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Contemporary Challenges for Hotel Operations

ECOLAB presented the second edition of General Manager & Leadership Roundtable that delved into how one can leverage the tool of technology in hotel operations By Joanne Pereira The second edition of Hotelier India’s initiative, the General Manager & Leadership Roundtable (GMRT), presented by ECOLAB — leaders in water, hygiene and energy technologies, reinforced the need to sustain dialogue and interaction among hospitality professionals to effect excellence in hotel operations. The assembly of general managers from leading hotel chains in Mumbai, at The JW Marriott Juhu Hotel on October 31, 2018, highlighted the evolving dynamics in the contemporary context. The camaraderie, as the GMs warmed up in anticipation of the forthcoming discussion, was evident. Twelve leaders of the fiercely competitive industry enthusiastically exchanged notes, dwelling on what they did best through their years immersed in the shaping of the hospitality industry, both in India and abroad. Paradigm shifts in the industry and its environment have given rise to the need to redefine approaches, deliberate opportunities and strategise to meet the new set of challenges faced by GMs in their individual and collective functioning. Clearly, plain vanilla operations have given way to the cognisance of having to function in a broader perspective, as business models with an end goal of being profit centres. Gurmeet Sachdev, Publishing Director, Hotelier India, welcomed the gathering, asking them to continue the conversation with the same gusto and invited Sanjay Sethi, MD & CEO, Chalet Hotels, to moderate the session. Sethi got the session kickstarted with a touch of humour as an ice-breaker, asking the participants to state two ‘facts’, one being true, about themselves. One ‘fact’ sharing that brought smiles to all was Ravi Rawat’s, GM of The Park Navi Mumbai, claim of having weekends off, an unimaginable luxury in the realm of operations. Sethi’s anecdote highlighted how a GM was called to use his wits, among other skills, to counter and turn around situations. He got young students, holding him at gunpoint in his property in Varanasi, to not only pay up their bills but also offer him any degree of his choice without stepping into the campus! Anuraag Bhatnagar, multi-property VP, Luxury, Marriott International, the Guest of Honour at the roundtable, spoke about adding value that bring smiles to the faces of the owner and guests alike. He shared his observations about how the scope of functioning of a GM had evolved over the last couple of decades — from head of operations to head of business. The international new skill is staying sharp, given the present complexities and world-class delivery. About other elements, he stated, “Today’s beast, the digital media, makes it important to be seen doing the right thing. Talent attrition is another challenge we face.” The proceedings reaffirmed that GMs had to be masters of many trades today. Getting down to the business of the day, Sethi spoke about how the industry has been going through a downcycle since 2009 due the the play of demand and supply forces and the economic cycles that the country went through. “Since 2015, the occupancies are coming back and in the last two years we've seen rates kicking in and progressing. Investors are questioning when this is likely to happen as historical data indicates an INR 100-400 increase, mainly occupancy-driven growth which has not even been 6% YoY in the last three years. Despite the demand growing at a steady 12-13%, with the supply keeping up at 3% for the next five years, which has given us arbitrage in a seller's market, we talk of a longish upcycle, as the supply is lagging by 7%.” Sethi threw open the consequent question of what the prevailing situation in the rate dynamics is, and the strategies to address the rate growth that is required in view of occupancies of 77-78% being hit. To which Puneet Singh, GM, Grand Hyatt Mumbai, responded saying, “Rates are not going to grow till 2020-2022, when a clear demarcation in rates between weekdays and weekends would be obvious. A double digit growth of 2006-08 is unlikely. Today, discounts are about 30% of that period. In the last year we had to shift and juggle our segmentation of groups to achieve an average growth in rates at about 3-4%, even in a seller's market. With the airports maxed out, the projection of double digits is dependant on infrastructural development.” Rawat, speaking about an entirely different segmentation of massive project-based occupancies presenting an opportunity to ramp up the ARRs, elaborated how the focus since 2014-15 had been on occupancies. Rawat’s rate projections stand at double digits, which factor in weekend occupancies touching about 50%. In context to the digital medium, he found its