Mall development partners offered complete rent waiver for lockdown period for almost 60% cinemas, says Ajay Bijli, CMD, PVR Ltd

PVR Cinemas, which reported consolidated losses of Rs 184 crore for the July to September quarter of fiscal 2020-21, said that the company is in active discussions with mall developers to negotiate lease rentals and common area maintenance (CAM) charges. This was necessary due to the fact that all of PVR’s 831 screens continued to be non operational during the second quarter of the current fiscal i.e Q2 FY'21.

According to a top company executive, the company’s discussions (on lease rentals and CAM charges) with mall developers have been very successful. “We have been in active engagement with all our development partners for discussion on rent and CAM. So far settlements have been reached for almost 60% of cinemas (with mall developers / partners) offering complete rent waiver for lockdown period and significant discounts on rent post reopening,” said Ajay Bijli, chairman and managing director, PVR Ltd during an earnings call earlier today.

The multiplex chain operator also clarified that discounts on lease rentals and CAM charges, post reopening of cinemas, have been offered by mall developers / partners only till March 31, 2021. It is very likely that PVR management will have to engage in fresh discussion to negotiate lease rentals and CAM after taking into account the market situation at the end of this fiscal.     

 

Furthermore, discussions are on with remaining developers and the company management is expecting to close the negotiations successfully once cinemas are allowed to reopen in states that are yet to give it a go ahead. Towards September end, the Ministry of Home Affairs (MHA) had issued unlocked 5.0 guidelines allowing cinemas to reopen from October 15, 2020, onward, with 50% capacity. So far 16 states and Union Territories (UTs) where PVR has presence have permitted cinemas to restart operations.

 

“Of the total 831 PVR screens, 575 plus have received permissions to reopen. We are eagerly awaiting now for the reopening of other states specifically Maharashtra and Telangana so that business can gradually get back to normal. We're taking all possible precautions, so that both our customers and employees feel safe while visiting their favorite PVR cinema,” said Bijli.

On the overall liquidity part, the PVR management is quite confident and is using a judicious mix of debt and equity to meet its capital requirement. In fact, as of October 31, 2020, the company has over Rs 550 crore of liquidity available, which is sufficient to sustain its operation and meet all its obligations. 

In terms of strategies adopted by the multiplex chain operator to woo back patrons to its cinemas, the company management has rolled out several celebrity promotions and offers.

Among some of the measures being adopted to get back cinema goes to its properties include, opportunity for private screenings, film festivals and a fresh new menu to enhance the overall movie watching experience. “Many of our patrons have responded positively and we are fully prepared to give them the same immersive movie viewing experience the way we've done before,” said Bijli.

 

Talking about the company's Q2 FY'21 business performance, Bijli said, the cinema industry continued to remain shut throughout Q2 FY21 and the company’s results reflect the same. “PVR had almost nil revenue during the quarter from the core movie exhibition business and almost 100% revenue decline. The company reported losses in the second driven by the continuing fixed costs,” said Bijli.

On the personnel expenses front, the company management continued with manpower rationalisation measures wherein overall headcount was brought down to 6,241 on September 30, 2020 as against 11,073 on March 31, 2020. The company management doesn't intend to ramp up the headcount till the time the occupancy levels come back to pre-COVID levels and will continue to operate the business with the current employee base. PVR Cinemas also implemented temporary salary cuts of between 25% and 50% across the organisation.

During the first half of fiscal 2020-21, the company incurred one time expenses of Rs 8.6 crore on account of full and final settlement for employees who left the organisation.

Consolidated revenues of quarter ended September 30, 2020, declined almost 89% at Rs 111 crore, as against Rs 979 crore during the corresponding period last year. Consolidated earnings before interest, tax, depreciation and amortisation (ebitda) loss for the quarter was Rs 14 crore as against a positive ebitda of Rs 324 crore in Q2 FY'20. Consolidated loss, after tax for the quarter stood at Rs 184 crore as compared to a profit of Rs 48 crores during the corresponding period last year.

“After adjusting for impact of Ind AS 116, leases, revenue ebitda and PAT of the company would have been Rs 44 crore and Rs (81) crore and Rs 116 crore respectively,” said Bijli.

The company continued with a strategy of aggressively controlling costs, as well as augment liquidity. With these efforts PVR was able to reduce its fixed costs by over 70% in Q2 FY'21, as compared to Q2 FY'20 excluding rent and CAM charges. Monthly fixed costs, excluding rent and CAM dropped to Rs 24 crore in the quarter as against Rs 86 crore in Q2 FY'20.

(The writer is a Mumbai-based independent business journalist and has extensively covered diversified consumer businesses over the last two decades. He can be reached at hello@ashishktiwari.com)

eCommerce Push: Shoppers Stop connects four distribution centres with Amazon.in

Company will also open assortment from 50-odd stores gradually for shopping on Jeff Bezos owned eMarketplace. Management expects double-digit revenue contribution from online sales going forward

In its effort to push online sales as part of the company's omni-channel strategy, K Raheja Corp’s listed retail arm Shoppers Stop Ltd has connected all its distribution centres and 50-odd physical retail stores with the Indian arm of global eMarketplace operator Amazon, which is owned by Jeff Bezos. The company management has been talking about this approach for a while now however the COVID-19 induced lockdown and the ensuing business challenges ensured these plans were taken up on a war footing and fast tracked to hit the market at the earliest. 

