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The Taj empire strikes back

With the right ideas and an unmatched record, Vir Sanghvi is betting that Rakesh Sarna can take the Taj to the top once again

brunch Updated: Oct 03, 2016 13:02 IST
Taj Group

The tasteful interiors of iconic Taj properties such as (clockwise from left) the Taj Mumbai , The Pierre (New York) and Taj Lake Palace (Udaipur)

With the right ideas and an unmatched record, Vir Sanghvi is betting that Rakesh Sarna can take the Taj to the top once again

Though we now tend to think of it as just one division of the giant Tata empire, the Taj Group of Hotels is one of the great corporate success stories of 20th Century India.

The original Taj in Bombay was built by Jamsetji Tata over a century ago as a grand rival to the Whites-only places (no Indians were allowed into, say, the Yacht Club or any top Bombay hotel), but by the early Sixties it had deteriorated so much that even JRD Tata famously remarked that the only reason he didn’t fix it was because there was so much wrong with the Taj that he wouldn’t know where to start.

After negotiations with the Hilton group fell through, JRD Tata put his faith in a young catering manager called Ajit Kerkar. It was Kerkar who turned the hotel around and then oversaw the opening of the new wing in 1972.

The Tatas were not convinced there was a future in hotels so Kerkar created the chain, almost by stealth, without any money from Bombay House. The Madras property (Taj Coromandel) was funded by a businessman who used to stay at the Bombay Taj, the Goa hotel (Fort Aguada) was financed by a group of businessmen (RV Pandit, Manubhai Madhvani, etc), the Delhi Taj was part-owned by the New Delhi Municipal Corporation and the palace hotels (Lake Palace, Rambagh, etc) were run on management contracts.

It was through such means that the Taj Group (comprising different companies with different investors) was created and became, by the end of the 1970s, India’s greatest hotel chain, eclipsing the older, better-established Oberoi Group. All this happened on JRD’s watch and he let Kerkar run the company like an entrepreneur because, in that era, that was how the Tata Group was managed.

In the mid-1990s, when Ratan Tata adopted a more centralised approach, ending the autonomy of JRD’s viceroys (men like Russi Mody and Darbari Seth), Kerkar found himself out of sync with the new management style and in 1997, the Tatas threw him out, after a short but ugly struggle.

In retrospect, nobody can deny that Ratan Tata acted with the best intentions or that, in the new order, there was simply no room for entrepreneurial managing directors. But it is as hard to deny that since Bombay House took control, the Taj’s fortunes have been mixed. On the plus side the company is run more transparently with better processes and less ‘jugaad’. There have also been some solid successes: the acquisition of the Bombay Regent, which became the Land’s End, a management contract at Jodhpur’s magnificent Umaid Bhavan and some important restaurants: Varq, Wasabi and the Konkan Cafe.

But equally, the Taj’s greatest successes came in the Kerkar era: the creation of Goa, Rajasthan and Kerala as destinations, the iconic restaurants (House of Ming, Southern Spice, Karavali, Orient Express, Paradise Island, Raintree and Thai Pavilion), the triumphant push into Delhi, the acquisition of the President in Bombay, the lease for the Spencer hotels (Connemara in Madras, the West End in Bangalore and Ooty’s Savoy), and the group’s global reputation for Indian hospitality.

To Bombay House’s credit, it managed to preserve the spirit of the Taj (chefs and staff took bullets for their guests during the 26/11 attacks). On the other hand, it vacated the Taj’s prized slot of warm and personalised Indian hospitality – leaving the field clear for ITC to make that market niche its own.

And there was a series of terrible management decisions including a disastrous branding exercise (Vivanta and Gateway), unsuccessful and expensive purchases of American hotels and an abortive bid for Orient Express Hotels that bled the company of its Indian profits.

Sadly for the Taj, this phase coincided with the emergence of Biki Oberoi at the helm of his family’s company. A battle between a hoteliering genius and a stumbling corporate behemoth was always going to be one-sided and today, nobody in the hotel business disputes that the Oberois are well ahead of the Taj.

