Session Highlights

Brand brouhaha

The Great Brand Debate saw heated discussion on the relevance of a brand. Neeti Mehra reports

This post-lunch concurrent breakout session saw the participants debate the relevance of a brand and the benefits attached to affiliating with a brand name. Moderating this heated discussion, conducted in a rapid question-answer form, was Kevin Murphy, managing partner, Asiawide Hospitality Solutions. Participating in it were Rohinton Commissariat, director (Sales & Marketing) Taj Business Hotels, Malcolm Kerr, vice president, (Acquisitions & Development), Aloft Hotels Asia Pacific, Tom Mcloughin, CEO, Per Aquum, Resorts, Spas & Residences in Maldives and Rishi Kapoor, director (Strategic Planning) at New Delhi-based The Imperial.

Indian brand

The discussion revolved around the emergence of an Indian hotel management brand outside the domain of property ownership and the time India would take to open up to this possibility. Kapoor said that The Imperial would never be an asset owning company, whereas Mcloughin said, "The reason for failure in such ventures is primarily due to the lack of transparency in such ventures."

New investments

With the proliferation of diverse brands in India, Murphy raised the issue of how existing brands sought new investments, which were getting diverted into new entities. Commissariat said that the Taj brand was developing ownership patterns and growth plans based on that. However, Kerr did not see saturation in the market-place and said, "The opportunity still exists in India for the brand Aloft, and for many new brands, and in each of Starwood's brands there was great belief in its success."

In terms of attracting the right management to the brands, the panel agreed that salaries need to rise, and on the necessity of bringing in international talent, while simultaneously developing local manpower, and developing successors to carry on the mantle. "The Taj brand can leverage its advantage owing to its spread and reach, plus the training facilities," Commissariat said. However, Kerr didn't view lack of manpower as an issue, yet. "Our in-house training is very effective and we will invest in training facilities," he said.

Inherent strengths

Murphy then threw up a question: What, apart from ownership, is the current inherent strength of Indian brands? Kapoor believed that the knowledge of the marketplace was its strength, as compared to international brands. "Indians are cogniscant of the fact that the Taj is a separate brand, and addresses a specific set of people. Initially in India, due to the unique socio-political situation, it was necessary to exercise control, but now we are moving towards a mixed ownership pattern," Commissariat said. But international brands can hold their own in the dynamic Indian marketplace, Kerr believes. " Starwood is moving away from capital ownership to a multi-brand strategy. With our extensive network, we take strategic decisions on a global basis and work as operators and marketers of the brand," added Kerr.

Joint ventures

Questioned about the implications of joint ventures, and the assurances of associating with a certain brand name, Kerr stated that over the past year the relationships built by Starwood in India have evolved. "We as a brand have to offer elements that add to the property. Quality and consistency was initially poor in our relationships, and we had to deliver the brand promise through the brand network. We could not add value and growth to each other, but now that has changed," he said, describing past rocky relationships.

Market demand

"What is the market looking for, from local, Indian and global brands?" questioned Murphy of the panelists. While Kapoor felt that the market looks for product and service quality, Mcloughin believed that the market seeks a global brand that adds value. Commissariat had an interesting observation stating, "Customers like the comfort of a brand they are aware of. Within a certain psychographic set, some customers are adventurous and are willing to experiment with different brands, and the others choose a known international brand, but in both cases, they demand a certain standard of services." Kerr felt that each brand stands on three pillars - quality, consistency and strength, and this satisfies the market's need." “International players will not be pursuing lower cost hotels," stated Kerr matter-of- factedly. "Aloft will do well. Mid-scale is a massive growth area for us."

Finally the panelists discussed the experience international customers are looking for in destination India, given that hotel occupancies are dominated by international travellers. "Customers are aware and are looking for a new experience," said Kapoor, while Mcloughin reiterated this saying that an experience in a stand-alone destination is capable of giving travellers a unique experience.

Asking if international management companies will provide answers, perhaps leading to a cost escalation, but with a corresponding increase in return of investment, the panelists agreed that labour costs will escalate, and with an increase in demand, ARR's would decline, due to which new investors could shy away. But that scenario would not descend on the currently booming hospitality industry, as inventory across the country is still at abysmal levels. An improvement in hotel processes and multi-tasking would set-off a labour cost escalation.

The future

Murphy pointed out that with NRIs interested in the Indian Hospitality scenario, the industry would experience a change with NRI investors driven to the homeland, bringing along with them capital and international standards of management and operations. While the interest in the bullish Indian economy was keen to be spotted by both international hotel companies, investment funds and NRIs, currently many big brands have entered and consolidated their existing operations in India. As envisioned by the panel, the market map should be closely aligned to the global scenario, and development of hotels with strong brand equity to appeal to the burgeoning middle class. The great brand debate will still be raised many years hence, but with a different set of issues to be discussed in the mature Indian hospitality scenario, once the investment dust has settled.