B S Nagesh, chairman and non executive director, Shoppers Stop Ltd, said the move will help the company hit a double-digit figure in terms of revenue contribution from online sales. “We have been talking about our partnership with Amazon. It's been quite a struggle for us in the last few quarters. But now I'm happy to say that, we as an organisation now are fully connected,” he Nagesh during an earnings call earlier today.

As of last week, all four distribution centres of Shoppers Stop have been connected to Amazon. This apart, the retailer will, one by one, open up the assortment from its 50-odd physical stores that are connected to Amazon. “As of now we have just opened private brands, watches and a few other brands. Over the next three to four weeks, we will add up and open up the full assortment of what Shoppers Stop has across the country onto the Amazon site,” said Nagesh. 

The COVID-19 pandemic has created havoc on apparel and lifestyle retailers over the last couple of quarters in the current fiscal. And as brick and mortar retailers come to terms with the market situation post the unlock phases, industry players are going aggressive on strengthening their eCommerce sales channel(s). As a result, all efforts are being directed to ensure online sales set the cash registers ringing thereby helping retailers make up for the loss of business in the lockdown period.

Going forward, customers looking to shop from Shoppers Stop will be able to access the product(s) and get it delivered directly from the stores. “I think this will really enhance our capability of serving customers. Our eCommerce sales have grown by more than 50%. And our share of eCommerce has increased from 2% to 8% in this quarter. The way things have gone in the first two weeks, I'm very hopeful that we should be hitting a double digit figure very soon,” said Nagesh.

In May last year, Shoppers Stop had said that it will relist and sell its products on the e-marketplace operated by Amazon India. This was in response to the new rules for foreign direct investment (FDI) in e-commerce retail disallowing investee companies from selling on emarketplace(s) operated by the investor or subsidiary firms. In September 2017, an investment firm of the global e-retail giant Amazon.com NV Investment Holdings LLC acquired a minority stake of 5% in Shoppers Stop for Rs 179.26 crore. As the new rules kicked in, the fashion and lifestyle products retailer had to withdraw from Amazon.in, in February 2019. 

In another development, the company has appointed former chief executive officer of Tata Group’s retail arm Westside, Venugopal G Nair as managing director and chief executive officer, Shoppers Stop Ltd. Nair is expected to assume office in the first week of November 2020.

(The writer is a Mumbai-based independent business journalist and has extensively covered diversified consumer businesses over the last two decades. He can be reached at hello@ashishktiwari.com)

Asian Paints, where is thy heart?

Asian Paints, a Mumbai-headquartered India’s largest multinational paint company, has been known for creating some really humourous television advertisement campaigns (TVCs). I have personally liked and enjoyed watching TVCs from Asia's fourth largest paint company claiming to have a turnover of Rs 202 billion. However, their latest TVC for the Shyne range of paints for interior and exterior walls that I came across a week ago was purely in bad taste to say the least.

Not sure if you have seen it yet? Unfortunately, I'm unable to share the video weblink of the TVC because it’s been removed by the uploader at the time of writing this piece. Am not sure if the advertisement has been taken off air as well. I’d seen it yesterday or the day before while catching up on my daily dose of comedy serials on Sony SAB and &TV. (UPDATE as on August 30, 2020 - The advertisement continues to be showcased in a truncated form on some TV channels and in full on a few others.) I was unable to reach Asian Paints for an official comment on the status of this TVC and their reasoning behind giving this campaign a go ahead. A few memes of this TVC are in circulation as well so do look it up on Google or YouTube for the message this company was painting in the market.

Just to tell you briefly, the TVC basically attempts to create an impression on a small town boy’s friends about the shiny wall paints and that the boy’s family must have loads of money to be able to afford a high quality paint for their house. The discussion veers into undertaking foreign travel for holidays because the boy brags about having loads of money. That’s when destination Singapore comes into play leaving the boy's friends in awe.

The next scene shows the boy’s father entering the house with train tickets in hand, announcing that the family is going to Kolhapur for holiday. The father adds that they will get 'Kolhapuri chappals" for the boy’s friends on their return journey. In a catch 22 situation, the boy is seen making faces expressing disappointment while his friends poke fun at him and call his bluff.

This TVC might seem to be a light-hearted humour to many. But, I’d like to differ on that opinion. And this is purely from the point of view of an Indian citizen and a customer of products manufactured by Asian Paints. I understand there is already a huge uproar on this inappropriate ad campaign from local political parties and consumer groups in Kolhapur.

I can’t blame them either. Just imagine, an Indian MNC downgrading an Indian city/ destination in the minds of young Indians. How does it classify to be a light-hearted humour? If our domestic destinations are going to be looked down upon by such messaging from large Indian MNCs, how do we expect to preserve heritage into the minds of our children, forget instilling a sense of pride.

What’s further appalling is that the advertisement has been conceptualised by none other than Ogilvy India. This agency has, in the past, made some really wonderful and laudable campaigns including “Incredible India”. Additionally, Ogilvy has worked with Madhya Pradesh Tourism, Maharashtra Tourism Development Corporation (MTDC) and Gujarat Tourism to name a few on creating their respective tourism campaigns.

Taking these into consideration, I am sure the agency executives are well aware of the hard work that goes in creating a long lasting positive impact for domestic destinations in the minds of the domestic and international travellers alike. And after knowing all this, they come up with something that’s utterly disgusting not only for the people of Kolhapur but the entire nation.