utilisation to get footfalls very effective. Manish Sodhi, GM, Hotel Sahara Star, acknowledged the advantage he has with a product that boasts the biggest ballroom in the city. He said that Reliance’s impeding additional capacity is not a threat to mopping up market share, but recommended that hoteliers take a pledge of maintaining rates, critical to meet overhead costs. “Occupancies may drop in the short run, but we have the demand, the buoyancy to do it. The industry has to come to a consensus to safeguard against yielding to discounting due to bargaining,” said Sodhi. Ashrafi Matcheswala, GM, Vivanta President, Mumbai, an IHCL verteran for over three decades in its Indian and San Francisco properties, said, “There is a lot of scope for increasing the rates for global travellers. We have to work separately for rev power in North and South Mumbai.” Among other factors, Matcheswala highlighted being given a freehand to run operations as an essential one. Nicholas Dumbell, GM, Renaissance Mumbai Convention Centre Hotel, spoke about how F&B contributed to profitability. “Those with banquet facilities and few F&B outlets scored. Europe and the US messed up by being too focused on cost-cutting. It is important to find the balance. Further, as an industry, we need to get the payroll pieced right.” Dumbell felt that keeping the channels of communication open was important while forging a bond with the owners. He emphasised, “The key was to build trust, which plays a part in being given a free hand in operational decisions." Sameer Sud, GM, The Leela Mumbai, speaking on driving levers towards profitability, said, “Payroll cost was a challenge we faced by relooking at areas to reduce manpower without compromising on the guest experience. Certain places could do with contracted labour, resulting in a saving of about INR 3.5 crores. Finding the balance and a mix of occupancy that works for us is unique to each present here. The rate should not be the only factor to be considered.” Ajoy Balkrishna, GM, Radisson Mumbai Goregaon, touched on profitability increasing when the rates get better, the challenge of taking on contract labour, and the effective utilisation of power. Biswajit Chakraborty, GM, Sofitel Mumbai BKC, is a self-proclaimed Mumbai specialist. While touching on a host of issues, he highlighted that value offered in India is much higher. “Digitalisation is the key to push demand within static supply. Relatively less expensive than utilising human resources but it has to be used with specific reference to targeted audience. He affirmed that Air bnb is a threat to business but positive depending on how elections pan out. Sharad Datta, GM, The Westin Mumbai Garden City, added, “Profitability means different things to each of us. PRS Oberoi’s dictum of 'Don't cut costs, eliminate waste' holds true. In my case, the built quality of the hotel is excellent, which saves us costs. It is easier for me to maintain the 10-year-old property. My view on payroll costs is: I would like people to come to work [in a hotel] where the focus is not on the best pay, but on providing self-paying incentives that get into the pocket. It is about the reputation of the brand, about providing an exemplary guest experience, and not just the rate. Attracting talent is a struggle for us all; we require to create talent pools. Rupesh Kharbanda, Head - Institutional Subcontinent, Ecolab. observed that not enough was being done to retain and scout for talent. The new millennials have different expectations. To conclude, host Sharad Puri, GM, JW Marriott Juhu, observed that he had not seen international brands putting in talent contribution. Mid-and senior-level management programmes are not robust enough and the industry had to contribute there. Also, the dollar presents an opportunity. He said, “It is up to us to take the rates up. In most cases, the interest of the owner and operator are the same." Sethi, too, highlighted how it is the industry’s responsibility to give back to the educational system and get the IHM programs upgraded. He also dwelt on operational business decisions when it came to utilisation of space being driven by profitability. A keen eye on portfolio management and EBITDA margins were factors that translated into a healthy bottomline. The session ended with Mukund Vasudevan, MD - India, ECOLAB, expressing his appreciation for the many aspects that were brought to the table, concluding it by felicitating the participants. GMRT catalysed the need for hospitality leaders to put their heads together, literally. The potential and significance of dialogue as a tool for healthy growth in the industry signals the way forward for this pioneering initiative. The veterans present were appreciative of the enabling forum, essential to achieve operational excellence in a service driven industry.

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