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Hotel Leela's Captain Courageous
Vir Sanghvi, Hindustan Times
New Delhi, February 12, 2011
First Published: 13:17 IST(12/2/2011)
Last Updated: 19:49 IST(12/2/2011)

I often wonder how many people who stay at the Leela hotels realise that the hotels are named after a real person. Though the chain was founded by (and is still run by) Captain Krishnan Nair, the hotels are not named after him. They are named after his wife Leela.

Unusually for a self-made man, Captain Nair attributes much of his success to his wife. Almost everything he has ever done, he says, has happened because of Leela.

Captain Nair was born in 1922 into a poor family in north Kerala, one of the eight children of a government bill collector. He joined the army and because of his sense of initiative, seemed set to go far. In 1950, he married Leela, the daughter of a prosperous handloom owner from Kannur. He ended up joining her father’s business, took it over and then developed export markets, becoming one of the pioneers of the Bleeding Madras fabric that was a craze in the US in the 1960s.

By the early 1980s, Captain Nair was already a rich man. The textile business (called Leela Lace after his wife) had boomed, he had a large bungalow in North Bombay and a textile factory near it. When he heard that the new international airport terminal was being built a few minutes from his property, he had the idea of turning the land at the back of his factory into a hotel.

In those days, Bombay did not have so many hotels. The new Taj had opened in 1972, the Oberoi in 1973 and the President shortly after that. There were a few hotels in Juhu (Sun and Sand, the Holiday Inn etc) and the Centaur, run by Air India, near the domestic airport. Nothing new had opened for a decade and Nair thought that a hotel near the new airport would do well.

Though his own experience of the hotel business was limited, he built a five star hotel anyway, drawing inspiration from a hotel he had seen in Budapest (of all places!) and fighting off sabotage from a lobby of existing hoteliers. When the Leela (he named it after his wife whose cooking, he says, inspired him to enter the hospitality business) was nearly ready, he wondered how to market it. Recognising that his best hope lay in airline passengers, he linked up with the Penta group, then owned by a consortium of European airlines. It was a mistake, he says now. After he signed the agreement, he went to London and discovered that Pentas were airport hotels. No matter. The same group owned the Kempinski chain and within a year his Leela Penta became the Leela Kempinski.

The Leela opened in 1986 and began recording high occupancies on the basis of airline traffic because of its location. But Captain Nair was determined to move into the luxury business, away from airport sites. In 1991, he opened one of the first resorts in South Goa and made plans to build hotels in Bangalore, Delhi and Udaipur.

As the Bombay Leela kept recording high profits, the group seemed unstoppable. Captain Nair had made friends with Bob Burns, the legendary founder of the Regent hotel chain, and wanted a collaboration. But by the time the Leela was ready to take on a partner, Regent had been sold to the Four Seasons group. Burns introduced Captain Nair to Isadore Sharp, the owner of the Four Seasons, and the two men agreed to work together. As part of the collaboration, the Leela Goa was refurbished at huge cost to reach Four Seasons standards and it was agreed that the two companies would jointly develop properties in Delhi and Bangalore. Suddenly, Captain Nair was beginning to look like a major player in the hotel business.

Then, in 1998, it all began to go wrong. The deal with Four Seasons collapsed. Both sides still have bitter memories of the episode. Sharp suggests, in his autobiography, that he was diddled by Captain Nair. (The chapter is called A Few Bad Apples which offers some indication of its tone.) Obviously, this suggestion does not go down well with Nair who wrote Sharp a letter of protest when the autobiography was published. According to Captain Nair, there were two problems. The first was that the Four Seasons discovered that it could not get the extravagant room rates it had predicted for the Goa property. The second, and more important, obstacle was branding. Captain Nair wanted the hotel to be called Leela-Four Seasons. Sharp refused to share branding.

The collapse of the deal marked the beginning of the end of Captain Nair’s first golden phase. He had spent crores on refurbishing the Goa hotel, and it would be a while before he could recover his investment. Moreover, he suddenly faced competition in his own backyard as new hotels opened near the Bombay Leela (the Maratha, the Hyatt Regency, the Intercontinental etc.). Worse still, he discovered that the land he had bought in Udaipur was a waste – no construction was allowed on that spot. And the Rs. 200 crore that he had paid for land in Delhi (where Ansal Plaza is now located) to HUDCO, a government body, was also lost because no hotel could be built on that spot. Worst of all, HUDCO seemed reluctant to return his money. If you spoke to most hoteliers a decade or so ago, they would tell you that Nair and the Leela were done for. The debts were rising. Profits were falling. And the group would collapse.

As it turned out, the sceptics were wrong. Captain Nair pulled off an astonishing comeback, thanks mainly to his Bangalore hotel. From 2000 onwards, Bangalore began to attract thousands of foreign visitors because of its software industry. Fortunately for Captain Nair, he was ready with a new Leela property which was not just next to the airport, but was also conveniently located near the software companies. Foreigners could fly in, do their business and fly out again without ever bothering with the maddening traffic and pollution of Bangalore city. The demand for rooms at the Banglaore Leela was such that it began to charge rates that no city hotel in India had ever charged. Just as the Oberoi group’s Vilas properties demonstrated that Indian hotels could charge as much as those in say, Europe, the Bangalore Leela proved that our city hotels could charge as much as properties in America.

As profits from Bangalore began streaming in, Captain Nair’s luck changed. He finally got his money back from HUDCO, he signed up to manage a property in Gurgaon, the Goa hotel eventually made profits and the Bombay Leela held its own despite the competition. That streak of good luck has continued. He runs a property in Kovalam (the old ITDC hotel, now transformed), has built a world class hotel in Udaipur (on that same land, having finally got the permissions) and is on the verge of opening a deluxe property in Delhi’s Chanakyapuri. More significantly, he has gone from being an outsider in the hotel business to becoming one of its elder statesmen. (He sold the textile business for a few hundred crores some years ago.) Once, we spoke of the three big hotel chains (the Taj, the Oberois and ITC); now increasingly, we speak of four. Despite being so much smaller than the others, the Leela is now regarded as one of the big boys.

I’ve known Captain Nair for well over a decade now, through his good times and his bad times. He has always struck me as being more like Biki Oberoi than say, Ajit Kerkar or Yogi Deveshwar or any of the others who built hotel companies in India. Like Biki, Captain Nair has an individualistic, personalised approach to the business. He never forgets that it is his company and treats it as an owner would, not as a professional manager does. By the time the first Leela opened, he was already 64, a rich man who had spent his life in the world’s best hotels. In many ways, he was his own customer and so, he knew what his guests wanted. He is not as shy and reserved as Biki (the opposite, in fact) or as well-versed in the mechanics of hotel operations but he has the same entrepreneurial instincts: he will bet the company on his vision and when the rest of the industry thinks he is finished, he will suddenly bounce back.

He also has a quality that few Indian hotel company bosses possess: he knows how to get the best out of expats. Despite his temper and impatience, he manages to keep executives and managers happy for as long as he needs them. Much of the Leela’s success these days is due to Captain Nair’s ability to get highly-trained foreigners to raise the company’s standards to international levels. And now, with Rajiv Kaul (ex-Oberoi, ex-Taj) running the company’s operations, the chain has its own distinctive identity. When the Delhi Leela opens (March/April) Captain Nair will be 88. Despite his age, he is active, alert, adventurous and ready to risk everything on a dream. I’ll review the hotel when it does open, but it is hard not to admire the initiative, enterprise and imagination behind the venture – and the man who created the company.

- From HT Brunch, February 13

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