There’s no doubt about Singapore being a world class island city-state and its potential to attract tourists from across the globe. However, as an Indian company we also need to take pride in our heritage and this TVC basically attempts to demean/ degrade a prominent Indian city and a domestic tourist destination. More so because Kolhapur has a rich cultural and historical heritage in addition to being of special religious significance - The Ambabai Temple is one of the Shakti Peethas listed in various puranas of Hinduism. You can read more about the significance of Kolhapur as a tourist destination here.

In a world dominated by digital and social media platforms, a right advertising campaign / message can work wonders for the company and its brands. However, if marketing managers and brand custodians are going to take things for granted the impact will be seen on the company’s goodwill and the consumer connect the brand has established through decades of hard work. Asian Paints, where exactly thy heart is?

(The writer is a Mumbai-based independent business journalist and has extensively covered diversified consumer businesses over the last two decades. He can be reached at hello@ashishktiwari.com)

“Pod hospitals can significantly enhance quality of healthcare infrastructure and delivery in India”

The COVID-19 pandemic has created havoc across the globe especially countries lacking specialised and quality healthcare infrastructure to treat those infected with the coronavirus. The pandemic also exposed the fact that the gap between demand and supply of healthcare infrastructure and delivery is only widening by the day and that there is an urgent need to come up with solutions that will help bridge this gap timely, effectively and efficiently. The pod smart hospitals concept, according to Mahesh Krishnachari, director and founder of the design and build firm “Vevra”, is one such game changing solution to the problem at hand. Read on for more details.

What led to conceptualising the pod hospitals? Is this something you’ve been working on for some time now?

It all started after the lockdown was implemented earlier in March. We all watched the chaos this pandemic has brought upon the healthcare infrastructure and delivery space. We also realised how helpless we were in addressing this situation. Being a design and build firm we began brainstorming for possible solution(s) to deal with airborne diseases like COVID. That was the starting point for this pod hospital concept.

We wanted to devise a futuristic solution that would prove beneficial in the effective treatment of such diseases that may surprise us going forward. The idea was to come up with a concept that can be easily scalable and ensures timely delivery of quality healthcare services.

A lot of efforts have gone into understanding/ identifying the pain points, taking feedback and interacting with healthcare professionals from the United Kingdom as well as doctors from private and government hospitals in Bengaluru. Additionally, feedback was also sought from nurses and other hospital support staff including the Class IV employees. This exercise revealed that lack of quality infrastructure was and continues to be the key issue in the treatment of diseases like COVID-19.

All the data and intelligence gathered were studied and brainstormed by the Vevra team to come up with possible solutions that will help overcome the hurdles in the overall healthcare delivery process. A fully-furnished prefabricated pod hospital concept was the outcome of this exercise.

Could you tell us about some of the key pain points being addressed?

Sure. I think one of the crucial issues was that doctors, nurses and hospital support staff were getting infected from coronavirus while performing their duties. So designing a safe “PPE” donning and doffing area for doctors and nurses who were getting exposed to this airborne virus while overseeing the treatments was critical to minimise the spread of this infection.

Most doctors were getting infected in the doffing area, basically at the time of removing their personal protective equipment (PPE). That’s because doctors and nurses are moving in an open area with 100 to 150 COVID positive patients and there is a huge viral load in the treatment area. Being airborne the viral load settles on the PPEs worn by the doctors and nurses. And these viral particles were infecting healthcare professionals at the time of removing the PPEs in the doffing area.

So irrespective of how many COVID patients a hospital is treating, if the healthcare staff including class IV workers are at a greater risk of contracting the virus due to lack of proper facilities, then we are not really fighting COVID effectively.

And the Vevra pods hospitals are capable of addressing this issue?

The ideal solution to address this problem, in my view, is to control the air quality inside the COVID treatment area(s) thereby curtailing the spread of this virus. That’s one of the key features of the pod hospital concept we’ve designed. The air getting circulated inside the premises is getting exhausted and fresh air (filtered using HEPA filters) is being pumped into the pod.

Eighty per cent fresh air and 100% suction ensures negative pressure in these pods. This is very important especially for patients in intensive critical units (ICUs) requiring oxygen, are on a ventilator and so on. You cannot have the same air circulating or split/ centralised air conditioning and that was the reason for the government to issue an advisory on use of ACs in such areas.

Apparently, the ICU section in most hospitals have a maximum of 15 to 20 beds. Besides, no hospital in India has got negative pressure ICU’s to treat any airborne disease. Pumping fresh air and exhaust the air at regular intervals brings down the load of viral particles inside the pod. As a result the possibility of these viral particles settling down on the PPEs worn by healthcare professionals, nurses and support staff is very low. This in turn helps reduce the spread of virus and related infections.

The fully furnished and prefabricated ICU and operation theatre pods designed by us can thus come very handy in such situations. This apart there are other variants like the general pod, doctors stay pod and scanning room pod that ensure patients being treated for such pandemics apart from other ailments can be properly isolated while ensuring there is no compromise on the quality of healthcare delivery. These pods are not just the regular mobile isolation rooms but a completely functional, fully furnished, internet of things (IoT) and artificial intelligence (AI) integrated smart hospital setup. (More details about the features of these pods can be found here)

What was the reason for partnering InnoWave group?

