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Rajiv Kaul, President, Leela Palaces Hotels & Resorts, in a conversation with T3
Leela Hotels currently operates eight luxury properties in key gateway cities and holiday destinations including New Delhi, Mumbai, Chennai, Bengaluru, Gurgaon, Goa, Udaipur and Kovalam. I would like to see that this portfolio doubles in the next five years. However, our future growth will be driven through asset light strategies. We needed to build a brand and then grow from there. Today, Leela is a name synonymous with opulent luxury, and this is the way we are known and will grow.
We opened The Leela New Delhi in April 2011, followed by The Leela Palace Chennai in the early 2013. Going forward, we are readying our next hotel, a resort property in Jaipur, later this year. The property is expected to open doors around October. This will be followed by a business hotel at Bhartiya City, Bengaluru in 2016. It is strategically located in close proximity to the airport and will redefine the hotel industry in the region. We may also have Agra, a palace hotel, opening doors by the end of 2016.
For now we are confined to the luxury segment. We still see that there is tremendous scope to grow in this segment and hence will continue to do so. There is no plan to enter the budget market. There has to be clarity about our core competencies, and our core competency is luxury. Our emphasis is quality, quality and quality and not quantity.
We have had 25 long years of mutually rewarding association with Kempinski in India. And both of us have benefitted from it. However, now is the time to further build and strengthen Leela as a standalone luxury brand on its own. Today brand Leela is well known and recognised for its unsurpassed luxury, services and an all-encompassing hospitality experiences in India as well as internationally. Besides, we already have a marketing alliance with Preferred Hotel Group.
First, we would definitely want to complete the North India circuit. We already have a significant presence in Delhi and NCR. Jaipur opens later this year and Agra, hopefully, by 2016. Noida and Kolkata are other markets we would like have a presence in. We are also looking closely at markets such as Dubai, Maldives and Sri Lanka to make our international foray in due course.
S. Venkat, Director – Finance, Air India speaks with T3 about the progress on Air India’s recovery strategy
The year 2014-15 was better than 2013-14. We were able to achieve most of the parameters under the Turn Around Plan (TAP) except the on-time performance, which was affected only recently due to a host of factors. Apart from that, Air India notched good load factors, almost 70-80 per cent on domestic and 73-74 per cent on international routes. In all, the airline achieved 74 per cent load factor across the network, which is in line with the TAP. Yields have also been good with the domestic sector achieving revenue of nearly Rs. 6 per km and international touching Rs. 3.75 per km. As far as aircraft utilisation is concerned, narrow body has recorded 10-11 hours a day, and wide body about 14-15 hours a day.
In addition, we have been able to induct the 787 on major routes such as Europe, South East Asia, Far East and UK. This has resulted in improved margins because the aircraft has been a game changer for us in terms of fuel consumption. In fact, some of the routes that were showing losses have now been able to cover our variable costs.
We have also been able to hive off certain non-core activities such as ground handling and engineering into two separate subsidiary companies. So, aircraft to manpower ratio has also come down to 1:100 as opposed to the earlier 1:250.
Last but not least, we have been able to bring down our cash losses, though as per the TAP we will be cash positive only in 2018-19. We are now trying to bring that to an earlier financial year. The fuel rate reduction is certainly going to work in our favour. We are also hoping RBI will take a more benevolent stand and reduce their lending rates, allowing us to borrow at a much lower cost. Today the interest rates are quite high – nearly 10-11 per cent, and they significantly affect our bottomline. If they come down to 7-8 per cent we will certainly see airlines return to a more profitable status.
Capital infusion is related to the attainment of certain targets and government guaranteed loans. It is an important ingredient to Air India’s recovery plan, and so far the government has been very generous with us in bringing in the right size of equity at the right time. Starting this year the equity, which is spread over the years to 2021, will begin to a lower figure.
As part of the Star Alliance network we do consult internally as well as with our partners before adding to the network. But there is optimism in the air following the reduction in fuel prices in terms of connecting certain points in the US with a stopover in Europe or UK. There is also a possibility of reconnecting Canada as tourism exchange volumes are high from there. However, all of this is still in the drawing board stage.
