Cover Story

Freedom for the frontline

Shifting focus from the top level management to the frontline, this Independence Day special looks at the hospitality terrain from the point of view of the general managers and tunes into the back office frequency to present this special. By Neeti Mehra

It is often said that a general manager is easy to identify. He is the suave man walking with his head thoughtfully perched and his hands clasped behind him. Carefully scouring the scene, his hawk eyes miss not a speck of dust or untowardly incident. Behind his friendly façade and the cheerful banter is a man on the frontline of operations. And this Independence Day we have questioned him of his vision for the property, the broad trends in the industry and most importantly, the restrictions from which hospitality needs to unshackle from - to achieve complete freedom.

The issue about it all

General managers (GMs) have a lot on their plates. From macro issues (such as the impending influx of supply in cities such as Bangalore and the NCR territory) to micro ones (as simplistic as a banquet F&B going awry), their magnitude confronting this fire-fighter will only increase as the industry matures.

At the start of the year, Express Hospitality held a hospitality think tank of GMs and other industry leaders from Mumbai and Pune. The issues raised were not merely regional but resonated across the country in each hotel. Invariably, discussions pivoted around pricing and employee retention. So have the issues been resolved half way down the year, or have they been muted? Not really. Attrition for the frontline still stays crucial. In our survey today also, GMs list the human resource issue at the top of the pecking order.

Have the hotelier's perception changed over the months? The biggest poacher has morphed from BPOs to the retail industry, yet the grouse remains the same. Payment is critical. An unnamed industry watcher says that as hoteliers continue to make hay while the hospitality sun shines, only a miniscule portion trickles down to the staff, exacerbating the situation.

More heads will be hunted from hospitality's green pastures in metro cities with not only a proliferation of other international leading hotel brands but also with the retail revolution. The CII-AT Kearney retail report 2007 shows that retailing is the largest contributing sector to the country's GDP - a whopping 10 per cent. The market is valued at an estimated US$ 270 billion with a growth rate of 5.7 per cent per annum, and is the second largest employer in the country after agriculture, employing about six to seven per cent of the total workforce. Its deep pockets will invariably attract the best of hospitality talent.

In India, there are almost 7,50,000 people working in hotels, according to a study conducted by the Ministry of Tourism. In addition, the study shows that this figure is forecast to increase to 3.5 million by 2020. Where will the employees come from is the moot question? Some GMs say the problem is not only of sourcing but of perception too, as one succinctly put in, "Top end manpower doesn't want to be service class while the lower end ranks lack competency". Sloppy standards of catering colleges which are not getting the correct profile of students add to their woes. Is it a mere coincidence that hotel corporate offices are announcing plans of hospitality institutes as a quick-fix plan to shield the managers from this problem? What would the quality of students churned out be in short-term courses?

Pricing is another issue. The preferred dual tariff policy made hoteliers run for cover with the dipping dollar. Hoteliers today are cautiously adapting to market dynamics, but, it is the case of the pied piper, with all smaller players continuing to bleed until a market leader makes a decision. With the Damocles' sword precariously low, one GM points out that hoteliers have realised the folly of turning the situation to their advantage. Rate fluctuations owing to fickle demand-supply dynamics are relegated to the past. Today, they look beyond rack rates and corporate rates to the ROTDs or the Rate of the Day, a strategy that maximises RevPARs. One GM points out that his clan will soon contend with rate-of-the-hour. That's dynamic pricing for you!

Other points of contention included exorbitant rates by cable operators, a crippling bottleneck in visibly-improved infrastructure, and the usual suspects of road and rail connectivity. But GMs today need to confront intangible concerns. One cites that the biggest challenge will be to ensure that hotels are heavily backed by services to please today's finicky guest.

A reason to cheer

The hegemony of north and west India was broken some time ago by the emergence of the south and, hopefully, the east soon indicated by the Taj Gateway that has set up shop. Meanwhile, city limits have been stretched. Now hospitality in Delhi includes the NCR and Navi Mumbai got its first five-star hotel - The Park - this year.

An interesting finding of this inquisition is the official death of the 'season'. As hoteliers lay wreaths on it, fluctuations in ARRs and inconsistencies in occupancy owing to the off-season have been buried six feet under. Credit must go to the much overlooked domestic tourist, who is being wooed to leisure destinations such as Goa and Kerala during the off season. They are travelling like never before - not only the bargain hunters in the monsoon and the off-season but also peak seasons at peak rates. Infrastructure has played a role in this too, with improved connectivity in rail, road and air transport. Also, new source markets, including Punjab, play a role in this buoyancy.

Business destinations too have shown buoyancy, with two-tier cities like Chandigarh seeing a boom in MICE traffic. Interestingly, the administration is as keen to promote the region's fortunes through progressive tourism policies. This buoyancy is reflected through other cities too such as Pune, Kolkata and Hyderabad, all riding on the ITES boom. With the coming of the SEZs, there will be a discernable shift in the business traffic. That is yet to be seen. Despite the impending supply of rooms expected in 2009-2010, especially in the hospitality hotspot of Bangalore, the GMs aren't worrying yet. One hotelier from Bangalore says that for a year there is no reason to worry, but with close to 17,000 rooms flooding the market, prices should dip from today's Rs 15,000 to Rs 13,000 bracket to around Rs 9,000 to Rs 11,000 with occupancies stabilising.

Within this phase, there will be an influx of rooms in the budget and no-frills segment too. But perhaps the biggest threat to the fortunes of a city like Bangalore, and to hospitality in general, is alternate hospitality options such as serviced apartments, which are already eating into their collective fortunes. The influx of corporate houses hoping to cash in on this sector promises stiffer competition, ensuring that the end user enjoys the best of it all. A GM points out that the cream isn't restricted to the key metros and two-tier cities but has percolated to the mini metros of Ahmedabad, Pune, Lucknow, Raipur, Ranchi, etc. With no relation to the above, GMs are also whole-heartedly embracing technology now, because "he can no longer afford to remain aloof from IT".

Bed of roses

So what do the men in black see in their crystal ball? The industry sees more tourists and business travellers. The graph has moved upwards with an increase in leisure tourists as well as the considerable MICE markets. Niche segments such as wedding tourism are also appearing on the radar. In a micro view, hotels are pandering to the affluent culture vulture through book launches, art camps, theatre, etc as value-adds. Luxury tourism is on an upswing too with the industry catering to the luxe segment with helicopters, yachts and luxury limousines. Budget hotels too are bringing in their stamp of personalisation into the hotel to make up for the lack of superfluous staff.

The GMs view the tourism policy optimistically too and give credit to the government for attracting more projects. In fact, they feel that hospitality will overtake retail as the support system for many states in India. The vision seems to be a prophetic one with the power firmly retained in the hands of these very men.

With inputs from Praveen K Singh (Delhi), Gayatri Vijaykumar (Bangalore), Rupkamal Sarma (Hyderabad), and Dinkar Farwaha, Sayoni Bhaduri and Rajesh Rodrigues (Mumbai)