That was mainly for technology required to monitor the patients’ health records as well as the medical equipment inside the pod. We couldn’t find a local technology partner who could meet our requirements. I reached out to a former colleague from a Portugal-based company who was working with an internet of things (IoT) firm. We exchanged notes and figured out the synergies. It was a coincidence and a good one too. Interestingly, InnoWave was already doing this in hospitals across Europe and the Unites States of America (USA). However, it would be the first time this will be done in a movable pod hospital set up in India.

How far have you reached with this concept?

The conceptualising part was completed in May and its designing was finalised in June. Thereafter we got into sourcing the raw materials required for making the pod. Incorporating the negative pressure aspect was challenging because we couldn’t find a company who could do it in a movable pod. We were fortunate to find a company based out in Bengaluru, sourced the systems/AHU’s from Luxembourg based company that had the expertise and agreed to take up the project.

The prototype is currently in very advanced stages and we are testing the functionality, efficacy and mobility of the pods in our manufacturing facility. After thorough testing at our end, we will test the healthcare delivery through these pods on hospital premises to see if there are any final tweaks required. The pods will then be delivered to the healthcare facilities for treating patients. This will take a few more weeks. The pod hospitals will go live on hospital premises that have expressed interest in having them for specialised healthcare delivery.

Are these pods made used shipping containers by any chance?

These can be made using shipping containers. However, our pods are built using other durable and recyclable materials. Every care is taken to ensure we are meeting the required guidelines and standards of building a hospital premise. Our pods are made of a prefabricated structure and its surface, walls and roof is completely antibacterial. The power requirement is up to 20-25 kilowatts resulting in a monthly electricity bill of around Rs 25,000 or so. There is a three-and-a-half feet gap between each bed which is enclosed by thick PVC curtains that acts as a barricade for additional safety of patients.

While its designs are owned by Vevra, I don’t mind opening it to someone who’d like to do this on a large scale. As for the size of these pods is concerned, it is similar to that of shipping containers because it’s been done keeping the mobility aspect in mind. These pods can be transported anywhere by loading it on a low-bed trailer and it can be shipped to other countries as well.

Can these be used to construct modular hospitals?

Definitely. The pods can be annexed to existing hospital premises depending on the kind of open space they have. This ensures there is no cross contamination in the main hospital building when treating COVID patients. In fact, if the structural design of the hospital is good enough to take another five to six tonnes of load, we can easily place these pods on the hospital terrace (after analysing the building structure).

Another advantage is that the hospital can scale it up from four beds to 100 beds depending on the requirement. It can be done in a small space of 400 square feet to 100,000 square feet. We can also stack it one above the other to make a ground plus one hospital structure. The pods can be built in two weeks and shipped to the hospital/ healthcare service provider. The reusable, easy to maintain structure can be used for 20 years without much hassles.

There is a dearth of healthcare infrastructure facilities in Tier II, III, IV locations and rural India.

This concept can make a huge difference across such locations. This set up is also very appropriate for companies looking to set up or upgrade healthcare facilities at their manufacturing units located in the interiors or for that matter undertake healthcare related corporate social responsibility (CSR) activities in these areas. Overall, I think pod hospitals have great potential to significantly enhance the quality of healthcare infrastructure and delivery in India and across emerging markets.

Will these help in bringing down the cost of COVID-19 or healthcare treatments in general that’s going through the roof?

I cannot really comment on that because pricing the healthcare delivery will be decided by the healthcare service provider. As for the costing of our pods is concerned, we haven’t yet arrived at the final pricing either since final testing of the prototype is still underway. Besides, I am also working on various permutations and combinations of this pod hospital concept so that it can be made available across price points depending on the hospital’s requirement. The IoT and AI features will be offered on a subscription basis allowing hospitals to switch on/off depending on the requirement. All I can say is that pod hospitals are way too economical as compared to the conventional structure. And the best part is that it comes as a fully furnished unit.

How much have you invested in this concept so far? How are you funding this development?

It’s been done through internal sources so far. We will be looking at external funding in terms of bringing in a financial partner or even a strategic investor. We haven’t yet decided on the quantum of funding to be raised as all the focus currently is on getting the pod hospitals up and running.

Will you be looking at a leasing model for the pod hospital infrastructure?

Yes. A lot of hospitals may not have financial resources to acquire it upfront. In such cases leasing the pod hospitals for a certain number of years or maybe even renting it for a predefined period makes more sense. The lease model can certainly be explored on a case to case basis.

(The writer is a Mumbai-based independent business journalist and has extensively covered diversified consumer businesses over the last two decades. He can be reached at hello@ashishktiwari.com)

“India has lost a huge opportunity to convert outbound travellers into domestic”

It’s all coming back but not as I’d imagined. While domestic travel is witnessing some activity, it’s still to pick up steam. I think it will happen gradually, feels Himmat Anand, founder, Tree of Life Resorts. In this candid conversation, Anand speaks about the hospitality market scenario as India unlocks in phases, consumer behaviour, present and future business prospects, manpower issues and other challenges surrounding the hospitality, travel and tourism industries. Edited excerpts…

It’s been a little over two months since Tree of Life Resorts opened for business at some locations. How has the journey been so far?

 

Tree of Life Resort & Spa Jaipur was the first one to open and it has taken-off really well. In fact, I’m quite amazed with the market response. Jaipur is a clear indication of the fact that if the source market is closer the resort will do much better. The Jaipur resort continues to clock between 65% and 68% occupancy levels at very good average room rates (ARRs).