Domestically we are trying to ramp up capacity as we are adding to our fleet, and furthermore, yields are higher and costs are lower on domestic routes. We recently took delivery of one A320, with four more to follow till September. Similarly, three more dreamliners are expected this year. We have also issued a tender for 14 more A320 aircraft, and have received good response.
FDI will come in provided the industry is profitable. The structure has to be profitable. The cost structure in India is not very healthy with the ATF rate being the highest, airport charges being high, banking industry being shy to lend to us, and the tax structure not being a friendly one. I am sure the govt is working towards it and the FDI will increase if all this changes. India is starved of two things: It can’t increase fares due to competition and it can’t reduce fares due to operational costs. However, I am optimistic that the industry will be profitable soon.
Air India has recorded cash profits on Rs 20 crores as well as enjoyed increased revenue, yield and seat factor despite a drop in capacity. This information was provided by Rita Motilal, GM – Commercial PAX SBU, Air India, at a lunch hosted by Air India in Mumbai recently as a thanksgiving gesture to their trade partners. She further informed that the airline has enjoyed a 75 per cent international load factor and an 80 per cent domestic load factor on average as of March 2013.
Addressing the gathering, R Harihar, ED- Project, Air India stated that the airline has witnessed growth in the western region as a result of which the carrier was able to re-introduce its Riyadh and London flights from Mumbai last year. “We are now awaiting the return of the Boeing 787 which will add tremendously to our cash margins. Following its re-introduction we hope to commence daily operations to Melbourne and Sydney from Delhi, as well as add routes that are still in the discussion stage and will be announced at a later date,” he said.
He further added that Air India looks forward to the FY 2013-14 for two major developments - the return of the Dreamliner, and the launch of the Chhatrapati Shivaji International Airport T2. Speaking on the sidelines of the event, Harihar revealed that while the national carrier is yet to notch profits, the gap between the costs incurred and the revenue earned is narrowing. “We have made cash profits but it will take time for the gap to narrow down enough for profits to seep in. The revival of shelved flight routes followed by the addition of new ones will aid in this mission,” he concluded.
Addressing an important topic in the aviation scenario, the Routes Asia 2013 commenced its strategy summit by discussing the topic of developing hubs in Asia. Moderated by Nigel Mayes, the panel comprised of John Shepley, SVP Network Management, Etihad Airways; Deepak Brara, Commercial Director, Air India; Anil Srivastava, Joint Secretary of the Ministry of Civil Aviation and Tariq H Butt, VP- Airport Marketing and Aero Business, Mumbai International Airport Ltd (MIAL).
Mayes started the discussion by asking the panel about the challenges faced while developing hubs in Asia. Speaking about Abu Dhabi as a hub, Shepley opined that the Abu Dhabi is georgraphically well located and has the advantage of engineering progress that makes it a good hub. For India, he added, unfair barriers need to be lifted for the Indian airline industry to give the industry a platform for competitiveness in network, product and service.
Brara, however, was of the opinion that India has hubs in Mumbai and Delhi which welcome 12 and 11 million passengers a year, but India hasn’t been able to develop them as effectively as the ones abroad because our infrastructure has developed only over the last two to three years. “Hubs are about where the market is. Less than three per cent out of India is connecting traffic, the majority originates here,” he added. He further revealed that alliances are important for development of airlines and hubs.
Srivastava opined that India is strategically located to be a hub. However, strong airlines needed to take up development of the same. “Travelling within India takes as long as travelling to short haul destination so there will be an emergence of multiple hubs, whether primary or secondary,” he stated. Agreeing with him, Butt added that costs are still high and need to come down for profitability to enable this. Bilaterals like the FDI will be key to development, he said.
While India is popular for a myriad of tourist attractions such as scenic beauty, adventure activities, heritage and culture, among others, a facet of tourism that has potential but is ignored is garden tourism. India has several historic gardens as well as exhibitions and seasonal flower shows that can easily be pushed among the foreign tourists visiting the country. The Mughal gardens of North India, of which the Taj Mahal Garden and the Shalimar Bagh Garden in Kashmir are perhaps the most famous, are never popularised as part of the state’s tourist offerings.
