Will Taj regain India’s top Hotel brand crown by 2022?

Indian Hotels Corporation Limited (IHCL) is the company that owns Taj Hotels Resorts and Palaces, Vivanta and Gateway brands. Roots Corporation is a 100% subsidiary of IHCL and owns the Ginger brand. IHCL currently has an impressive portfolio of 145 hotels under it. IHCL has seen quite a few strategies lately. The initial one was a single brand strategy. It meant that all hotels except Ginger would come under the Taj brand. Before this could be implemented, there was a change in leadership. Puneet Chhatwal took over as Managing Director and CEO in 2017.

New leadership spruced a new strategy. IHCL came with an impressive and ambitious plan codenamed Aspiration 2022. Its main aim is to tackle the Marriott-Starwood merger which dethroned IHCL as the largest hotel brand in India. With time, strategies keep on changing due to needs. Same happened with Aspiration 2022.

In the beginning, it was a 3 brand strategy: Taj, Vivanta and Ginger. Later on, Vivanta’s growth was cut-off and a new brand SeleQtions was introduced. In many cases, Vivantas were better than Taj hotels in the same cities. So Vivanta was downgraded to Upscale brand from Upper Upscale brand.

Taj Aravali Resort & Spa, Udaipur

What will the brand structure look like in the coming years?

  • Taj Hotels Resorts and Palaces: This label will be reserved only for the group’s prized luxurious properties. The target area will be  Palaces, Leisure and Business. Focus area domestically will be all the key cities in the top 15 states by GDP for city hotels, established destinations with good access for resorts, authentic palaces and safaris located near key wildlife parks.
  • Vivanta: According to reports dated June 2018, Puneet Chhatwal said that only 25 hotels will retain this label. There are only 21 hotels currently under this brand with 3 of them shifting to SeleQtions. So 21 Gateway hotels might form a part of either Vivanta or SeleQtions. Some Vivanta hotels are shifting to the Taj brand. The Connemara, Chennai was earlier a Vivanta but after renovation, it is now a Taj.
  • SeleQtions: This is a new label modelled on the lines of Marriott-Starwood Luxury Collection and Wyndham’s Trademark Collection. This means all the landmark properties of the group will come under this brand. Initially, The Gateway Savoy-Ooty, Vivanta President-Mumbai, Vivanta Blue Diamond-Pune and Vivanta Ambassador-Delhi will come under this label. As of now, no launch date is confirmed. IHCL plans on adding 50 more hotels under this brand.
  • Ginger: It is a 100% subsidiary of IHCL. Still, it wasn’t considered a part of the Taj Group until the Marriott-Starwood merger. Ginger is being given a new identity. It will now be a mid-scale brand. They will place Ginger in the minimum INR 5,000 per night category up from the current INR 2,500-3,000 per night category. These will be located in the top 80 cities in India.

What made IHCL reposition Ginger?

Ginger was facing stiff competition from web-based hotel aggregators like Oyo rooms under their brand Townhouse, Fab Hotels and so on, hence the upgrade. Now it will compete with the likes of Novotel, Fairfield by Marriott, Radisson Blu, Premier Inn, Ibis and Days Inn.

According to Puneet Chhatwal,

We want to reposition Ginger in the midscale segment, with or without food and beverages, and have within each a small meeting venue, a banquet hall and one restaurant that is done up tastefully.

They want to make Ginger a bit more fun by playing with colours, style of furniture, lighting and by offering seamless WiFi connectivity.

There are currently 45 hotels under Ginger brand and IHCL plans to add another 55 over a period of 5 years using an asset-light lease model. They have roped in DY Works for a new Ginger brand identity and JOI Design, a German company for the interiors of revamped hotels under the new Ginger Brand. Now I can’t imagine a Ginger competing with the likes of Novotel or Radisson Blu or Fairfield at least not without massive renovations.

Taj Theog Resort & Spa, Shimla

So where is IHCL expanding?

