Restoring the Ashok

Below the aging porch of The Ashok in Delhi, there stood a post office that no guest of the hotel ever cared to use.

The post office shared space with the hotel's records room, the laundry and the guard's rest room. Faced with the challenge of turning around India Tourism Development Corporation's (ITDC) 23-acre loss-making property in Central Delhi, Amitabh Kant, managing director, ITDC, that runs the hotel, decided to make better use of the space.

Today, a 6,500 square feet nightclub called Capitol has replaced the post office. Capitol is run by Micky Choudhury, managing director of Infrared Entertainment Ltd. that also owns Velocity in Mumbai.

The large cycle stand on the property has also made way for a fancy retail store selling the Bentley brand. That is not all. The hotel's deserted health club and beauty saloon is being replaced by a day-spa.

Mayar India, the Rs 800-crore group with interests in paper and spa products, has secured a 10-year lease to build an ayurvedic spa called Amatrra. Nearly Rs 15 crore has been pumped into the project that will be operational next month.

The effort seems to be paying off. The Ashok, which was in the red for many decades, has finally shown a marginal net profit of Rs 2.5 crore. Last year, the hotel clocked a turnover of Rs 54 crore up from Rs 52 crore in 2002.

Talking about the initiatives to make Ashoka profitable, Kant says: "The idea was to increase the turnover radically and reduce the capital expenditure sharply."

To augment revenues, Kant first struck deals with private operators to run various restaurants in the hotel.

In less than two years, at least five restaurants have been given out on profit-sharing basis. These include Ssteel, Rouge and Mashrabiya, that have been set up by Turkinz run by Amit and Arjun Amla.

Today, the city's only Korean restaurant is located at The Ashok and run by a private operator.

Even as the restaurants are doing good business, the hotel management has managed to collect dues to the tune of Rs 7 crore from various ministries. It is also plans to refurbish its popular restaurant The Frontier at the cost of Rs 1 crore.

Other than looking at revenue generation, Kant felt it was critical to lift the morale of the staff. "We had to create a sense of ownership while at the same time set targets," he says."Our focus has on strengthening the marketing and sales function to increase occupancy," says Kant.

However, some problem areas remain. The hotel's room occupancy is low at 50 per cent compared to the industry's average of 84 per cent in the city. "While we have a large inventory of rooms, we've seen depreciation as they haven't been upgraded," he says.

On the cards is a plan to renovate 300 of the 540 rooms in the hotel. The plan includes making The Ashok into a convention destination and link up with the adjoining Samrat Hotel, also run by the ITDC.

"We want to benchmark ourselves against the best hotels and prove that it's possible to turn a place around," says Kant.

But whether the piecemeal efforts will bear fruit remains to be seen as Kant admits that the place requires at least Rs 150-160 crore to be completely resurrected. Till then, the rivals may continue to eat into its share of business.