I imagine some of these calculations went through Cyrus Mistry’s head when he took over the Tata Group. His solution was to hire the world’s best-known hotelier of Indian origin and to ask him to fix the Taj.

Rakesh Sarna is a legend within the Hyatt Group where he worked for 35 years, rising from the ranks to first become head of Hyatt International and then of Hyatt in the US. Sarna was 57 and ready to retire to Miami within three years when the Taj tapped him. His plan was to be near his two daughters and to “go back to school”: his wife and he were looking forward to taking courses in culture, history and other subjects. (“Only because we really enjoy learning!’’).

The big challenge: For Rakesh Sarna, the chance to clean up what is potentially one of the world’s great hotel companies was irresistible.

So why did he take the Taj job? “Ego,” he says, self-deprecatingly. More seriously, he adds, “I grew up in Malviya Nagar in Delhi. We couldn’t afford to eat at the Taj. But it was a very big deal when my father once took me for a cold drink at the lobby lounge.”

Like many Indians of his generation, Sarna believed the Taj symbolised the best in Indian hospitality. “I always thought of the Taj as being, you know, somehow, noble,” he says. And the chance to clean up what is potentially one of the world’s great hotel companies may have been irresistible.

He’s been at the Taj for nearly two years and the consensus is that Sarna has repaired some of the damage of the last decade. Revenues are rising and the group’s sorry international investments have been cleaned up. There is a long overdue push into digital sales and marketing and while Sarna has still not abolished the disastrous rebranding, he has gone back to the regional management structure of the pre-Bombay House days. My guess is that all the Vivanta/Gateway nonsense will go by the end of the year.

He concedes – if you push him – that as impressive as the achievements of the last 20 months are, they have still to translate fully into an enhanced experience for guests. But he says that the Taj is now ready to offer guests something different.

“Suppose you were to be blindfolded and taken to a hotel,” he says. “When they removed the blindfold and told you to look around, would you able to tell that you were in a Taj hotel?”

My short answer is no. In fact, not only has the Taj lost its distinctive character, the quality of the hotels is also uneven. Some of its properties have declined (including the Bombay flagship which is now sloppily managed with depressingly poor F&B service) while others (such as Bombay’s Land’s End) have improved dramatically.

Sarna’s solution is to unify the experience through ‘Tajness’ – a concept that harks back to the core values of the group: distinctive hospitality, luxury that is Indian inspired without being in-your-face Indian and a sense of warmth.

Tajness is still being unveiled but some of the outlines are clear. There will be rituals that embody the distinctive luxury of the Taj experience so guests can go away with special memories. The lobbies will vanish. They will be replaced by drawing room-like spaces where guests will be received by elegant men and women who look like they belong there and not like costumed receptionists.

There will be a quantum leap in F&B over the next year or two. Some of the (really bad and outdated) restaurants will go. They will be replaced by modern eating places, each of which will be planned in association with the best global consultants. (Sarna has a reputation for creating great F&B from his Hyatt days.) More attention will be paid to every detail, from the fragrancing of the public spaces to the manner in which staff interact with guests (more style, less servility).

Having run huge global chains before (the Taj is tiny compared to Hyatt), Sarna is not being reckless in making promises. He knows that all this won’t happen overnight. More significantly he is determined to do this by motivating the Taj’s own staff rather than by bringing in outsiders so that the changes reflect in the culture of the company. He is holding Town Hall style meetings with General Managers to convey his vision of Tajness and has made it his mission to personally clarify any doubts or questions they may have.

Will it work? In an era when the Oberois are so strong, when ITC has emerged as a major player and the big luxury foreign chains are beginning to dominate the space, can Sarna really save the Taj?

I am hesitant about making predictions. But I will stick my neck out this time.

If anyone can turn the Taj around, it’s Rakesh Sarna. He has the right ideas, an international record that is unmatched and a historic opportunity to regain the glory that once was the Taj.

I am betting he can take the Taj to the top once again.

From HT Brunch, October 2

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