G20 will have a big role to play in India’s positioning in inbound tourism, says Anuraag Bhatnagar, CEO of Leela Palaces and Resorts, pointing out how delegates from the top 20 countries of the world will go back with memories and experiences that India will create in not just hospitality, but culture and tourism. “In the short term G20 has already given a big boost to the hospitality industry in India , but in the long run we will benefit in 2024 and 2025 as well, he says. The hotel chain, which was acquired by Brookfied for $500 million, is strengthening its position in luxury through a host of new product and service offerings, says Bhatnagar. Excerpts:
Ever since the Brookfield acquisition, there is a lot of energy seen in the recapitalised Leela brand. How is the josh?
The josh is strong. There is a sense of excitement about Leela 2.0, where we have really embraced and preserved what all is great and distinctive about the brand — the warmth, the authenticity, the Indian quotient, the extreme attention to detail, amazing build quality — it’s not going to be easy to build hotels like this.
But if you are going to manage more hotels than build your own — how will you ensure this build quality?
We currently have five fully-owned hotels and seven managed hotels. We were fortunate to retain the original design and development and technical services team that built the Leela Palaces and Resorts. It was important to preserve the legacy of the brand through design and architecture so that even in the hotels we don’t own, the third party also adhered to the same quality and guidelines. For us to have a Leela flag, we need to have the right partner, right asset quality, right build quality, service style and design and then core values of the brand.
We have a single brand so we have to be extremely protective to preserve the brand. So that there is no Leela lighter version, hence we are very mindful of our strategic growth.
Having just one brand limits growth, right? Would you think of launching another and operating in other segments?
Our current business plan is to remain focused in luxury. We want to expand our footprint in the luxury space.
Where are you expanding?
We are actively closing opportunities. We are in an advanced stage of discussion in some international projects as well as growing our portfolio in India. By year end we will be able to make some announcements. We own a major piece of land in Agra, for which we have started design and development. That should be ready in 2026.
How is this year looking in terms of bookings?
G20 and the Cricket World Cup are two spike events for the hospitality sector. Most of our hotels had participated in G20 and hosted heads of state and finance. This year is a great year for the industry. We definitely will see the positivity and momentum continue as we head into 2024.
But will rates hold? While you are capitalising on demand, there are inflationary trends that could keep away consumers.
What has happened is that post Covid, there has been a much needed correction in room rates. Indian luxury hotels were by any benchmark of comparison, even with Asian capitals, underpriced for the offerings we were providing. Imagine. even today, you can stay in the finest luxury hotels in India for less than $350, which is unthinkable, given the kind of experiences we provide. We feel the price correction is likely to stay. We are forecasting and planning for that. Our retail prices are slowly getting more reflective of how the world sees luxury hotels.
What about occupancy?
It has reached pre-covid levels, which for us was 68 per cent for the full year for the entire portfolio. We are forecasting occupancy to go higher in 2024. The only headwinds we see are the US situation, and continuation of geopolitical battles.
Has the mix of foreign vs domestic guests changed at your hotels?
We are seeing a climb back in foreign visitors. Domestic is still higher than inbound. In some cities like Bangalore and Delhi, international corporate travel has reached pre Covid levels but international leisure is yet to catch up.
But we are seeing a very good pace of bookings coming from October to December from outside India. The atual data will surprise us pleasantly.
Is the luxury consumer changing? Are you seeing more consumption from smaller cities?
Yes, there is a lot of consumption from smaller cities. We have seen this trend post Covid that Luxury has become democratic and also a bit source agnostic. Typically luxury customers were from big cities and metros. Now we see a lot of customers in our hotels from tier 2 and 3 cities. Gujarat, for instance, is a good source market. They pay top dollar.
India is changing. Demographic shift is huge. There is so much exposure and awareness. Our guests are clear about what they are seeking and expect. They don’t make decisions based on what we market, but from what they find from their own research.
As part of marketing outreach, our brand teams, digital marketing teams and direct B2B sales as well have started going into smaller cities to ensure that the Leela brand promise goes to them.
Leela 2.0 has invested in a lot of new branded products and services like Tishya (fragrances and creams), Aujasya (wellness menu), and so on. Are there more in the offing?
Leela Palace Trails has been fine-tuned and relaunched, primarily for six of our hotels in Delhi, Jaipur, Udaipur, Bangalore, Chennai and Kovalam. This has taken off very well. We have curated some experiences that money can’t buy. For instance, if you stay in Jaipur you can have insider access with the royal family. We have a partnership programme with The Jaipur lit fest for three years. We have now an initiative Shefs by the Leela focusing on women chefs. Icons of Leela is another strong IP.
Are there more products in the offing?
We are launching Phool. All the flowers we use in our day-to-day operations across our hotels — some 14 tonnes of flowers used for various decorations— will be upcycled to create Agarbattis infused with the fragrance of Tishya. The first phase will be internal consumption, then it will be guest gifts. Eventually it will get into retail.