According to Venkat Iyer, Business Director, Orbitz Corporate & Leisure Travels, while there are no requests exclusively for gardens in India, foreign visitors do tour the gardens as part of their trips if there is a special bloom in season. “For instance, when seasonal flowers bloom in the Valley of Flowers, visitors who are already touring Jammu and Kashmir will visit it,” he said.
Ravi Goel, Co-Founder and Director, Ecomantra stated that there is no specific niche called garden tourism in India yet. “Our experience says that garden tourism is a very small part of a day trip, when the guest visits gardens, zoos, botanical parks etc. For instance - In Srinagar, our guests are big on Nishaat baag, Tulip Garden, Shaalimar and other Mughal gardens since they are historical, big and world class. In Darjeeling, Gangtok, Mysore and ooty, they like to visit Botanical gardens. One of my guests wanted to visit Srinagar just because he wanted to visit Tulip garden shown in bollywood movies,” he said.
Goel further added that in the rest of India, in tourism zones such as Goa, Rajasthan etc., there is a complete absence of world class gardens that are worth to visit as part of the day trip and hence nobody asks for it. “If a world class garden exists - people love to visit them. Our outbound guests love the gardens in Europe. I have never heard a guest specifically ask for gardens,” he said.
Ajay Prakash, Chief Executive, Nomad Travels, does not believe that garden tourism is a segment to be promoted in India. According to him, on the face, several other attractions in the country would far outcry gardens. However, Iyer is more optimistic, stating that the segment has potential if promoted correctly, especially in the hills.
ITC Grand Chola, Chennai, which was unveiled in September this year, has already attracted a lot of attention owing to its position as the largest LEED Platinum hotel in the world. The property is modern in its feel and reminiscent of the erstwhile Chola dynasty in its look, and seamlessly combines luxury with the responsibility of being green, which in itself is a rare combination in uber-luxury hotels in the world, opined Philippe Charraudeau, Vice President and General Manager, ITC Grand Chola, Chennai. The property, owned and managed by ITC Hotel and built on an investment of around Rs 1,200 crores, will achieve an occupancy level that will be a benchmark for any hotel of its size in the history of this country, he stated.
“The hotel has multiple edifices to accommodate multiple needs of customers and aims to attract revenue streams from various segments – discerning business and leisure travellers for events and conventions. Our offerings in the MICE segment are un-paralleled in the country. Apart from this, the hotel has a separate section of exclusive service residences and a luxury retail arcade that is expected to draw in a whole spectrum of different audiences,” added Charraudeau.
Speaking of Chennai as a location for the hotel, he said, “ITC’s hotels business endeavours to continue to make a meaningful contribution to the overall economic development of the country in multiple ways, while enriching the tourism landscape. The hospitality industry in Chennai features the least number of premium accommodations as compared to other major metros in the country. There is hence a need and an opportunity that we believe existed in the luxury hotel segment in Chennai. The ITC Grand Chola is ITC’s tribute to Tamil Nadu and an iconic asset to the city in which ITC forayed into the hotel business in 1975. The grandeur and unique attributes of the hotel will provide a fillip to the hospitality sector in Chennai in addition to transforming Chennai into India’s convention capital.”
The ITC Grand Chola has a detailed plan on promoting the property in the print media, online and through the official website, along with Starwood’s network to reach a wider segment of audience. The 600-key property also has several ancillary offerings such as a luxury retail arcade, 10 food and beverage outlets, a 23,000 sq. ft. internationally acclaimed spa brand, Kaya Kalp and 100,000 sq. ft. of banqueting and convention space with 30,000 sq. ft. of pillar-less ballroom. The establishment is expecting a sizeable amount of revenue from these streams, concluded Charraudeau.
While the Rupee depreciation did cause a dip in outbound travel, it did not deter Indians from taking their international vacations. It just meant expenditure was lower while on it. Numbers to most of the popular destinations continued to rise from the country. 2013 was a fruitful year for Dubai. The destination notched 15 per cent growth from January – September over the same three quarters in 2012. According to Carl Vaz, Director, Dubai Department of Tourism and Commerce Marketing (DTCM) India, they aim to maintain double digit growth in 2014, and welcome over one million tourists to Dubai in 2015.
