‘We feel we’re the custodians of Indian hospitality’

Updated on: Jan 27, 2018

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In 1903, Indian Hotels Company (IHCL) opened its first property, the Taj Mahal Palace, in Mumbai, overlooking the Arabian Sea. In the 113 years since, the Taj has not expanded across the world and forged a connect with a wider Indian audience through newer brands such as Vivanta and Ginger. The group bounced back stronger from the terrorist attack in November 2008, but now it faces the challenges of debt and losses. Managing Director Rakesh Sarna addresses all this and more in a freewheeling chat with Rashmi Pratap . Excerpts:

Indian Hotels and the Taj brand have maintained their relevance even a century later. How did you do this?

There are two main factors: the legacy of Jamsetji Tata, and the people of this organisation, who have made it what it is. This is not a company , it’s a culture . There’s technology, there are culinary skills, and there’s architecture; but it is people who make the difference. Also, the admiration and adulation that our guests give to Taj.

What have been the company’s biggest challenges?

What happened on 26/11/2008 was a strong blow. But in a strange way, it made the group strong and the Taj family more resilient. It has delayed us from becoming better, but it hasn’t stopped us. If anything, it has made us more daring. The 2008-09 period was the best in the history of Taj. We need to get back to that surer footing, knowing that the world is volatile. Now, eight years later, we feel we need to regroup financially and get our hotels ready for soft challenges. Many new brands are coming into India. Competition is always good, as it helps us improve, but it also means added pressure on us because we feel, rightly or wrongly, that Jamsetji made us the custodians of Indian hospitality and we don’t want to squander that away.

What are you doing to ensure that the Taj brand does not get lost in the crowded hospitality market?

In the 2010-15 period, there was an exponential growth in the supply of good hotels in India. We welcome our competitors, but we need to be focussed on what matters to us: being faithful to our guests. We have captured everything that is great about Taj and distilled it into a simple philosophy:‘Taj-ness’. Taj-ness will touch on sensorial issues: the uniform, fragrances, the wonders of the Taj cuisine, but the most important part of Taj-ness is that we sincerely care for you. We’ll find various means to demonstrate we care.

How are you dealing with debt and profitability concerns?

One way to deal with it is to improve earnings from our assets. We are going to charge prices based on international levels. Some of the products and services that Indian hotel companies or even global companies here provide are superior over other places, and so, selling cheap has to stop. Also, cost management is important. We have to recycle our asset base. Take assets that we can recycle, bring the proceeds back to not only pay debt but also fuel growth. Through all this, we must maintain our brand presence. Recently, we’ve recycled an asset in Boston; there is more of that to come. We are very committed to improving the quality of our earnings and the debt-equity ratio. We are on schedule to turn profitable by the end of this fiscal.

IHCL has expanded rapidly in the past 10 years. Have you spread yourself too thin by creating multiple brands?

It is time to take a look at that. Our biggest asset, the only asset, is brand Taj. We are moving towards aligning ourselves to capitalise on it.

What is your expansion strategy?

If there is a good deal to be had, we will not shy away from investing, but the deal must build shareholder value. That is the only checklist I have. We will embark on management contracts where it is nice to be, and we will deploy our balance sheet where we must be. In existing assets, wherever we have the potential, we will add other products. We will start doing it in the next 12 to 15 months. We also want to flex our muscles in the area of branded service residences. The company has done an amazing job with one in Mumbai and we hope to do more of those.

What is the management’s vision for the company?

We have a mission to build shareholder value and we want to become a globally reputable brand. The recent past has been tough financially. If we can get back on track to build shareholder value, that will be an achievement.

Published on August 12, 2016
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