Built in the 1950s, The Claridges, located in Lutyens' Delhi, is well-known for its quaint, Victorian charm. Ever since the Nandas acquired it a few years ago, they have been wanting to reposition the 137-room property as a high-end boutique hotel and spread the brand elsewhere in India and the world. Their brief to Peter Leitgeb, recently inducted president and CEO, was much the same. Leitgeb, who has 30 years' experience managing hotels all over the globe and was formerly president with the Leela group, could just be the man for the job, finds Gargi Gupta
These are exciting times for the hospitality industry in India.
There is no question that business in India, whether it's leisure or otherwise, is excellent. But is it sustainable? Everyone wants to develop hotels and interestingly, all are headed in the upper-end of the market.
Soon, that particular segment will reach a point of saturation. We are all pretty much safe, in Delhi at least, until the 2010 games. Thereafter, it's going to be a challenge. From April to August last year the top 10 hotels in the city had an occupancy rate of 67 per cent only, versus 65 per cent this year. And this,is without additional supply coming in.
How does it pan out for Claridges?
Our revenues, from the group perspective, this year are up 51 per cent.
What explains this growth?
We had been neglecting the corporate segment, only looking at leisure. We've arrived already at a 60 per cent corporate base, we need to get to 80 per cent. We are also targeting the embassy market, since there are embassies around.
Recently, we catered at the German embassy""the largest crowd ever of 1,250 people "" to show what the hotel is able to do. This month we're looking at an occupancy of 87 per cent. Average room rates this month will be approximately Rs 13,000 "" only four years ago, they were Rs 4,500. This year we're looking at an overall Average Room Rate of Rs 11,000.
What about restructuring The Claridges, Delhi?
It's being conducted in three phases. Phase I started around a year-and-a-half ago and cost around Rs 30 crore. Phase II starts in April and will cost Rs 40 crore; phase III, next year, will cost another Rs 40 crore and will see the development of restaurants, health spas.
A few weeks back we restructured the Senate; we've introduced many fancy new features; the car-fleet is being changed. The whole objective is to enhance the product and operational excellence.
What about manpower
To be frank the hotel is overstaffed and way behind in terms of productivity as a percentage of gross operating profits. We're restructuring right now, optimising labour and introducing new systems which work well in Europe and in America. But we'll definitely bring down head count by 10-15 per cent.
What about the new developments?
There is the 204-room, The Claridges Surajkund, coming up at a huge investment of $50 million which will be very strong in the Meetings, Incentives, Conventions and exhibitions (MICE) segment. Also we're talking to a spa-operator from Bangkok to develop it as a leisure weekend destination
What about SeaRock in Mumbai?
Work on demolishing the existing building will start soon.
Why did you have to demolish it?
Look at Mumbai, you have the Oberois', the Tajs, the Grand Hyatt, the Sheratons, Leela Kempinski and now you have Four Seasons, Carlton, and even Shangrila coming in. We as a developer and promoter need to make a statement. We have an Letter of Intent from the Mandarin Group for SeaRock, and it'll take another three months to sign anything definite.
What's the investment for all this and how will it be raised?
It'll be around $500 million. The strong cash-flow situation here will come in, then there'll be some bank loans and the promoters intend to go public. We're doing a lot of number-crunching now, so probably next year, or the year-end.
Future plans...
We're talking to a developer in Chennai, and we should be ready with an announcement by this year end. We've just signed up an international reservation sales and marketing partner - one of the top five internationally - who will help us drive business from our core markets: the US and Europe.