Indian footfall to Spain has increased approximately 20 per cent from the last year, although the growth was slower than the last few years. From January to October 2013, Indian arrivals to New Zealand increased 2 per cent compared to the same period in 2012. As of July 2013, 67,096 Indian tourists visited South Africa between January to July 2013 which is an increase of 8.2 per cent vis-à-vis the same period last year. Even Thailand, which has been embroiled in a political turmoil of its own, welcomed 958,921 Indian travellers, representing a 4.07 per cent increase over 2012.
Manoharan Periasamy, Director, Tourism Malaysia India called the Indian market is a significant contributor in visitor arrivals and has proven to be a strong and viable venture for Malaysia. In 2014, Malaysia will celebrate its fourth Visit Malaysia Year (VMY) with the theme “Celebrating 1Malaysia Truly Asia”. Indonesia started the year 2013 with an expectation of 200,000 Indians in 2013, and has notched a significant growth through the year. India is currently Indonesia’s 11th largest source market, with Malaysia, Singapore and Australia leading the list. With Garuda Indonesia set to start India operations in 2014, they have an optimistic outlook for the year.
Oman has recorded enough of an increase from India to move its sights to tier II cities to woo travellers. Abu Dhabi, which recorded India as its largest source market halfway through 2013, organised its largest roadshow in India last year to woo more travellers.
VisitBritain, which receives over 330,000 Indian visitors annually now, aims to attract 425,000 visits from India by 2016. According to Shivali Suri, Country Manager, Visit Britain India, the aim is to identify the high-yield travel segments and tap their potential through B2B engagement and tactical partnerships, reaching out to tier II cities and creating aspiration through Bollywood connections. Even Brand USA , the public-private partnership responsible for promoting the United States as a premier travel destination, has launched a series of travel agency educational programs at major Indian metropolitan and tier II cities.
It is hence little surprise that these destinations are quite optimistic about the year to come. For 2014, the Mauritius Tourism Promotion Authority (MTPA) will focus on the young Indian travellers and educate the travel organisers on how to package and sell the destination. Between January and October 2013, Mauritius received 60,000 Indian visitors, reflecting a 7.8 per cent increase in Indian footfall compared to the corresponding period last year. Their target is to increase the growth rate to 10 - 15 per cent per year, Vijaye Haulder, Deputy Director, MTPA informed.
“2014 is a positive year for us, we expect to grow this year as well, and also maintain our double-digits in terms of Indian arrivals. We also foresee a direct flight connection to Spain in 2014, Air India and Jet Airways already have permissions to have direct flight to Spain. However, this is foreseen to be commissioned into service in the coming year since a final decision about this is yet pending,” said Arturo Ortiz Arduán, Tourism Counselor, Tourism Office of Spain – Mumbai (India).
Ozgur Ayturk, Culture and Tourism Counselor, Turkish Embassy in India revealed that the mutual exchange of tourism between the two countries has been steadily increasing in the past few years. Last year. more than 90,000 Indian tourists visited Turkey while approximately 20,000 Turkish tourists visited India. This year the destination is expecting far better figures and to easily cross the 1,00,000 mark. “This year, we even introduced an e-visa system for the Indian citizens, this is available for those that hold a valid Schengen visa or a valid visa or residence permit in any of the OECD member countries, where they can get their e-visa by using without going to the Embassy or the Consulate,” Ayturk added.
Setting their eyes on markets beyond the metros, Hanneli Slabber, Country Manager, South African Tourism (SAT) stated that the destination expects tremendous growth in Indian arrival figures, not just from metro cities, but also from tier II and tier III markets in India. Taking that into consideration, SAT has aligned its key marketing and communication strategy for next year in these markets as well, she added.
“In 2014, in terms of product evolution, we expect a rise in the demand for customised FIT packages to outbound destinations. Over the last few years, there has been a substantial increase in the number of Indian visitors opting for a tailor made holiday package customised to their preferences. We foresee a rise in the demand for outbound MICE travel as well as experiential and luxury travel. With reference to France, we hope to have an augmentation in the number of Indian tourist arrivals in the coming year. This will of course depend on the economic situations prevailing then. One positive factor that could pave the way for an increase in arrivals is the temporary suspension of biometrics for all visa applications,” said Catherine Oden, Director, France Tourism Development Agency.
