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India's hotel industry rocks!

The hotel industry is one of modern India’s big success stories. It has created a new model for development and growth; a model that is uniquely Indian, says Vir Sanghvi.

india Updated: Jul 10, 2010 17:00 IST
Vir Sanghvi
Vir Sanghvi
Hindustan Times

The hotel industry is one of modern India’s big success stories. It has created a new model for development and growth; a model that is uniquely Indian

If you’ve been reading the papers then you will probably know what the world’s best hotel is. It is Vanyavilas, a small luxury resort run by the Oberoi group near Ranthambhore in Rajasthan.

Vanyavilas was accorded this distinction by Travel & Leisure magazine which produces a list of the hundred best hotels in the world every year. As big a deal as the honour is, it is not the first time that an Indian hotel has topped the list. In 2007, Udaivilas, another Oberoi property (in Udaipur) was rated as the best hotel in the world.

HotelWestern hoteliers argue, with some justification, that Asian hotels have an unfair advantage when it comes to ratings. Staff salaries are far lower in Asia than in Europe or America and so Asian hotels can hire many more staff members per guest than European or American hotels can. (Okay, but that’s true of Africa, Eastern Europe and much of South America and the Caribbean as well. How come Asian hotels outperform rivals in those areas?)

This explains – to some extent – why such hotels as Hong Kong’s Peninsula and Bangkok’s The Oriental (and once upon a time, Singapore’s Raffles) tend to fare well in many rankings. Certainly, many of the world’s top luxury chains are Asian-anchored: Mandarin Oriental, Peninsula, Aman and Shangri -La. Even Four Seasons only really reached the top league after absorbing the Asian Regent chain.

But here’s why this year’s Travel & Leisure ranking is interesting. On the Asia list (i.e. the best hotels in Asia) Indian hotels occupy the top four places. All the Mandarins, Peninsulas, Amans etc did not manage to beat the Indian hotels.
Slightly predictably, the four top Asian hotels are also Oberoi resorts. Number one is Vanyavilas (natch: if it’s number one in the world, it’s number one in Asia) followed by Agra’s Amarvilas, Jaipur’s Rajvilas and then, Udaivilas.

You could treat the list as confirmation that the Oberoi group is among the world’s top luxury chains but I’m guessing you knew that already. Enough has been written (often by me) about Biki Oberoi’s grand passion for the Vilas resort properties and about how he bet the company on his vision. Biki is one of the world’s great hoteliers and the Vilases do so well in every list of the world’s great hotels that they have outperformed all of the competition and some of their own inspiration: the Aman chain, for instance.

I draw a more general conclusion from this triumph. While it is true that the Oberois routinely outperform every other Indian group when it comes to global rankings, it is also true that other Indian hotels are justly celebrated the world over.

For instance, Jaipur’s Rambagh Palace (run by the Taj group) was rated as the best hotel in Asia by Conde Nast Traveller last year. That same year, in a list of the best destinations, hotels, cruise lines etc in the world, the Rambagh came second. Given that Sicily (destinations were part of the list) came first, I guess this made the Rambagh the best hotel in the world on that list.

Even ITC, a group that has resolutely ignored the global travel press and rarely features on such lists, manages to win honours despite itself. Two years ago, its spectacular Kaya Kalp spa in Agra was rated as the world’s best spa by the British Tatler magazine.

What does all this tell us?
Well, it tells us the obvious: that Indian hotels are now among the world’s best. But it also tells us something deeper: the hotel industry is one of modern India’s big success stories. It is as much of a success as say, the story of the software industry, but one that is much less talked about.

Moreover, it reminds us that because of a handful of visionaries and because of the aptitude of the Indian people, our hotel industry was able to create a new model for development and growth; a model that is uniquely Indian.

