With new hotels opening, the Indian chains need to up their game
Only one foreign hotel brand has managed to distinguish itself in India, and it’s all set to expand, writes Vir Sanghvi.Updated: Nov 29, 2015 11:45 IST
When it comes to hotels, India is something of an anomaly. For a start, we have great homegrown hotel brands. In every major Indian city or tourist destination, the top two hotels are run by Indian chains. That, alone is more or less unprecedented anywhere in the world.
And yet, the truth is that much of the expansion in the hotel business in India is now happening in the foreign branded sector. ITC, the Oberoi, Taj and Leela open about three new hotels a year between all of them. The foreign chains, put together, open between 20 to 30 new properties per year.
For most Indians, the sudden influx of foreign brands is confusing. What’s the difference between a Westin and a Sheraton? (If you find out, let me know; they are part of the same company.) How does a Marriott differ from a Hilton? And so on. These are questions we’ve stopped asking about our own chains because they have distinct identities. But the sudden influx of foreign brands puzzles us.
From my perspective, only one foreign chain has created a distinctive identity for itself. When the Hyatt Regency opened in 1982-3 in Delhi, it was – let’s be honest – just another anonymous hotel with small rooms. But starting with the mid-1990s, when it relaunched itself on the basis of F&B (first La Piazza, then Djinns and now China Kitchen), it has begun to be talked about in the same league as the Taj, Maurya or Oberoi.
And now that Hyatt has suddenly become the fastest growing chain in this country, I have found myself staying at Hyatt properties all over India: Bombay, Ludhiana, Amritsar, Madras, Calcutta, Ahmedabad, Gurgaon and more. And though each property is different, certain things seem to stand out: an emphasis on F&B, a sense of architecture and design and – oddly enough, for an American chain – a focus on warmth.
Most people who are interested in hotels know the Hyatt story. Jay Pritzker, a wealthy entrepreneur, saw a hotel he liked near Los Angeles International Airport in 1957 and bought it from its owners, one of whom was called Hyatt von Dehn. Pritzker kept Hyatt’s name and built a chain around it.
He started with airport hotels (then a novel concept) and soon expanded into city hotels, involving his family in the company. The Pritzkers were always interested in architecture, and in 1967, Jay bought a half-finished hotel in Atlanta and turned it into the first large hotel to be built around an atrium, a trend that would be widely copied around the world.
In 1969, Hyatt opened its first overseas hotel in Hong Kong. Since then, there has been breakneck expansion around the world, much of it (contrary to current industry practice) financed by the Pritzkers themselves, which means that Hyatt owns many more of its hotels than any of its competitors. (The Four Seasons, for example, does not own a single one of the hotels it operates.)
The willingness to put their own money into the company sounds almost Indian: ITC, the Leela and the Oberoi own most of their luxury properties. The other Indian touch is the family aspect. Hilton is a faceless corporation, passed around from owner to owner, as is InterContinental, and Starwood is always the subject of takeover rumours.
But though the Pritzkers insist that the company is professionally run (the CEO is Mark Hoplamazian), there is still a strong sense of family within Hyatt. For instance, Hyatt prides itself on its ability to enable people to grow within the organisation. Most people at the top of the operations end of the business have spent the majority of their careers with Hyatt. Just as there is an ITC or an Oberoi mindset in Indian hoteliering, there is also a Hyatt DNA.
Because most Indians were used only to Delhi’s Hyatt Regency (it was nearly 20 years before another Hyatt opened in India), we sometimes miss the complex nature of the group’s branding. When Hyatt invited me to Chicago to interview Hoplamazian, I tried to get him to make sense of the branding for me.
Some of it is clear enough. The Regency is your basic five-star, the Grand Hyatts are bigger hotels, often with space for conventions, and the Park Hyatts are top of the line, on par with the Four Seasons or the Ritz-Carlton. Hyatt has rethought the Park concept in recent years, which is why some Parks (Madras, Hyderabad etc) seem right while others (Goa, my example, not his) are much less impressive.