 

We opened the Tree of Life Vantara Resort, Udaipur on July 1, 2020 followed by Tree of Life Kipling Jungle Lodge, Ranthambore on August 1, 2020. It’s taking time for business to pick up at these locations. We are doing around 20% occupancy which is alright given the current market scenario.

What hasn’t worked for the Udaipur market?

For Udaipur, Gujarat is the main source market. We were expecting the Gujarat market to respond quickly but that hasn’t happened as people are still very cautious about travelling. Mumbai is another good source market for Udaipur however, the coronavirus pandemic situation is quite dramatic in the commercial capital right now and people are still apprehensive about travelling.

 

You were among the few hoteliers to announce an opening date well before the unlock process started. What made you take that decision? How has it panned out finally?

 

We took the call to open our resorts in May 2020. That’s because businesses have to open and there is no such thing as ‘the right time to open’. You can either keep waiting or take the plunge and chalk out your own destiny. Yes, we were among the first ones to open for business and the decision was based on certain calculations like the lockdown will start to ease out starting June first week. Our assumption was that Punjabi households of the National Capital Region (NCR) will definitely head out for a short vacation with family. That’s something I was banking on in addition to the Gujarati households who’d venture out, for obvious reasons, after being confined in their houses for an extended period.

 

While the assumptions did work for the Jaipur market it didn’t pan out in the way we imagined for Udaipur. We were to open Jaipur resort on the June 19, 2020 weekend. But we’d already received booking from June 15, 2020 onwards as a result we opened for business before the targeted date. The guest profile was 100% domestic leisure travellers mostly from NCR-Gurugram.

 

While business gradually picked up in June, we closed July with 68% occupancy and an ARR of Rs 10,800 for Tree of Life Jaipur. The numbers were way better than what we’d done in July 2019 wherein the occupancy levels were between 45% and 50% at ARRs of about Rs 8,000. On a year on year basis, ARRs were higher by 30% to 35% while occupancy levels were up 36% over the same period last year.

 

We’ve done phenomenally well during July this year in Jaipur resort and August numbers are looking equally encouraging. What’s surprised me the most is that the luxury pool villas selling at Rs 14,000 a night (including breakfast) were the first ones that got sold out. In fact, even today, there are little chances of a guest getting a luxury pool villa unless pre-booked well in time.

 

Are travellers booking directly or coming from other trade channels?

 

Most of them are direct followed by bookings through the online travel agencies (OTAs). What also worked for us is that during the lockdown period, we aggressively used the social/ digital media platforms like Facebook, Instagram and Linkedin to ensure top of the mind recall for brand Tree of Life resorts across locations.

 

Every day there was some or the other activity planned on these platforms and we were approaching the business as if our hotels are still running. This not only ensured visibility/ recall but also helped us stay connected with the market. Our social media connect was very strong and the strategy has paid off well. So, when the unlock happened bookings began flowing in from the very next day we opened for business.

We also went with aggressive pricing on the OTAs. We started with heavy discounts to the tune of up to 50% in June, brought it down to 40% in July and cut down further to about 30% in August. I think by October the overall discounts will be down to the normal 10% to 15% levels.

The customary annual price hikes starting October will be a strict no-no in that case?

Beggars can’t be choosers so we’ll have to accept whatever best room rates we can get from the market. All is good as long as the hotel is able to meet its expenses and pay salaries to employees. Fortunately, we don’t have the burden of interest payments to banks. The loans on our books are internal as we are still a family owned company. So I don’t really have a bank sitting on my head every month seeking interest payouts.

 

There are talks about 40% to 50% of hotels going out of business owing to financial stress.

 

That’s indeed going to happen. In our case, while we have a loan to pay back, we are very fortunate that if I can’t pay today I have the flexibility to pay it later. There is no pressure on my business and we can breathe easy in the current financially stressed market conditions. That doesn’t mean we are taking advantage of the situation, loans will be paid back and there are no two ways about it. Having a breather for the next six months is a big advantage. I will be able to restructure the debt and pay it back thereafter. I think that's a huge positive for our company.

 

Why in your view are people still averse to travelling/ holidaying?

The overall scare in people’s mind about travelling, in my view, is mainly due to the continuous hammering across media outlets about the number of people infected by the coronavirus. I think India is way better off than most nations given the size of population. However, the media hype has put a spanner and delayed revival of the domestic travel market.

 

Secondly, there is a huge outbound market comprising 20 million Indians who travel overseas. However, due to lower number of operational flights these travellers are unable to pursue international travel. My assumption is that nearly 3 million people would travel during the July to December months.

What’s the hurdle in tapping this huge market of outbound travellers?

 

I’d thought that the outbound tour operators will actually tap this captive market and convert them into domestic travellers. That hasn’t happened because the outbound tour operators have not been as proactive on that front as they could have been. Inbound tour operators catering to international travellers are anyway stuck and can hardly do anything in the domestic travel segment given its peculiarity and the need for client relationships.

 

I think India has lost a huge opportunity in activating and converting outbound travellers into domestic travel. However, there is still time because I don’t see the frequency of international flights happening till November first week or so. We still have two to three months in hand and the outbound tour operators need to wake up to this opportunity.

 

How are guests responding to all the safety and hygiene practices being showcased by hotel companies?

