Chander Baljee, Chairman & Managing Director, Royal Orchid Hotels, in an exclusive chat, says may be ‘100’ is an objective, but now focus is more on quality than quantity
Royal Orchid Hotels currently has 75 operational hotels and 16 are in pipeline. Most operational hotels are under Regenta brand while a few are under Royal Orchid. The chain has 12 owned and leased hotels.
Royal Orchid is a leading name in India’s hospitality landscape with a strong portfolio. Let’s talk about the journey so far.
We started our first hotel in 2001. That time it was Royal Orchid. After 4-5 years, we decided to venture into hotel management area. In 2006, I went for IPO. With the money received from IPO, I decided to build our own hotels. We built critical mass of hotels because having a critical mass is essential to gain competency for a hotel management company. After that we started managing other people’s hotels. So, we started as hotel Management Company in 2009.
Now we have been ramping up our presence very fast. Earlier we were primarily a south-Indian brand but now we have become a pan-India hotel management company. Now we have hotels from Ladakh to Kamini. We have presence all over India. So, we are expanding in every region of the country. Now we are also focussing in Eastern and Central India.
What is Royal’s portfolio now and how many of them are owned?
We already have 75 operational hotels and 16 are in pipeline. Most operational hotels are under Regenta brand while a few are under Royal Orchid. We have 12 owned and leased hotels. Some are franchised hotels. Remaining hotels are under management contract. Regenta Central, which is a 4-star brand, is driving our growth followed by Regenta Place, which is 3-star hotel brand.
You are targeting 100 operational hotel portfolio by the year end. How are you gear up for that?
I mentioned earlier, we have already signed 16 hotels. That will take our strength to 91. I also expect that 25 per cent of upcoming hotels may not open this year. But I am sure 12 out of 16 signed hotels will open this year. Now we may have a gap of some 10 odd properties, and I am confident that we have a team that can help add and open 10 more hotels in this year.
We are very much near our target. You can see the result in the foreseeable future. May be 100 number is an objective, but now focus is more on quality than quantity. I told my guys, yes you may have target of 100, but let’s not get tempted by any and every hotel. Let’s now focus on quality. It doesn’t matter if we have five less hotels. We are a little choosy.
There are whole new ways the hospitality business is being conducted nowadays and those changes have come in the last few years. How are you adopting those changes in the royal Orchid expansion plans?
We have to be very adoptive. Always! That’s why in our expansion plans under management route, we also have revenue sharing model. Sometimes owners are disappointed with management contracts. They think that hotel management companies make money, and they don’t. So, we have come up with this revenue sharing model. In management contract, management companies may make less money but they never loose. In case of revenue-sharing model, operating companies may lose money, but owners would never lose money.
Like this hotel, Regenta Suites Gurugram, is under revenue-sharing model. Owners are finding such model a lot more exciting. We started this property two months back and it is receiving the number that is more than what we have expected. When I met the owner, he said that he is very happy with the performance of the hotel, and in future he would like to sign more projects with us.
Talk about the brand equity that Royal Orchid has as a management company and Regenta as a brand.
I believe that when you work in this business, you have to take care of the interests of all stakeholders. You can’t say I will make money, but they won’t. They should also make money. Employees should also get their fair share. So, everyone should get their fair share of revenues. They should also be part of the overall growth. That is our philosophy.
But when an owner signs a foreign hotel management company, it takes certain amount as fee, but such companies are not connected to owners. They take their fees but are not much bothered about owners’ problems. Contracts are very rigid. And if an owner has an issue the concerned foreign management company does not help to solve that.
We sometimes even help owners in restructuring their loans, shopping their loans. Those are none of our business. But we help owners if they have some problems. There are some banks which told us that you are going to manage a hotel, they are ready fund the development of that hotel. Our association with owners gives confidence to banks that their loans will be secured.
You have six brands under Royal Orchid. What is their brand specification?
They are not six different brands. They are sub brands. For example, this (Regenta Suites Gurugram) is Regenta Suites, because it’s like a service apartment, which has things like kitchen, larger space, etc. We have Regenta, which is 5-star brand. Then we have Regenta Central, which is a 4-star brand. There is Regenta Place, which is 3-star brand. Besides, we have Rrgenta Inn, which is budget hotel brand. Then, of course, ‘Suites’ get added, ‘Resorts’ get added. Basically, they all are sub-brands, which come under one Regenta Brand. Then of course we have the Royal Orchid brand too.