But other than these three basic categories, there’s a lot more. There is Andaz, which much of the trade sees as Hyatt’s answer to W, but which, Hoplamazian says categorically, was never meant to be anything like that. The W brand is a corporate version of the kinds of hotels that Ian Schrager (the former owner of the Studio 54 nightclub) opened (such as New York’s Royalton) which were hip and trendy. (Or as Maryam Banikarim, Hyatt’s global chief marketing officer, puts it, “Schrager’s hotels were intended to have a nightclub sensibility”.)
The W chain has so successfully perfected that hip-hotel formula that even Schrager himself (who has now tied up with Marriott) does not seem able to compete with it. But Andaz, says Hoplamazian, is not meant to be hip or trendy. Rather it draws on Hyatt’s traditional design skills to be a luxury hotel for creative people (“The CEO who wears jeans,” says Banikarim). To be fair, the Andaz concept has gone through many revisions since the first one opened in London (I’ve been there; strange place!) and has finally found great success in such new locations as Fifth Avenue in New York.
But the first Andaz in India, which opens next year in Delhi’s Aerocity, will not be a boutique property (it will have 400 rooms), will have only two restaurants and will reinvent the hotel room in design terms. Peter Fulton, an old India hand who now looks after many of Hyatt’s international operations, says they set out to create a hotel that will not overwhelm with glitz and marble (“It may even underwhelm!” he laughs) but grows on you because of its creativity and style.
Hyatt is as excited about its other brands. There’s Hyatt Place, which in industry shorthand, translates as Hyatt’s answer to Courtyard, which may be too simplistic. There are already Hyatt Places operational in India (Hampi, Gurgaon etc) and more will open. The hotels will offer a Hyatt experience in a pared-down form (there’s no room service in the US properties but the Indian hotels will offer limited room service) with less investment in restaurants and public areas. In big cities, the rate should be around `4,000 or less, and eventually, if all goes well, they should be able to eat into the Oyo Rooms market.
There’s also Hyatt House, the long-stay brand that has been a huge success in the US and which will further target the guesthouse segment, offering suites with kitchenettes for those who have to stay in a city for a couple of weeks or more. Again, the key is affordability. Unlike fancy service apartments (such as Bombay’s exclusive Wellington Mews), these will cost only a little more than guesthouses.
I asked Hoplamazian and Banikarim the obvious question. Weren’t they worried about diluting the Hyatt brand? Indian hotel companies, for instance, are fiercely protective of the main brand. ITC only lends its name to luxury hotels. Lesser properties are called WelcomHotels or Sheratons and its mid-market brand is Fortune. Biki Oberoi refuses to allow even deluxe properties (such as the Trident in Bombay’s BKC) to use the Oberoi name. The messy rebranding done by the Taj a few years ago withdrew the Taj brand from many properties.
But Banikarim sees it differently. She says that research has shown that guests look for two things in a brand: reliability and affordability. If a product is called Hyatt, then it has a guarantee of quality. The second part of the brand (whether it is Regency or Place or whatever) tells guests what to expect and how much they’ll have to pay.
It is an interesting answer to an old question. And it takes us back to where we started. Do Indians really understand foreign brands? Does anyone know what Hilton stands for? And even if they do, is it clear what a Hilton Garden Inn is? Do we even care? If brands are so important then why don’t the Ritz-Carlton in Bangalore and the Four Seasons in Bombay (both great brands and wonderful hotels) command the highest rates in their cities?
My guess is that we are on the cusp of a change. There’s no doubt that India has some of the world’s finest luxury hotels and that Indians are (as Mark Hoplamazian says) perfect hoteliers. But the hotel sector is changing in India. With so many new hotels opening and with so many fresh ideas and concepts flowing in, we will have no choice but to take the foreign companies more seriously and the Indian chains will have to up their game.
And judging by what I’ve seen and heard, Hyatt is going to be the chain to beat.
From HT Brunch, November 8
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