The hotel industry has got egg on its face as far as health, hygiene and safety matters are concerned from a customer’s point of view. I think industry players have overhyped the situation demonstrating a plethora of practices and whatnot. But let me tell you, the customer isn’t really interested in these cosmetics. All that the guests are looking for is basic hygiene including the standard guest onboarding procedures being prescribed by the regulator.

 

By creating all the hype about hygiene practices, the hotel industry has actually scared away potential guests.

 

Hotels have anyway been practicing the highest standards of hygiene and cleanliness irrespective of COVID-19 pandemic situation. There was confidence already built in the guests’ minds about the hotel industry’s focus on hygiene and cleanliness so what was the need to make such a song and dance about it anyway.

What has been the experience like on these matters in your resorts?

At Tree of Life resorts, we apprise our guests about the prescribed precautionary measures being taken at our properties. Thereafter, if the guest(s) asks for any additional precautionary measures to be taken we are more than happy to do it.

 

For instance, we have cameras installed in our kitchens and the guests have the option to watch the food preparation on their mobile phones. Similarly, all rooms are sanitised before the guests walk in and we also give them the option to re-sanitise the rooms in their presence. Not more than 5% of the guests have asked for the rooms to be re-sanitised.

This is a clear indication that the guests’ trust and resilience is already there and she/he is very happy with the basics being done at the resort/ hotel premises.

 

I think the guests aren’t as paranoid as the hotel industry has made it to be. They are coming to a resort to relax, walk around and experience the open space, something they aren’t able to being confined in their residential apartment. We have taken all necessary precautionary measures and I can confidently tell you that we have not had a single complaint about lack of hygiene matters on the resort premises.

 

Another aspect to be mentioned here is that while the hotel is responsible for the guests’ safety, the guest is equally responsible for their own safety in the resort. It cannot be 100% my job. The guests have to play their role and take necessary precautions like wearing their masks at all times, washing their hands, maintaining physical / social distancing and using sanitisers when in public places.

 

Travel was also curtailed due to restrictions imposed by local administrations in certain states / locations / regions?

Yes, these decisions have impacted travel plans. Local administrations need to take a stand and stick to it like Himachal Pradesh (HP) did saying no tourists will be allowed till August 15, 2020. However, there was a flip-flop situation in Uttarakhand every second day. Same was the case with Goa, Kerala, Karnataka and Andhra Pradesh (AP) if I remember it right.

 

I think the state governments also need to make up their mind. While lockdown happened very efficiently for a country of our size the unlocking exercise has made a total mess of it. Look at the situation with restaurants, while food can be served liquor has been banned. I just don’t understand the logic behind this move. Our unlocking has been a total disaster for the Indian hospitality and food service industry.

 

Of your resorts bouquet, only three are currently operational?

 

Four actually. The Tree of Life Grand Oak Manor, Binsar Wildlife Sanctuary has been opened for guests as well. The ARRs are low at about Rs 4,500 in Udaipur, Ranthambore and Binsar but I am hoping business to pick up as tourists from Gujarat seem to be warming up to the idea of holidaying.

Three more properties viz. two in Kerala and one in Dehradun will open in September. So all resorts in the Tree of Life portfolio will be operational well before the business season that’ll kick start in October.

Are the resort operations sustainable at such room rates?

 

Not really. We will be losing money for a month or two. Right now profit is not a consideration for Tree of Life. I am willing to risk running the business for a small loss for two or three months. I will take that chance because I cannot wait till October, November or December to keep thinking about how to move the business ahead.

 

My focus currently is to build occupancy across my resort properties. Average room rates are not really my target because we need cash flow. Besides, it’s occupancy that will bring in the cash flow not ARRs and I’m very clear on that. My objective is, If I have to discount, I’ll discount to ensure cash flow and I’ll bring back the pricing eventually when the market starts to look up.

 

A lot of hotel companies have cut down on staff strength.

 

All hoteliers have had to retrench/ lay off employees unfortunately because it was a business necessity during the lockdown period. We all had no choice as the market scenario was such. It wasn’t done to save money. There was no money to even pay salaries.

 

As and when the opportunities are arising I’m reopening the properties with half the capacity. We are also going back to our staff and asking them to rejoin. While I still can’t pay full salary it’s important to start somewhere. For me, it’s not a business obligation but a moral one towards my people.

 

I must also admit here that we haven’t been able to pay pre-COVID level salaries to our staff. However, with business picking up at our Jaipur property and hopefully at our other resorts in the coming months, we are working on gradually bringing the salaries closer to the pre-COVID scale.

 

Having retrenched earlier, hotel companies are now rehiring for the same positions albeit at much lower pay scale and unreasonable preconditions?

 

In fact, I am amazed looking at the approach by some multinational hotel companies / brands coming out with fresh/ new recruitment advertisements for all positions in their respective hotels. This is a very disappointing trend I am seeing currently on staffing.

 

Ideally, preference should be given to existing employees who were retrenched and only after they refuse should the hotels look outside. I don’t see any reason why former employees will not join considering they have been out of work for long and they have a family to support.

 

Hotels with significant debt on books are uncertain about their existence leave alone survival. What’s your advice for them?

 

Keeping this thought process in mind, I’ll respond in two parts. One thing that’s happened with us is that in the last two months, a number of asset owners have expressed interest in being a part of the Tree of Life network. Reason being that as an independent hotel operator, as you rightly pointed out, their survival over the next three to four years is going to be very difficult.

