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MICE, F&B driving Delhi-NCR hotels performance

Consistent GDP growth and a growing business environment are fuelling the overall performance of hotels globally.  Various industry experts including Parmeet Singh Nayar, General Manager, Shangri-La’s – Eros Hotel, New Delhi; Dilawar Singh Nindra, General Manager, Jaypee Vasant Continental, New Delhi; Vaibhav Sagar, Director of Sales & Marketing, Crowne Plaza Greater Noida spoke to T3 magazine exclusively on the current scenario, future outlook and challenges. Excerpt:

 

Q] How would you explain the current scenario of Indian hotel industry?

Parmeet Singh Nayar (PN): The Indian tourism and hospitality industry has emerged as one of the key drivers of growth for the services sector in India. Foreign Tourist Arrivals (FTAs) and domestic traffic (leisure & MICE) has increased considerably over past few years and attracted huge Foreign Direct Investment (FDI). Considering this growth potential, a lot of International hotel chains are increasing their presence in the country. Quite recently, even the Ministry of Tourism, Government of India has started investing in events that can help establish India as an attractive tourist destination for the untouched markets. We recently collaborated with India Tourism Mart to showcase our hotel.

Dilawar Singh Nindra (DN): The current scenario of Indian hospitality is still very volatile and dynamic. The Indian market with infusion of digital tools has been successful in opening gates for the digitally-advanced traveller. These tools help in planning, booking and enhancing the entire experience journey. We can also observe that the end user has moved away from the shackles of making bookings via the traditional methods and rely on the new age solutions. It is imperative to be equipped with all online portals so that inventory can be updated on real time basis. Also, efforts need to be made to understand the customer journey from the time the booking is made till the time he/ she checks out. In order to capitalize on the repeat visits of guests, it is vital that their previous feedbacks, expectations and complaints are addressed to on time.

Vaibhav Sagar (VS): Indian hotel industry is booming with more and more International players expanding portfolios in the country. Leisure (domestic & inbound travel) and business travel segments are witnessing major growth, with most hotels opening in Tier 2 & 3 cities. For a business & conferencing hotel like Crowne Plaza Greater Noida, we are experiencing increased demand from all segments resulting in promising revenue figures and profit margins.

 

Q] We have been witnessing a lot of disruptors like OYO, Airbnb and others consolidating in the market. What is the impact of these on the organized hotel sector?

PN: It’s good to see these new hospitality companies grow as they are eventually helping to organize the fragmented market which was operating in a very unstructured and unorganized manner so far.  While they will certainly create competition for organized budget and mid-segment hotel chains, consolidation of the long tail business will help standardize the offerings and benefit the end consumer.

DN: Disruptors being referred are not a direct competition for a 5 star hotel chain like ours. They may have snatched a small chunk of revenue from the organized sector but, their clientele was never a part of our target segment.

VS: Brands like OYO and Airbnb are preferred by leisure travelers while our target audience is business and MICE. Also these brands do impact the mid segment but does not have a major effect on the 5 star or premium hotel segments as the facilities and amenities offered are world apart.

 

Q]  Most of the development is taking place in mid market segment. What is the impact on ARRs?

PN: The mid-market segment is growing fast on account of heavy demand coming in recent times. There are a range of factors that have bolstered the mid-market brands in India - a surge in middle class segment to an increase in business and leisure travel, urbanization, higher economic growth and the doubling of air travel over the past seven years.  The price point and target audience for mid-market segment and luxury segment are completely different hence there is not much of impact on the ARRs for luxury hotels like us.

DN: We can observe that the ARRs have started to increase, however to reach its actual expected stage one has to be patient for the next 2 to 3 more years at least. The current ARR patterns are still 30 to 40% lesser in comparison to statistics from 10 years back.

VS: It is true that the branded, mid-market hotel segment is steadily growing particularly in Tier 2 and 3 cities. ARRs continue to grow but the growth pace has comparatively slowed down. 

 

Q] How was 2018 for you in terms ARR, occupancy and RevPar? Have you noticed any change on these parameters over 2017?

PN: In 2018, we had a great opportunity to showcase our refreshed product including new rooms and a spectacular Horizon Club Lounge located on the 19th floor of the hotel, offering views of the bustling New Delhi and the most iconic landmarks of the city, including India Gate, Lotus Temple and Jantar Mantar. Our success story reflected not only in the numbers but also in various awards that we won last year like ‘Best Business Hotel’ award by Travel + Leisure and Business Traveller Asia Pacific, ‘Best Employer Brand’ by World HRD Congress, Responsible Business Hotel, etc. To sum up, we witnessed an increase in all the areas - ARR, Occupancy, RevPar and customer satisfaction over 2017.

DN: The ARR was constant for FY 17-18 and 18-19, whereas the occupancy and RevPar both saw a marginal dip.

VS: At Crowne Plaza Greater Noida, we witnessed double digit growth across all these revenue indicators last year.

 

Q] MICE is emerging as one of the main contributors for hotels in Delhi –NCR. What is the contribution of MICE in your total room bookings?

