Customising hospitality

IN CONVERSATION

One of the first international hotel chains to set up shop in India, InterContinental Hotels Group has come a long way with 14 hotels and many more in the offing. Michael G Herrmann, director (operations), InterContinental Hotels Group (South West Asia), talks to Ravi Teja Sharma about its renewed strategy for India.

There is a huge gap in the branded budget hotel market, which many international chains are trying to plug. Does InterContinental Hotels have a plan to get more brands into the Indian market?

At the moment, we have 14 hotels in India under three brands "" InterContinental, Crowne Plaza and Holiday Inn. We believe that the three brands have not reached their potential in India as yet and we want to concentrate on these before moving forward by getting new brands in. But then, as a lot depends on the demand and supply in a certain market, we might look at getting in more brands, but on a later date.

Do you have a separate strategy for India?

Most of our properties in India have been franchise-based, which so far involved lending a brand name along with system services. The management of these hotels was under someone else (in many cases the owner).

Recently, we made some important changes to our India strategy. Now, all properties will be management contracts. These will be brand new and custom-built for specific brands. In the last 12 months, we have signed up 14 new management contracts at key locations - three InterContinentals, five Crowne Plazas and six Holiday Inns spread across in Delhi, Mumbai, Kolkata, Hyderabad, Bangalore, Amritsar, Pune and Kochi.

We are also looking at some resort destinations, maybe in Kerala, or a mountain and wildlife destination. Our target is to have over 6,600 rooms in India by 2010. The 14 existing properties make 2,369 rooms, there are 14 new properties in the pipeline and we are looking for more.

How would you explain this shift from a franchise-based business model to management contracts?

We are an asset-light company. The value of the company is in our brands and what we do best is manage properties. In a franchise model, the advantage might be that you could spread your brand faster but then, you don't have control over the destiny of that brand. With a management contract, we think, the growth might be slower but the company can control the quality and service of the brand.

Also, when we entered the market, the franchise route was the only way to be in India. With time, things have changed and now most companies use the management contract route.

You mentioned custom-built hotels. What kind of help do owners get from the Group while building the hotels?

We sign a contract and from the initial stage itself, provide design and engineering expertise to the construction team. We also work together with interior design team and provide them the design specifications. Our team gets heavily involved in the construction process to incorporate all brand values into the final product.

The new Crowne Plaza in Gurgaon is a very good example of this. It is our first completely custom-built property in India. We also work closely with the banks, investment companies and, in some cases, we build bridges between the property owner and the financial side to help the owner get what he wants.

Most international hotel companies coming into India today are partnering with local developers. Does your new strategy include looking for a partner as well?

We do not have any partnerships at the moment, but surely, we are not closed to the idea if the right partner gets us the right location. In our business, the logic is to get the right partner, the right location and the right brand that fits the location. Currently, we do have partners with whom we have multiple deals.