Hoteliers will hum and haw when you put this to them but the truth is that the global hotel industry is one of the last colonial structures remaining in the world. The industry took off in the 1950s when the likes of Conrad Hilton established a pattern that others followed. The pattern was this: Hilton (or Sheraton or Intercontinental etc) would arrive in a foreign country and ask local businessmen to build a hotel at their own cost. Then, American or European general managers would fly out and hire a largely local staff while ensuring that key posts were filled by white people. The hotel would take the Hilton name and would bury all references to its real owners. Instead, it would be projected as an American hotel run by Americans for other white people.

That pattern has altered (mainly during the 1980s) but elements of its style persist. Go to any east Asian country. You will find that in the vast majority of cases, five star hotels hire foreigners as general managers. The chef will probably be a European (or these days, an Australian). Local staff will get no higher than F&B manager (not even director of F&B) and will be told that there is little chance that the hotel will ever have a general manager drawn from the citizens of the country where it is located. Even the branding will usually be trans-national (Four Seasons, Ritz-Carlton etc) though some countries now have their own chains (Thailand’s Dusit for instance).

India is the one exception. When the foreign chains flooded into our cities a decade ago, we were warned that Indian hotels would now be in trouble. Instead, our hotels have more than held their own. In every significant market (Bombay, Delhi, Madras, Calcutta, Goa, Rajasthan, Kerala, Bangalore etc) the top hotel is Indian-owned and Indian-run. No matter how much money the foreign chains have spent on their properties, they have been unable to compete effectively with Indian chains.
Part of the reason is that the Indian hotel industry has been blessed with visionaries who believed in self-sufficiency. The Oberois had the Rai Bahadur, who founded the group, and his son-in-law Gautam Khanna. Then Biki took over and pushed the chain upmarket. The Taj had Ajit Kerkar who created the group from virtually nothing. ITC Hotels emerged out of Ajit Haksar’s vision. And the Leela group is a symbol of Captain Nair’s determination to do whatever it takes.

All of these chains have used foreign help when necessary. The Rai Bahadur called his hotel the Oberoi Intercontinental when he needed US government funds to finish his construction. Even today, the chain’s luxury division is headed by an Irishman, Liam Lambert. The Taj used the Intercontinental name for its new Bombay wing (for about a decade) and its CEO Raymond Bickson, an American, is among the world’s finest hoteliers. (So is Yanick Poupon who runs the international hotels). The Leela has known when to hire foreign general managers and chefs to take on competition from the bigger chains.
So there is no element of xenophobia: everyone recognises that in an international industry you need to hire the best talent in the world. But equally, there is no element of colonialism. Each chain is proudly and determinedly Indian. Its shares are quoted on Indian stock exchanges and its fortunes are determined by Indian shareholders. Most important, each chain now has an Indian brand that it proudly displays on all its properties. And in every single market, the Indian brand counts for much more than the world’s biggest global brands.

This is an achievement almost without parallel in modern India. Regrettably, in most of the industries where we have achieved global success, we have capitalised on our cost advantage. But Indian hotels charge as much as equivalent foreign hotels. Nobody stays at Vanyavilas because it is cheaper than the competition. In the luxury market, no cut price operation can succeed for long. And yet, many full price Indian hotels beat the hell out of the international competition in global rankings of the world’s best.

It helps, I think, that Indian hotels have a solid domestic base to depend on. Go to a hotel in, say, Thailand and you won’t find many Thais among the guests. In India, on the other hand, rare is the property where foreigners outnumber the Indians. So, Indian hotels don’t need to pretend to be American or European to appeal to foreigners.

It helps also that we now have the best hotel staff in the world. Unlike employees in east Asian hotels who can be charming and gracious, Indian staff are much more likely to use initiative and discretion to take decisions on the spot. Most are better educated than elsewhere in Asia and nearly all speak better English than their east Asian counterparts.

So, there is much for the Indian hotel industry to be proud of. Yes, all of us are delighted that Biki Oberoi now owns four of the world’s finest hotels (he has four hotels in the top 15 of the Travel & Leisure global list). But Biki’s success is the icing on the cake. The real success story is of the hotel industry as a whole. It took on the global chains on its own terms.

And it won.

First Published: Jul 10, 2010 16:11 IST