PN: MICE indeed has become one of the key contributors for hotels across Delhi & NCR. Personally for us MICE contributes approximately 13% to the overall hotel business and our focus remains to only cater to chic MICE business where we can help offer personalized, creative and thematic meetings that truly reflects luxury.

DN: MICE is one of the major revenue generating streams and the steady growth of business has helped us in capitalizing on this growing segment of business. The MICE sector is growing over the last one year as a significant part of the overall business and we expect this to continue in the coming years as well. We offer varied range of services for meetings, incentives, conferences and events. Our team helps in planning a customized event as per the requirement & budget of the client – from suggesting the apt venue to being flexible with the menu to planning some out of the box activities to surprise as well as help they unwind during long meeting hours – thus, providing end-to-end services. MICE contributes almost 10-15% of the total market share

VS: As a leading business and conferencing hotel in Delhi NCR, MICE is a major contributor for Crowne Plaza Greater Noida with 25% contribution to total revenue.

 

Q] F&B has gradually been emerging as a major revenue earner for hotels. What is the contribution of MICE & business travel, F&B and leisure in your overall business?

PN: As traditionally noted, creative F&B has been a DNA for success of hotels. Our key focus has been to offer authentic cuisine curated by the expat chefs from the region that we wanted to showcase. We brought in some famous dining concepts like a 47-year old legacy, the 39th Shang Palace in the World, Sorrento - the Italian restaurant certified with Golden Q from Ospitalita Italiana and world on a platter concept restaurant Tamra that keep us in the limelight. Launching unique food and beverage pop-ups and curating special dining offers and experiences through our dining programme called ‘The Table’ helped us with great positioning in the market.  Business travel without wellness is incomplete and therefore our focus has been to develop our wellness facility ‘Chi, The Spa’ as a personal space for our guests to take a break and de-stress themselves. We have a good mix of MICE, business travel and leisure business.

DN: F&B is the backbone in terms of revenue contribution. It has a constant share of 50 percent in the overall business. As far as MICE & Business Travel go, one third of the business is derived from these segments.

VS: F&B including C&E contributes about 29% to total revenue, off this 65% is contributed by conferences and events segment/; 25% contribution from MICE and approx. 5% contribution from leisure segment.

 

Q] What is the ratio of foreign V/s domestic guests in your occupancy?

PN: Our hotel experiences an influx of foreigner guests who are travelling on business as well as leisure while from India, there are majorly business travelers staying with us from key metros. Situated close to the Presidential Estate, shopping and business districts in downtown, Shangri-La’s - Eros Hotel, New Delhi is at the beating heart of the bustling capital. With the City centre location, our guests stay easily connected to the best of the city.

DN: Jaypee Vasant Continental, New Delhi has an optimum mix of foreign and Indian nations being, 45 % and 55 % respectively.

 

Q] Despite the prevalence of OTAs, Indian market is still driven by B2B. What percentage of bookings you get from online channels?

PN: Our company drives large share from e-direct channels that is the hotel website and the mobile app, of course supplemented by our partner OTAs. Our focus remains to maintain rate parity. 

DN: OTA have captured a major chunk of the revenue of the entire market for hotel business. We are in direct connection with guests which help us in ensuring personalization and attention to detail to guarantee repeat visits.

VS: OTA contribution to our business is about 27%. This includes OTA, brand website and GDS bookings.

 

Q] What sort of CSR activities you are involved with? 

PN: I personally believe that CSR and sustainability initiatives are the heart of Shangri-La’s – Eros Hotel, New Delhi. Driven by our core values, the areas of CSR that we work within are Our People, Our Business, Our Environment and Our Communities. Some big initiatives have been taken to drive a socially responsible business. As a group wide initiative, the company has decided to ban single use plastics straws and stirrers at our properties in 2019. We joined hands with our embrace partner Noida Deaf Society back in 2010 to contribute in improving the lives of deaf students from all across the country, by providing them vocational skills and enhancing their overall confidence so they can face the world with élan. We have employed 6 people from NDS who are working with us. We have developed a property called ‘Reviving the ‘Shangri-La’ of Delhi’ and we aim to plan multiple events around this. The importance of Delhi’s cultural heritage is diminishing and we have taken a step towards keeping it alive. In January we took kids from an NGO to a famous historical site ‘Humayun’s Tomb’ as our step to educate them on the importance of our culture and history and ultimately Reviving the ‘Shangri-La’ of Delhi.

DN: We believe ‘doing social good is a social responsibility of every business organization’.  We like giving back to the community by taking initiatives of the likes: organizing event for the differently abled children or orphans. Special food delicacies & gifts are offered to children and various interesting activities are organized. We organize ‘Camps’ where clothes and other basic amenities are shared with the needy. We also supply water to SDMC on monthly basis for conservation and horticulture purposes.

VS: At Crowne Plaza Greater Noida we support a local school in the area engaged in the work of educating underprivileged kids. Apart from this, we regularly engage in community activities like road safety week, tree plantations etc. in

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