GM Speak

'The tax structure has driven costs for guests up'

General manager of Delhi-based The Metropolitan, Aubrey Mullerworth, gives his viewpoint of the industry at a time when it is facing an acute shortage of both skilled and non-skilled staff in all areas

A majority of growth that the hotel industry is witnessing right now is in the corporate segment, both international and domestic, where demand has out-paced supply. This has consequently driven up rates. The fallout of this has been a drop in the travel and tour segment which now faces increased rates leading to a drop in inbound traffic that stays overnight in the city. At our hotel we have received increasing requests from travel and tour operators for wash-and-change rooms and dinner, which shows how they have adapted to the high rates.

The critical issue for hotels in New Delhi and the NCR is that extremely high demand during the October to April months is followed by extremely low demand during the summer months. Besides the weather, the trade fairs bundled at the same time does not help. While we understand their reason to do so, they could help spread the business over the year, which would mean adding air-conditioning to the exhibit halls and providing air-conditioned buses within the Pragati Maidan Complex, both of which are not hard to do. But this requires more funds and willingness.

The tax structure is another significant factor that has driven the cost for the guest up, and is also extremely unfair in the way it has treated the hotel industry. For example, if the rack rate for a room is INR 18,000 but has to be sold for INR 14,000, the guest has to pay tax based on the original cost. Hotels constantly face irate guests, who for the life of them do not seem to comprehend why they should have to pay tax on the higher rack rate. This is a serious problem that hotels face and it borders on the edge of restrictive trade practices by a democratic government. A fair way to handle this is to let the tax be computed on whatever the actual rate is just as it would be for any other good or service. In essence the current stance of the ministry is: we do not care what you sell the room for, we want our pound of flesh!

Solving HR issues

The industry in India is facing an acute shortage of both skilled and non-skilled staff in all areas. This has been caused due to the ballooning growth in the airline, BPO and call center businesses who have targeted the hotel industry for their staff. This has forced hotels to push up their payroll costs. The international cruise industry today has also discovered that India is a great place to attract trained service and kitchen staff.

The only way to stop this is by finding both monetary and attractive non-monetary benefits to retain the current workforce. The other option is to continuously keep training to meet the attrition. We have two programmes - interns from hotel institutes and an industrial apprentice programme.

We are looking at internet-based platform that we believe is the way to a better future and should be ready to make a final decision by the end of the year. We have extensive guest history that tracks every single guest request during their stay and we make sure that all previous preferences are placed or accommodated in the room prior to check-in. Similarly, our F&B department tracks preferences of the guests' dietary and dining needs. Our objective is to create the first boutique business property in the country. We have been diligently working towards this objective during 2007.

The Metropolitan Hotel, or The Met as we like to call it, is in a particularly unique position in today's market because of our location as a downtown city centre property; we are close to yet off the busy downtown thoroughfares. We primarily remain a business hotel and our focus towards the individual traveller, the corporate segment, and the trade fair and convention attendee is where we see ourselves best suited. Another unique feature of the hotel is Sakura, our authentic and award-winning Japanese restaurant. We feel we have all the necessary ingredients for a boutique business hotel.

(As told to Praveen K Singh)