Having benefited greatly from Air India’s direct air connectivity to two major cities, Australia estimates arrivals from India to Australia to be 179,000 for the year 2013-14. Arrivals from India, over the 10-year period (2011-12 to 2021-22) are expected to perform well, with an average annual financial year growth rate of 7.2 per cent through to the financial year 2020-21. “For 2014, we will be joining hands with key airline and distribution partners for co-op campaigns presenting potential travellers with a variety of exciting offers,” said Nishant Kashikar, Country Manager India & Gulf, Tourism Australia.
Undeterred by the political unsettlement in Thailand, Indian numbers have continued to move up to the destination. According to Runjuan Tongrut, Director, Tourism Authority of Thailand (TAT) – New Delhi Office, the destination is expecting over 10 lakhs by the end of the year. Agreeing with her, Sethaphan Buddhani, Director, TAT – Mumbai Office stated that the destination saw nearly one lakh Indian tourists every month during the peak season.
Mischa Mannix-Opie, Regional Manager, South and South East Asia – Tourism New Zealand expects that the India team touring New Zealand in 2014, and New Zealand co-hosting the World Cup in 2015, we will be focusing on actively promoting tourism through cricket. “Tourism New Zealand will remain committed to growing the India inbound market to New Zealand. Partnerships with travel trade and airlines will continue to be a crucial part of Tourism New Zealand’s ongoing strategy in India, and we continue to look for creative ways through marketing, PR and trade partnerships to engage Indian consumers and potential travellers,” she concluded.
Recording 71,000 Indian arrivals in 2012, Tourism Victoria has recognised India as one of its fastest growing source markets, resulting in the destination’s forecast expecting these numbers to increase to 129,000 Indians by the year 2021, stated Leigh Harry, Chief Executive, Tourism Victoria. To achieve the target, Tourism Victoria invited Indian photographer Atul Kasbekar to capture the state and all it has to offer. The images were unveiled at the end of a successful roadshow in Mumbai which saw a delegation of 15 tourist attractions from in and around Melbourne. The photos will be used in Visit Melbourne’s promotional campaigns this year, revealed Lousie Asher, Minister for Tourism and Major Events, Government of Victoria. India is the first country to be invited for an initiative of this kind.
Following the success of its ‘Melbourne Now’ digital campaign, which was unrolled last year inviting Indian travel agents to submit their proposed itineraries to highlight the city, Visit Melbourne has now entered phase II of its campaign. The campaign was aimed at increasing not only Indian footfall to the destination but also increasing the visitors’ length of stay. 15 winning agents from Delhi, Mumbai, Kolkata, Bengaluru and Pune will now work closely with Visit Melbourne to promote these itineraries and the destination in joint marketing initiatives.
“India is a rapidly growing market and we need to constantly come up with new ways to attract footfall from here. The photo exhibit and the ‘Melbourne Now’ campaign are another step in that direction. We were looking to increase overnights in Melbourne which were otherwise at a couple of nights. The new itineraries have set aside four to five nights for the city which is very encouraging. The pictures by Kasbekar should add impetus to attracting Indians to the destination,” said Asher.
Harry further added that Melbourne has not been aggressively promoting all that it has to offer which may be the reason for shorter overnights from India. “Our delegation at the roadshows we are conducting in Mumbai and then Delhi will highlight our other attractions, especially to the increasing FIT segment from India,” he stated. While the focus of the roadshow was Melbourne, Asher stated that Phillip Islands, Gold Fields region, Sovereign Hills, among others were options around Melbourbe being promoted for overnight stays.
Speaking of the Indian visitor seasons, Celia Ho, Regional Manager South and South East Asia, Tourism Victoria, revealed that April to June is the popular season for families while November to December were peak season for honeymooners. “We are working closely with the Indian travel trade, especially niche operators, to increase footfall from India during the other seasons. The in between season is gaining popularity among the Double Income No Kids (DINK) segment who are not affected by the economic slowdown,” she stated.
Throwing light on the Tourism Board’s activities for the year, Beena Menon, Representative, India, Tourism Victoria informed that the Board will participate in ATE and ITM and also chalk out their joint promotional campaigns with the winning travel agents from Melbourne Now.
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