This story first appeared in DNA Money edition on Friday, December 3, 2010.
Imagine a mid-market business hotel without a restaurant, coffee shop, bar, business centre, space for meetings and banquets, gymnasium, spa, or even a swimming pool.
A hotel where the management has outsourced all operational requirements — including food and beverage production and service (breakfast and dinner), housekeeping and maintenance, laundry and security — barring only the front office and sales and marketing.
Welcome to the latest concept in hospitality — select service accommodation.
Mumbai-based Check-Inn Hotels Pvt Ltd has just launched its prototype mid-market hotel project in New Delhi’s Connaught Place area. Check-Inn Hotels is the hospitality arm of Mumbai-based Shree Naman Group, which has interests in real estate, financial services, hospitality, energy and ready-mix concrete.
With 43 rooms, Check-Inn New Delhi focuses purely on providing accommodation. It offers rooms in three categories — executive (6), deluxe (35) and superior (2). The room size ranges from 200 sq ft (superior) to 280 sq ft (executive), and the tariff ranges from Rs 4,999 to Rs 7,999 (inclusive of in-room breakfast).
Significantly, the cost of development is only Rs7.85 lakh per room and the staff-to-room ratio is at 0.5:1. The hotel has only 16 people on its payroll, including the hotel’s general manager.
Hemal Modi, chief executive office, CHPL, said the concept took shape after a study indicated that a full-service hotel doesn’t generate enough money to be viable on a profit and loss level despite all that vanity. “That’s when we started thinking about putting together a model by squeezing public areas, back of the house utilities, etc, thereby having a financial discipline to the entire business.”
This was followed by a product orientation exercise to identify the key requirements of a business traveller with an average length of stay being 1.1 day (in layman’s terms, a one-night stay). Working backwards from there, the management sought feedback from corporate travellers on their requirements from a hotel room. “We identified eight focus areas, of which four factors were topmost priority — location, safety & security, comfort (not luxury) and food and hygienic environment. We have covered these areas and added a fifth element — value proposition,” said Modi.
The management has laid down strict quality standards to ensure smooth operations and service delivery. Instead of investing on the operational infrastructure and support functions, it has taken to outsourcing, thereby bringing in operational efficiencies, timely service delivery, cost control and increased profitability.
Food & beverage production and service have been outsourced to a local catering firm, Rupeats, housekeeping & maintenance to Orvis Hospitality, and security to TOPS Security, while a neighbouring professional laundry operator has been roped in to deliver laundry within three hours of requesting the service.
“An open kitchen and supporting infrastructure is provided by us, while the caterer brings in the utensils, gas, supplies and ingredients, cutlery and crockery, production and service staff. The F&B approach is completely in-room dining with a pre-set menu for every day of the week. Dinner is in the form of a pre-plated sumptuous vegetarian thali. The arrangement here is that while the caterer retains 60% of the overall F&B revenues, we get to keep 40%,” said Modi. Similarly, with housekeeping, everything from towels, linen, pillows, curtains, cleaning chemicals, equipment and manpower is brought in by the outsourced company wherein Check-Inn pays the company a lump sum.
As for laundry, there is a very insignificant mark-up of Rs10 on the laundry operators servicing cost per apparel.
In terms of development, the Check-Inn New Delhi property was initially a cold shell and the management acquired it on a long lease from the asset owners. Interestingly, the hotel has been made operational in exactly nine months of taking possession of the cold shell, thereby lowering the breakeven. The entire approach, according to Check-Inn’s initial study, significantly increases the possibility of the product getting easily absorbed in the market.
“An important factor to be considered here is that Indian customers are highly price sensitive and if they buy into the product, the hotel is very likely to start running from day one as against crawling (3 years), walking (2 years) and running (if lucky i.e.) in case of upscale full-service hotels,” he said. That’s precisely the reason why the CHPL management is targeting a breakeven within 12 months from the launch date (October 2010).
At 35% occupancy (without any promotional spend) and an average room rate of Rs6,000, Modi sees the numbers scaling up well especially with busy season in the coming months. However, he maintains that the hotel's business does not depend much on the seasonality aspect as the target customer base is largely domestic business and transit travellers looking for a no vanity functional accommodation in the heart of New Delhi.
With the select service accommodation prototype already rolled out, Check-Inn is currently working on its second project coming up in Mumbai. The hotel site at CST Road Kalina (close to Bandra Kurla Complex) has been identified already and the management is in the process of getting necessary permissions and approvals for the development.
The Mumbai hotel will have almost double the number of rooms as the New Delhi hotel, while everything else remains constant. The CHPL development team is also in the process of identifying a site in Bangalore and is likely to close it in the coming months.
“Once key metros have been covered, we will set up a shared service centre that will help streamline and centralise the entire sales and marketing, rooms reservation process for the hotel chain. Thereafter, we will get into the franchise mode under Check-Inn Xpress, Check-Inn Premier and Check-Inn Residences across other potential locations in the country. Only the owned and managed hotels will sport the Check-Inn Hotel brand,” said Modi.
