South Strategy

New kid on the block

Preet Inder Singh, business head at The Oterra, speaks of the newest luxury hotel located in the heart of Bengaluru's Electronic City. By Neeti Mehra

The Velankani group's flagship property, The Oterra, had a rather subdued soft launch in December, given that the market conditions were not exactly conducive to a new luxury business hotel in the IT/ITeS district. Since then though, business has picked up and Preet Inder Singh, its business head, is upbeat about the future. "Being new posed a challenge. Things were slow and this was compounded by the grim market scenario and the freeze on international travel into the country. I am happy to say that we are now doing almost 60 to 70 per cent occupancies," he says.

The Bengaluru market

India's Silicon Valley, Bengaluru has traditionally suffered a dearth of hotel rooms, with the total inventory falling short of demand. Since then, innumerable brands have made a beeline to the city only to confront an extremely drastic marketplace with falling ARRs and occupancies. For The Oterra itself, Singh admits that the budgets are conservative given its infancy.

But its location is a bonus. "Being the first and only five-star hotel in the area, all it took was word of mouth advertising," says Singh. A slew of promotions such as outdoor advertising and extensive and aggressive PR has helped to further the brand's visibility. Also, association with prestigious events like the Bangalore Fashion Week has been beneficial. "While our channels to counter the downturn have been unconventional, they have worked for us," says Singh. Currently the property enjoys ARRs of Rs 7,500-8,000 at about 55-60 per cent of its operational room inventory, and he expects a rate revision once things pick up.

He makes an interesting observation on service apartments that had grabbed a chunk of occupancies. "We see a shift from service apartments to hotels," he says, attributing this largely to the client profile, 80 per cent of whom are foreigners. "They need services that cater to their business and long-stay needs that some service apartments may not offer," he says, adding that The Oterra fills this lacuna with amenities like multiple F&B outlets, a spa, gymnasium and a business centre.

The hotel, though 50 km from the new airport, has turned the situation into a distinctive advantage by offering a helicopter shuttle services and cutting the commute to 10 minutes. It is looking to tap Mumbai, Delhi, and Chennai along with cities like Pune, Hyderabad and Gurgaon. Internationally, it is looking at the US, UK, Europe and Hong Kong as source markets.

The Oterra Way

Naturally, a major chunk of revenue comes from rooms and F&B. Apart from that, the hotel plans to pump its bottom-line through alternate revenue streams. For instance, The Oterra undertakes a considerable number of outdoor catering orders from multinationals in the vicinity, and also has a lifestyle store that attracts many footfalls. Another channel is its state-of-the-art laundry services used by neighbouring companies. It is also developing the spa into a major money spinner with membership for individual and couples which includes use of the gymnasium as well.

Apart from upping yields through diverse strategies, the company is exercising prudence when it comes to purchases, restricting it to must-haves, and has adopted various cost control measures. Speaking of FFE, The Oterra has sourced items from Europe, Hong Kong, the US as well as India. Following an eco-friendly mantra, it has instituted measures. For instance, nearly 80 per cent of hotel lighting is done with LEFs, CFL, and energy-efficient tubes. Key tag controls are used in room, thermostatic controls are employed for the HVAC; energy efficient chillers have been deployed; the usage of water treatment plants and recycled water for irrigation, toilet flushes, cooling towers; rainwater harvesting, etc. To increase efficiencies, the company is using a building management system and conducts energy audits.

The hotel has streamlined its HR functioning too, and has resized its original and overall manning list. Multi-tasking and re-deployment of existing staff as well as a reduction in contractual staff by 10 per cent to 15 per cent has taken place. "There is a freeze on recruitments and only key and critical positions are being re-hired. Payrolls and related expenses are controlled by optimal utilisation of services," says Singh.

The way ahead

The Velankani group plans to establish a chain of both four and five-star hotels across the country. Once the economy pulls back, he feels both the luxury as well as the mid-market segment will do well, but in the meantime, he believes the real opportunity lies in a good mid-market or budget hotel of international standards. "Hotels in metro cities, with ARRs of Rs 2,600-3,000, and hotels in non-metro cities, with an ARR of Rs 1,800-2,400, are likely to experience rapid growth in demand in the next year or two," he says. On his radar are cities like Pune, Goa and certain pockets in major cities like Delhi (west) and Mumbai (mill lands).

MICE is another segment it is tapping aggressively using promotional techniques as well as familiarisation trips. "Bengaluru regularly misses out on inbound MICE. The primary reasons are the lack of basic infrastructure and effective destination marketing - the most important aspects to attract inbound conferences and conventions," he states, pointing out that globally MICE contributes 40 per cent of the overall hospitality market.

Speaking of Oterra's own efforts, he avers, "There is a dedicated team handling MICE tracking city conference calendars and wedding planners, keeping in mind the huge infrastructure that we offer and at attractive price points." On its client roster are IT and FMCG companies, and events such as product launches, etc.

To attract travellers to this destination, the industry has come together in the form of Karnataka Tourism Forum and joined hands with the tourism department. He says, "The tourism department is actively boosting the state as a preferred destination among foreign travellers." The activities include road shows in Europe and the USA, as well as cultural programmes and promotions in cities like London, Manchester, New York, Washington, Chicago and Los Angeles. The government is also giving a thrust to medical tourism, given the advanced medical facilities which are almost 15-20 per cent the cost of treatment in Europe and USA, available in the city.