South Strategy

A royal bloom

Chender Baljee, chairman & managing director, Royal Orchid Hotels, believes that solidarity amongst industry players will go a long way in boosting tourism. By Neeti Mehra

With twelve hotels in six cities, Royal Orchid Hotels (ROHL) is shrugging off its regional tag as it spreads its wings to other cities. Says Chender Baljee, chairman & managing director, ROHL, "Our company is expanding and, at present, we have 1,000 rooms. We will be adding another 175 rooms in the current year and 450 rooms next year." Spelling out their future plans, he says, "At present we operate 12 hotels and very shortly there will be 20 operating hotels." Clearly, the brand has managed to steer clear of the recessionary trend.

Like most of the hospitality industry, the first quarter starting January saw a dip in occupancies and ARRs but since then it has picked up. Baljee feels that with a stable government at the Centre, things will turn for the better, and the tide has already started to turn. Today, he says that the group's performance is on par with the industry. "Currently the groups ARRs varies from Rs 6,000 to 7,500 across various hotels," he says. Baljee believes that the rates have already bottomed out and does not see any further corrections. He adds, "We do not see any further rate rationalisation."

ROHL has also benefited from its multiple property presence in the city of Bengaluru. When the airport shifted outside the city limits and the IT industry slumped, Hotel Royal Orchid situated at the Old Airport Road suffered a hit. But the group's existing hotel near Yelahanka that had already been renovated captured this business segment. "We have shifted the business there and the ARRs of that hotel have doubled," he says, a testament to the wonder a prime location can do for the fortune of a property.

The Royal Orchid way

MICE is where the opportunity lies, says Baljee. "Our sales office at Delhi and Mumbai is tapping the opportunities of this segment," he says. Meanwhile their offices in these two cities as well as Bengaluru, Chennai and Hyderabad are working aggressively to tap source markets.

With new properties on the anvil, the group is recruiting people, and he says that their employee cost to revenue percentile is one of the best in the industry. "We have also tried to bring down the cost by transferring some of employees to our new hotels that are coming up like our Whitefield hotel at Bengaluru which became operational in January 2009. But we have not cut any salaries nor have we given any pink slips to cut costs."

Cost controls are another area which they are exercising control on. "Our group has always been careful in cost and hence our operating profits in comparison to the revenues have always been one of the best in the industry," says Baljee.

While major revenues come from rooms (65 per cent) and F&B (25 per cent) of the total, the balance 10 per cent comes from other avenues. "But the group now will concentrate more on banqueting as well as outdoor catering to increase its revenues," he says of the opportunities in business hotels. In leisure properties they will increase revenue through health and wellness etc.

The way ahead

Currently there are four projects on the floor in India. Says Baljee, "We are concentrating on completing the projects and the work is going on full swing." The group has international ambitions too, and already has a project in Dar Es Salaam, Tanzania set to throw open its doors in 2010, and is looking at other countries as well. Apart from that, it is tapping into alternate revenue streams.

ROHL is stepping up efforts and is collaborating with various partners to bolster its online presence. Says Baljee, "We have strong tie ups with corporates and airlines. We have a good GDS and electronic presence and will aggressively enter into associations."

On the tourism industry front, he feels that there is a lot that can be done in terms of working in unison through promotions. "There is no solidarity in the industry. We need to have promotions like the Dubai Shopping Festival," says Baljee.

Hyderabad, Pune, Jaipur, Central and South Indian tier II cities like Indore, Bhopal and Coimbatore, are the cities that he is focusing on to fuel ROHL's growth. In conclusion, Baljee says it is the mid-market segment which he feels is the segment for the future.