Leadership Series Fireside Chat with Mr. Chander Baljee, Chairman & Managing Director, Royal Orchid Hotels

Humans are always mesmerized by powerful personalities. They make the best stories possible. They bring along with them a legacy, adventure, and experience which are more than words. They are metamorphic, captivating, and blend the creativity. Last Friday i.e. on May 15, 2020, I was proud to set the leadership fireside chat series in motion for RateGain. It focuses on speaking with eminent leaders from the travel and hospitality industry. The goal is to apprehend their stories and learn from their experience. It also focusses on gathering perspectives on the current crisis. Finally, how do they visualize the future unfolding for a #BetterTomorrow.

For the inaugural edition, I hosted one of the finest minds, a humble pioneer, and an inspiring leader, Mr. Chander K Baljee. He is a thought leader and go-to expert in the ever-evolving hospitality space. He was responsible for the rapid setup and expansion of the Royal Orchid and Regenta hotels. The entire conversation is available on RateGain’s YouTube handle. Consider a quick recap of the following 10 points while navigating the ongoing crisis:

1.     Dekho Apna Desh: We are in the midst of a crisis but things could have been worse. A Tsunami or Tornado could have hit us. At least that is not the case. The hotel properties are not damaged and it’s a temporary setback of operations. Although, it might take some time for the market to recuperate, yet, things are on a brighter side for India. 26 million people travel out of India and they are not going anywhere. They will travel within the country and to a drivable distance. International travel is not as easy as the pre-crisis scenario. As such, they will rediscover India with “Dekho Apna Desh” and be #VocalAboutLocal.

 2.     Multi-skilling & Versatility: To survive the crisis, multi-skilling is the need of time. Front office, housekeeping, and F&B will have to train themselves in many skills. With furloughs and layoffs on the cards, hospitality professionals are for the first time willing to do this. This indicates a mindset change with a positive note. It also recognizes the “dignity of labor” notion coming to action. The other aspect is that hospitality trained professionals are very versatile as a source of talent because they are well groomed, disciplined and have excellent communication skills. After graduation some Hotel Management trainees join BPO, retail, and other sectors so they will always enjoy employment. As such, the hospitality industry is a great supplier of net talent to other industries.

 3.     Cost-Effectiveness: In the present-day context budget only the “must-have” costs and avoid the “good-to-have”. Royal Orchid & Regenta Hotels is looking at a 30-40% reduction in fixed costs. Consider reducing overheads such as manpower and electricity. Find innovative ways such as convenience food and new ways of cooking from the F&B perspective.

 4.     Gradual Recovery: Recovery will happen in 3 to 6 months timeframe. Flights will be starting from June, but, the pickup will be gradual. In the beginning, people will be afraid of traveling. It could be because of safety reasons or expensive ticket prices. Trains are going to start in July. Besides, with borders closed, people won’t be able to cross states to go to a nearby tourist destination. The demand will increase from September onwards. Travelers are staying within locked doors and would want to go out so expect a lot of latent talent.

 5.     Segment Recovery: MICE will take a longer time to recover. Online meetings and video conferencing is now happening through Zoom and Microsoft teams and will become a permanent feature for most organizations. Decisions related to events and exhibitions will get postponed. Customers will make them after a proper recce of the venue. Recovery in weddings might get delayed a bit as well with a limited number of people allowed in a gathering. Many things like feeling the vibe of the city and tasting the local cuisines have its charm, and video conferencing can't help with that. Restaurants in hotels should witness a growth in demand. Customers might have apprehensions about visiting non-branded hotels and restaurants. As such, with a little tweak in F&B prices, hotels should be able to deliver greater value for their customers.

6.     Soft Relaunch of Hotels: The entire staff of Royal Orchid and Regenta hotels are already using the “Aarogya Setu” app. The screening will take place as per the decided zones of the Government of India. If located within a containment zone, then they will stay at home. Staff will wear face masks and headgears. They will use hand sanitizers and change uniforms daily. Plan many improvements in tactical activities to provide a contactless experience to the guests. No-touch check-ins and sanitized key cards will become a norm. Reduce the number of people in lifts and use things like toothpicks to press lift buttons. All the hotels are preparing for these hygiene practices and procedures. With the hotels in Karnataka opening from today i.e. 18 May, it’s going to be more like a soft re-launch for all the hotels in the region.

 7.     Pricing & Revenue Management Strategy: With lower prices the size of the target guest market increases. Yet, it can also end up attracting guests who can ruin the property. As such, for individual bookings, reduce the prices but not below an acceptable rate. If there is a corporate group booking then consider more flexibility on pricing. Cultured guests will not usually harm or damage the property. Prices can go down as much as 50% compared to the pre-crisis rates. As hotels are planning to reduce 30-40% of fixed costs, so, this is still manageable. Leveraged hotels with an interest burden can suffer. Hotels with minimal serviceable loans can plan to raise some debt to tide them over. One way out would be to negotiate rentals down with landlords for a few months.

 8.     Distribution & Sales Strategy: Video conferencing and phone calls have become the new normal. More bookings will happen and close on digital channels. This will save the unwanted travel time of corporate sales executives in hospitality chains and make them more productive. Leverage OTA's which are an integral part of the distribution mix. Regular travel agents are also there to help.

 9.     Advice to Hotels: In today’s world, it’s becoming difficult for singe hotels to survive. They need both manpower and sales & distribution muscle to survive which is not a piece of cake. As such, they should affiliate with chains. Foreign and Indian chains are available for affiliation. Consider Indian chains for flexibility, deliverability, and manageable contracts. The franchise model option is also available for independent hotels. They can take the brand name and guidelines but run it by themselves. A piece of advice to any hotel would be to be judicious about spending money. They should not get blown by the ego of having the best hotels. A hotel determines its ARR by the market and not only by a fancy product. Hence, perform a proper evaluation of spending on spas, gyms, and specialty restaurants and take a good look at what is essential for relevant target audience.

 10. Financial Projections: The first quarter may be in loss. It will be lucky to have a break-even in the second quarter. The third quarter can witness profits and the fourth quarter can see more profits. In conclusion, it won’t be a plus but won’t be a minus too.

(Stay tuned and watch this space , as I speak to more travel and hospitality leaders)