 

I’m a small inventory hotel chain with 10 to 20 guestrooms in each property that we currently operate. Independent hotel asset owners want to be associated with our brand and leverage on our strengths. As we speak, four contracts are under advanced stages of discussion and by next month we should be adding four or five properties to our portfolio of resorts.

 

So at a time when business is shrinking for a lot of hotels, we are confident to be able to generate enough revenues and we know that very well. While there are a lot of such discussions we may not sign all of them. We have shortlisted five that fit very well in the scheme. Our feeling internally is that we should be able to work together very well with these properties. That’s one part of the story.

Now let me answer the second part. I think the only thing that can give hotel owners sleepless nights is loan payback. So asset owners without any loan liability on the property should not have much of an issue right now. There is no need for them to get adventurous particularly those located in the Tier II and Tier III markets. That’s because the moment you’ll open there will be some of the other expenditure that will come up and that’ll kill you for sure. So it’s best to remain shut till October - November. Also, if the asset owner is among those thinking about making a profit by opening then let me tell you upfront, no hotel will ever make profit over the next six to nine months.

 

However, those servicing loans on their respective hotel assets will have to find a way to restructure the debt. For these asset owners survival is all about managing the loan because I don’t think business is really a criteria for them right now. My view is that many will not be able to restructure loans and a lot of distress sale assets will be up for grabs in the coming months because the Reserve Bank of India’s interest moratorium ends on August 31, 2020. While the RBI has offered a one-time debt restructuring option it is unlikely banks will extend the facility to hotels and restaurants owners considering long term uncertainty looming over these businesses.

 

Given the current and future industry scenario, what’s going to be the fate of aspirants currently studying hotel management and those who’ve graduated this year?

I think these are tough times for students especially those graduating this year irrespective of the education stream being pursued. While every other industry is facing challenges the level of pain differs. Having said that, there are industries especially in the digital space that have gained significantly and are busy chalking out plans to tap the future growth opportunities.

 

While hospitality, food service, travel and tourism are among the badly hit my view is that over the next couple of years every sector will go through a restructuring process and cost rationalisation will be key to accomplish this exercise. However, hospitality industry aspirants and professionals need to keep this in mind that we are a part of an industry that thrives on personalisation and guest experience.

Irrespective of the level of digitisation or automation that one can think of it cannot overlook the fact that hospitality is a people’s business and will remain so for years to come. While percentages can vary, I do not believe that the hospitality industry can be do without its people, especially the leisure segment. The room to staff ratio will obviously undergo a significant change particularly in the case of large inventory business hotels.

All in all, the next 24 months are going to be challenging for every business including hospitality, travel and tourism. However, I’m not only confident about a revival in the overall market scenario two-and-a-half years from now but also the fact that there won’t be any dearth of opportunities for hospitality industry aspirants and professionals. Students currently pursuing should utilise this time to make themselves future ready while working professionals will have to reinvent and find newer ways to stay relevant and thrive in these challenging times.

(The writer is a Mumbai-based independent business journalist and has extensively covered diversified consumer businesses over the last two decades. He can be reached at hello@ashishktiwari.com)

Google Play Music to be replaced by YouTube Music starting October 2020

Here’s a piece of news for all smart phone users. Come October 2020, Google will kick start the process of replacing its popular Google Play Music app with YouTube Music. In a communication sent out on Friday afternoon, the global technology giant said that, “Google Play Music is going away soon”.

“YouTube Music is replacing Google Play Music as your new destination for music listening and discovery. Between October and the end of this year, access to Google Play Music will be removed permanently. We know that you've spent time building your Google Play Music library, so we've made it easy to transfer your music library to YouTube Music with just one click, including playlists, uploads and recommendations,” Google said in the email.

While YouTube Music, according to Google, looks a bit different from Google Play Music, it has been built by the same team with the same passion. “It also offers more than 65 million official songs, albums and playlists, as well as many features that you love and expect from Google Play Music,” said Google adding that music can be transferred to YouTube Music app available for downloads on Google Play as well as App Store. Alternatively, music files can be transferred using the browser as well.

As for what happens to the user’s Google Play Music library and data, the technology giant said, “In addition to transferring your library to YouTube Music, you have the option to download any music that you've purchased or uploaded to Google Play Music, as well as a list of the tracks, playlists and radio stations in your library. We'll notify you before you lose access to your Google Play Music library and data. You can also delete your Google Play Music data.”

On Music Manager and uploads, Google said that uploading and downloading music with Music Manager will be discontinued starting in 30 days. “But don't worry – you can always upload your personal music collection to YouTube Music or download your existing tracks via Google Takeout,” said Google.

Also, starting in 30 days, the Music store on Google Play will go away. It will no longer be possible to purchase music on Google Play, and all pre-orders will be cancelled. So, when you transfer, your purchases will move with you to YouTube Music. Talking about ‘Radio and background play’, Google said that Background play is only available to paid users of YouTube Music. “However, the free version of the music app allows background play for your uploaded or purchased songs,” it said.    

(The writer is a Mumbai-based independent business journalist and has extensively covered diversified consumer businesses over the last two decades. He can be reached at hello@ashishktiwari.com)

IHCL to home deliver dishes via Qmin mobile app starting July 25

Qmin home delivery service will cover top 10 markets including Delhi, Chennai, Bengaluru etc. over a period of five weeks

Come July 25 and South Asia’s largest hospitality firm IHCL, a Tata Group company, will introduce the Qmin, a mobile application for home delivery of dishes from some of its iconic restaurants. That's not all. This will be followed by the launch of the gourmet Qmin Shop in August and a loyalty platform in September.