A hotel where the management has outsourced all operational requirements — including food and beverage production and service (breakfast and dinner), housekeeping and maintenance, laundry and security — barring only the front office and sales and marketing.
Welcome to the latest concept in hospitality — select service accommodation.
Mumbai-based Check-Inn Hotels Pvt Ltd has just launched its prototype mid-market hotel project in New Delhi’s Connaught Place area. Check-Inn Hotels is the hospitality arm of Mumbai-based Shree Naman Group, which has interests in real estate, financial services, hospitality, energy and ready-mix concrete.
With 43 rooms, Check-Inn New Delhi focuses purely on providing accommodation. It offers rooms in three categories — executive (6), deluxe (35) and superior (2). The room size ranges from 200 sq ft (superior) to 280 sq ft (executive), and the tariff ranges from Rs 4,999 to Rs 7,999 (inclusive of in-room breakfast).
Significantly, the cost of development is only Rs7.85 lakh per room and the staff-to-room ratio is at 0.5:1. The hotel has only 16 people on its payroll, including the hotel’s general manager.
Hemal Modi, chief executive office, CHPL, said the concept took shape after a study indicated that a full-service hotel doesn’t generate enough money to be viable on a profit and loss level despite all that vanity. “That’s when we started thinking about putting together a model by squeezing public areas, back of the house utilities, etc, thereby having a financial discipline to the entire business.”
This was followed by a product orientation exercise to identify the key requirements of a business traveller with an average length of stay being 1.1 day (in layman’s terms, a one-night stay). Working backwards from there, the management sought feedback from corporate travellers on their requirements from a hotel room. “We identified eight focus areas, of which four factors were topmost priority — location, safety & security, comfort (not luxury) and food and hygienic environment. We have covered these areas and added a fifth element — value proposition,” said Modi.
The management has laid down strict quality standards to ensure smooth operations and service delivery. Instead of investing on the operational infrastructure and support functions, it has taken to outsourcing, thereby bringing in operational efficiencies, timely service delivery, cost control and increased profitability.
Food & beverage production and service have been outsourced to a local catering firm, Rupeats, housekeeping & maintenance to Orvis Hospitality, and security to TOPS Security, while a neighbouring professional laundry operator has been roped in to deliver laundry within three hours of requesting the service.
“An open kitchen and supporting infrastructure is provided by us, while the caterer brings in the utensils, gas, supplies and ingredients, cutlery and crockery, production and service staff. The F&B approach is completely in-room dining with a pre-set menu for every day of the week. Dinner is in the form of a pre-plated sumptuous vegetarian thali. The arrangement here is that while the caterer retains 60% of the overall F&B revenues, we get to keep 40%,” said Modi. Similarly, with housekeeping, everything from towels, linen, pillows, curtains, cleaning chemicals, equipment and manpower is brought in by the outsourced company wherein Check-Inn pays the company a lump sum.
As for laundry, there is a very insignificant mark-up of Rs10 on the laundry operators servicing cost per apparel.
In terms of development, the Check-Inn New Delhi property was initially a cold shell and the management acquired it on a long lease from the asset owners. Interestingly, the hotel has been made operational in exactly nine months of taking possession of the cold shell, thereby lowering the breakeven. The entire approach, according to Check-Inn’s initial study, significantly increases the possibility of the product getting easily absorbed in the market.
“An important factor to be considered here is that Indian customers are highly price sensitive and if they buy into the product, the hotel is very likely to start running from day one as against crawling (3 years), walking (2 years) and running (if lucky i.e.) in case of upscale full-service hotels,” he said. That’s precisely the reason why the CHPL management is targeting a breakeven within 12 months from the launch date (October 2010).
At 35% occupancy (without any promotional spend) and an average room rate of Rs6,000, Modi sees the numbers scaling up well especially with busy season in the coming months. However, he maintains that the hotel's business does not depend much on the seasonality aspect as the target customer base is largely domestic business and transit travellers looking for a no vanity functional accommodation in the heart of New Delhi.
With the select service accommodation prototype already rolled out, Check-Inn is currently working on its second project coming up in Mumbai. The hotel site at CST Road Kalina (close to Bandra Kurla Complex) has been identified already and the management is in the process of getting necessary permissions and approvals for the development.
The Mumbai hotel will have almost double the number of rooms as the New Delhi hotel, while everything else remains constant. The CHPL development team is also in the process of identifying a site in Bangalore and is likely to close it in the coming months.
“Once key metros have been covered, we will set up a shared service centre that will help streamline and centralise the entire sales and marketing, rooms reservation process for the hotel chain. Thereafter, we will get into the franchise mode under Check-Inn Xpress, Check-Inn Premier and Check-Inn Residences across other potential locations in the country. Only the owned and managed hotels will sport the Check-Inn Hotel brand,” said Modi.
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