhatwal wants to make Indian Hotels not only the most iconic, but also the most profitable company in the hospitality business in South Asia. In an interview with BusinessLine, Chhatwal outlines his gameplan. Excerpts.

Are you on course to meet the 2022 targets?

We are well on track to meet the targets outlined in our 5-year business strategy, Aspiration 2022. We are the oldest operating company of the Tata Group. We have some fantastic assets that few others can lay claim to. Doing the job and doing it with speed and efficiency is something that our group Chairman believes in very strongly. He believes in the 3S: scale, simplify and synergise; these resonate with most of our company CEOs, because without scale you become irrelevant. There is so much to synergise within the group, as well as all other stakeholders, you can ride the headwinds, or you can manoeuvre.

Has the economic slowdown impacted you and how are you coping with it?

There is a slowdown since March, but we are very focused on market share. We're increasing our market share consistently in the majority of our portfolio because the size of the pie is not going to increase. We have to keep our costs under control without losing quality. So, we reported a 6 per cent topline growth and that included monetisation of certain flats which is a part of our Aspiration 2022 strategy. Without monetisation, the increase would have been around 4 per cent, and majority of this 4 per cent was coming from the US and UK. There is a slowdown across the globe and within high growth emerging markets in particular.

One of the issues raised by various industries is the impact of GST and high taxes in general. How has this played out for you?

The taxes are currently too high, which, in my opinion, goes against the idea of attracting global talent. This, therefore, has a bearing on the net payroll. This also impacts our ability to correct salaries. It is the same with GST, with hotels being taxed at 28 per cent. This makes Indian hotels very expensive vis-à-vis international competitors. As a result, India loses out as a destination. A hotel is a job multiplier. So, a lot of times hotels try to keep the room rates at around ₹7,000-7,500 otherwise you will be charged higher taxes.

We have such great heritage sites in India. They should be looked after better. Perhaps there can be investments in the area of restoration of heritage buildings and monuments. The investors should get accelerated depreciation so they can offset it against taxable income.

You said you are looking at increasing market share. How are you doing that?

We are constantly making strategic and tactical interventions to increase our market share. This includes renovating our hotels, spending on tactical advertising, and using branding effectively. 19 of our hotels have been upgraded to Taj. We are re-imagining the Ginger brand. For example, we are building a Ginger in Santacruz, Mumbai. We have owned this land for the past 22 years. It used to be an old flight kitchen and now we are building it into a 371-room property. It will take two-and-half years. We may need one like this in other top Indian markets like Bangalore and Delhi. We have repositioned Ginger in the lean luxe segment. We have changed the whole branding, Web site, look, design, everything as we believe that people are looking for aspirational products. We are expecting a 30 per cent increase in yields from Ginger through this new strategy.

About 70 per cent of the Ginger portfolio will be re-branded by the end of 2022. In the revised brandscape similarly, Vivanta will be a standalone brand. I do believe we have to keep investing, even in a slow down. But we are now focused on the returns. And that's what we've tried to change by saying, we will not only be the most iconic, but also the most profitable company in the hospitality business in South Asia.

Now that you have won back Taj Mansingh in New Delhi what are your plans for it?

Taj Mansingh was our turning point in recent history. Many people were convinced that we were going to lose it. It’s a prestigious property. It has an emotional connect to the city of Delhi much like the connect of Taj Mahal Palace with Mumbai. We have started renovations at Taj Mansingh. We will spend ₹150 crore over a three-year phased renovation plan. The first major renovation within the hotel is at Machan, the iconic all-day diner which is much loved by generations of Delhiites.

What can the Government do to help boost the sector?

We welcome more support from the Government. One sector that is a multiplier of jobs is the hospitality and tourism sector and the government needs to recognise this contribution. The policies should be conducive for private sector investment.

Published on September 12, 2019

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