A repertoire of culinary experiences, Qmin will commence home delivery of dishes from the hotel chain's eight iconic restaurants in Mumbai, in the first phase. Among the list of restaurants are Golden Dragon and Souk from Taj Mahal Palace; Thai Pavilion and Trattoria from President; and Ming Yang from Taj Lands’ End to name a few. To start with the Qmin service will cover top 10 markets in India including Delhi, Chennai, Bengaluru etc. over a period of five weeks.

According to Puneet Chhatwal, MD and CEO, IHCL, this addition will augment the group’s food and beverage (F&B) offerings leveraging a digital platform to address a growing consumer demand for online gourmet food delivery services. “Qmin will scale up in the months ahead to include the gourmet Qmin Shop with delicatessen-based food choices. Taj has been home to our guests for more than a century. With the launch of Qmin, we bring Taj to their homes,” he said.

Qmin will bring curated dishes made using the highest quality ingredients and a variety of cuisines, delivered in the comfort and convenience of the home. Available on both android and IOS mobile devices, Qmin will offer its guests a differentiated delivery experience with an enhanced focus on maintaining stringent protocols of safety and hygiene.

This will include contact-less delivery and the mandatory use of protective gear for delivery executives in extremely sanitised vehicles. The packaging will be eco-friendly utilising bio-degradable materials and with customised insulation boxes to preserve the food whilst being delivered. A dedicated toll-free number 1800 266 7646 will also be made available for guests to place orders.
 
Qmin will expand its scope and bring Taj@Home to other cities in the near future. The gourmet Qmin Shop presenting epicurean specialities and authentic artisanal brands will open in August. Qmin will be integrated with IHCL's loyalty program in September, where guests can earn and burn points using Qmin services.
(The writer is a Mumbai-based independent business journalist and has extensively covered diversified consumer businesses over the last two decades. He can be reached at hello@ashishktiwari.com)

Indian Hotels to debut own home delivery business under a new brand

This is an EXCLUSIVE story. Do not reproduce or use in any manner whatsoever without the writer's permission.

 

Tata Group's hospitality company will launch state-of-the-art mobile application in a week

 

An experiment, to deliver food from restaurants housed in some of its luxury properties in Mumbai, is set to go mainstream soon. Tata Group’s hospitality business, Indian Hotels Company Ltd (IHCL), will launch a mobile application next week that will allow customers to order home delivery of food akin to ordering from online food delivery aggregators like Zomato and Swiggy.

In an earnings call on Thursday evening, Puneet Chhatwal, managing director and chief executive officer, IHCL, said the move is part of the hotel company’s efforts to drive revenue growth. 

“Our RESET response to COVID-19 is based on revenue growth. We have lined up a number of key initiatives including new lines of revenue. In fact, within a week from now we will be launching our own home delivery business under a new brand through our own state-of-the-art (mobile) application. This was long desired in our business from the digital side,” said Chhatwal without sharing further details.

So far, IHCL has identified seven key initiatives to help drive revenues that will be unveiled gradually over the next four to six weeks (depending on the opening up of hospitality sector in India). Earlier this week, the hospitality chain launched the first initiative in Kerala, which is based on the concept of DriVacations i.e. holidaying at destinations and properties that are within three to five hour driving distance.

The new initiatives, Chhatwal said, are meant to compensate for the loss in revenue, or earnings before interest, taxes, depreciation and amortisation (ebitda) as well as profit after tax (PAT), which is the case for IHCL as well as the overall hospitality, travel and tourism industries across the globe in the first quarter of fiscal 2020-21.

“Additionally, we are coming up with strategies for new corporate, leisure, wedding and meetings, incentives, conventions and events (MICE) business across different space. “We will have new business based on the upcoming app involving gourmet shops in our hotels at key city locations,” he said.

In April, the hotel company had launched Hospitality@Home initiative involving three different varieties of hampers for people to pick up for personal consumption or gifting purposes. IHCL has also been driving The Chambers (its exclusive private club) membership for some time now.

The Chambers boasts of a completely new look, feel and design now and will be launched at Taj Mansingh in Delhi by September or October this year.

“It was delayed by three to four months for obvious reasons including air-pollution issues followed by COVID-19 pandemic as a result of which the hotel was shut. The Chambers will also debut in the London market giving the private club brand a great positioning. This will also be our competitive advantage going forward,” said Chhatwal.

As for the impact of COVID-19 pandemic on IHCL’s hotels, the company said in an investor presentation that approximately 50% of its properties across portfolio were closed or were acting as active quarantine centers as on May 31, 2020. The hotel company has put together a staggered opening plan post relaxation of the lockdown.

The management will also undertake effective asset management initiatives including monetisation of non-core assets, monetisation of hotel assets and minimisation of lease costs. 

For instance, in fiscal 2019-20, IHCL has raised a total of Rs 211 crore by selling land parcel in Pune (Rs 63 crore), 24 apartments (Rs 105 crore) and Taj Madras Flight Kitchen, Chennai (Rs 29.8 crore). The hotel company is also in talks to divest a few more assets in the current fiscal and lease it back or take it up on a management contract basis.

(The writer is a Mumbai-based independent business journalist and has extensively covered diversified consumer businesses over the last two decades. He can be reached at hello@ashishktiwari.com)