IHCL has an impressive list of new hotels which will open up in the next few years. The list will continue to grow significantly as they seem to be signing a new contract or two every few weeks. As of now, the following hotels are in the pipeline,

  1. Taj Theog Resort & Spa, Shimla (2018)
  2. Taj Aravali Resort & Spa, Udaipur (2018)
  3. Taj Rishikesh Resort & Spas, Uttarakhand (2018)
  4. Taj Jumeirah Lake Towers, Dubai (2019)
  5. Taj Exotica Resort & Spa, Palm Jumeirah, Dubai (2019-20)
  6. Taj Deira Creek, Dubai (2022)
  7. Taj Makkah, Saudi Arabia (2023)
  8. Taj Lonavala, Maharashtra
  9. Vivanta, Bhopal
  10. Vivanta Katra, Jammu and Kashmir (2019)
  11. Vivanta London Heathrow, London (2021)
  12. Vivanta Kathmandu, Nepal
  13. Ginger, Visakhapatnam (2019)
  14. Ginger, Bharuch (2019)
  15. Ginger Madgaon, Goa (2019)
  16. Ginger, Jhansi (2020)
  17. The Connaught, Delhi will undergo renovation and will form a part of SeleQtions.
  18. Plan on opening a hotel each in Muscat, Wadi Rum, Amman and all the Emirates of the UAE including Abu Dhabi.
  19. Talks of a JV with the Claridges group to expand and operate The Claridges, Lutyens, Delhi under the SeleQtions brand. 

If you look at the list, Taj is expanding big time in Middle-East. Middle-East is now a focus destination for them. Why wouldn’t it be? With so many Indians visiting Middle-East every year and Oberoi also significantly expanding their presence, Taj is bound to expand. Will they expand to other international destinations also?

Taj Jumeirah Lake Towers, Dubai (2019)

How will IHCL manage their financials?

IHCL is aiming to expand and cut down on debt at the same time. They plan on reversing their current ownership model. By 2022, IHCL will own 50% of the hotels down from the current 65%. The rest will be on management contracts. An asset-light strategy would help them bring down costs and ensure a faster growth rate. Puneet Chhatwal is a numbers guy and is focussing on revenue optimisation.

Marriott is enjoying success due to two factors: Huge presence in India across all price points and a very strong Loyalty program.

But, F&B has been Marriott’s weak point, especially in the midscale segment. Whereas IHCL have been better in F&B service. If they carry this on with their Ginger brand then they will have an edge over Marriott. But will IHCL make revamped Ginger a part of Taj InnerCircle?

That brings me to Taj InnerCircle. Puneet Chhatwal has hinted that there will be many new alliance partners like Shangri-La in the near future.

IHCL seems to be more focused now. They are slowly but steadily gaining traction as a part of their turnaround plan. They face stiff competition not only from Marriott with their every increasing hunger for growth but from other brands like Hilton, ITC hotels and so on. Hilton has stepped on the gas as well. They are strengthing their core management team due to their renewed interest in the Indian market.

Bottomline

There’s a confusion where the current Gateway Hotels will fit under the new brand division. Will there be a difference between Vivanta and SeleQtions? The Taj was known for creating tourism destination like Goa, Kerala and also Rajasthan up to some extent. However, it seems to have lost as they are focusing on developed markets. Also, they aim to be the preferred alliance partner so some good news for us. All in all, they want to be the largest and most preferred hotel chain in India by 2022. Can’t wait for SeleQtions to launch.

Every hotel brand wants to be India’s most preferred chain. Which one will succeed in the end? What are your thoughts about Taj’s intentions to get back on top. 

Comments

  1. I wouldn’t believe Taj to become the most prominent brand in India. Secretly and strong handedly another brand is expanding and doing the right type of associations and getting best hotel group awards for last few years. They are ITC Group of hotels that includes luxury collections, 1 Sheraton and lot of welcome group hotels. They have strong plans till 2022 too and their financials are far superiors than IHCL can imagine.

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