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Ginger hotel opened its 28th property in Noida today. The budget hotel brand is in a ramping up mode with 43 more hotels in pipeline in the next 3 years, P K Mohankumar, managing director and chief executive officer, Roots Corporation, which runs the Ginger chain, tells Ruchika Chitravanshi. Excerpts:
Having added the 28th property to its portfolio, have you upgraded the overall brand strategy for Ginger?
After I took over, I redid the strategy for the next three years. Being a pioneer in the segment with 60% market share, we have acquired a huge learning curve. When we talk of smart basics, affordable price points, value of proposition or what we call the budget hotels, the story of India is not just tier one or two cities. We made a huge discovery that Mumbai, Delhi are the biggest source markets for the business. It is at the root of the fast track expansion. It is a bastion area for brands across categories. It is also challenging when it comes to the costs. Our recent openings in Chennai, Mumbai and now Noida have all proved to be in line with the original concept of high volume, sustained average room rates (ARR) and therefore delivering the bottom line.
How have the overall occupancy and rates been in times when hospitality sector is not doing well?
Our Q1 results are encouraging. On a year on year basis we have grown by about 6% in terms of revenues, largely due to our well balanced ARRs (average room rates) averaging around Rs 1,700. The entire range is from Rs 1,500 to 2,500. The increase in ARR has been very slow. Entire sector has shown a decline, but budget hotels have shown an upward trend. We want to penetrate the market by volume route. Ginger is all in the volume game.
With nearly 10 years behind Ginger, how are you maintaining brand consistency?
There has been a lot of work done in the last few months. We had augmented our operations. We are engaged in the turnaround of a whole lot of properties. What has really happened to the benefit of the Ginger brand is that over the last couple of years, there have been 6 to 7 openings and they are doing well. They are the lead guys and are pulling up the others to meet year on year targets. So there is a mixed bag here. 15 hotels doing extremely well and there are hotels in places like Agartala, Guwahati or Indore which are challenging. Overall, city hotels have been accepted. There is a lot of feedback that we have factored in internally and addressed them like in case of room service, speedy check-ins, women housekeeping, engineering excellence. Concept of Ginger is here to stay and it has been accepted. People are demanding that we address gaps in product.
How are you tackling manpower issues?
We are doing a lot of backward integration. Our engineering, security, IT department are picking up the nuances of hospitality. There is a lot of e-learning. TCS as our backend infrastructure resource is a strategic advantage. Ginger is going to be transformed into a brand that will be technology driven, both at the backend and the front end as much as it will be design driven. We will address the issue of talent retention. Youngsters are very aspirational. They want to work for a Tata company and learn primarily.
Many international budget brands are positioned as mid-market in India. Are you planning to upgrade above budget?
Last 60 years we have played only in the top end of luxury in hospitality and then premium. There is now a huge structured phase going in the industry. So it is being defined into segments and products. The Indian customer has an aspiration to be associated with the high end brand. There is a stigma about something associated with low cost or cheap cost. Perhaps, it should be redefined and called in a stylized avatar. Seven years ago, we came out with a positioning of smart basics with affordable pricing. We will continue to stay with that.
As far as competition goes, Taj group has been used to playing world class excellence, hand in hand with the best in the world. The same DNA comes to Ginger. We have captured strategic locations, being the first entrant. There are advantages of being huge an Indian player.
What is the next milestone for Ginger?
We are looking at ramping up. What we have achieved in the last seven years we want to do it in the next three years or less. So we are looking at 27 hotels now to 70 hotels in the next three years. We are receiving a whole lot of investor interest, management contracts. We will expand through all the channels. We are not giving up on our greenfield growth.
Have you addressed the quality issues with Ginger, which have come under the scanner often?
That is precisely the raison d‘etre of bringing a man like me, with an experience of 40 years, into the operations. I am a hard core operations person. That is one thing I have been focusing from day one. Judging from the improvement in the guest satisfaction index there is a huge change and it is a work in progress.
What are the areas of improvement?
It has to tune in what the guest is expecting. Some of the things are very basic in terms of cleanliness and hygiene, quality of food, hassle free wi-fi connectivity, faster check-in.
What is the big concern you have for Ginger?
We are at a stage where we have set a certain milestone and so gaining traction and ramping up is one restlessness in my mind and that gets transmitted to everyone in the system. The other thing is that how do we become a world class player. My dream is to make Ginger a global brand. Right now it is about India story. We want to establish ourselves as the dominant brand in the sector.
