Indian hospitality industry on the brink of collapse, says Hotel Association of India (HAI)

The Indian hospitality industry is on the brink of collapse and is in dire need of support from the government and the Reserved Bank of India (RBI) to be able to get back on a revival path. According to the Hotel Association of India (HAI), four key factors are responsible for the deteriorating health of the hotel sector and the situation is only getting more challenging with every passing day.

The apex industry body pointed that being a discretionary spend, there is negligible demand for hotel rooms and services. Absence of air travel, corporate restrictions, cancellation of holidays, state lock-downs and imposition of quarantine on travellers have only added to the turmoil. Furthermore, hotels are bearing the brunt of fixed costs to the tune of almost 70%, which largely comprises payroll expenses and government levies.

Being capital intensive with a long gestation period banking on high cost, short-term debt funding has become a major peril as well. Topping it all is the negative outlook on the industry making it unattractive for lenders thereby leading to a liquidity crunch and increased rates of interest to cover for the perceived risk.

In such a scenario, the Indian hotel sector will collapse if not supported by the Government and RBI, said HAI in a statement earlier today.

The COVID -19 pandemic, HAI said, has led to demand destruction in excess of 90% for the tourism and hospitality sector which employs nearly 4.5 crore people; provides livelihood to around 16 crore people and contributes 9% to India’s gross domestic product (GDP).

Citing a recent McKinsey study, the apex body said that airlines and hotels were the worst impacted sectors in India with around 75% output decline in the first quarter of fiscal 2020-21 over fourth quarter of fiscal 2019-20. Also, the hotel sector features in the list of strained sectors on debt service coverage ratio (DSCR). The overall loss of revenues for the Indian hotels sector in the year 2020 is pegged at Rs 90,000 crore.

While the RBI has announced an immediate term to avert the crisis by allowing relief on Loan moratorium on interest and principal repayment for three months (later extended to six months but that will only help the industry to survive in the short term which may not suffice for revival and subsequent thrival of Indian hospitality that has attained great heights globally for its service standards.

Continuing with its efforts to highlight the hotel industry's plight, the apex industry body, has been recommending more relief measures for the survival, revival and thrival of the sector in the hope of a much needed support from the government at this juncture.

"The hotel industry is now solely focused on survival and has been requesting the RBI to extend more proactive support. The current debt levels in the organised part of the industry (which is less than 10% of the total) stands at Rs 45,000 crore. Unfortunately, an immediate term solution will only defer the crisis as what is needed is a longer-term solution spanning the next 24-36 months which solves for both stakeholders: the borrower (unable to pay the interest and principal for the foreseeable future) and the lender (loans becoming NPAs)," HAI said in a statement.

In this regard, HAI is recommending relief - for those companies with good credit history i.e. Standard Assets as on March 31, 2020. To this effect, the apex body has proposed an extended tenure and a staggered approach to the applicable rate of interest in what it anticipates will be the three stages for a return to normalcy.

-- Survival Phase (next nine months): The moratorium on interest and repayment of principal is extended for the entire FY21 i.e. till March 31, 2021, the interest due is added back to the total principal outstanding and the loan term extended by 12 months. This will solve the current cash crunch as there is expected to be almost no demand for FY21.

-- Revival Phase (following 18-24 months): Interest Rate @ Repo Rate + 200 bps: the lending institution can fund this by borrowing from RBI without being out of pocket.

-- Thrival Phase: At MCLR as the market improves and performance of the industry reaches 50-70% of Pre-COVID levels (expected 30+ months).

(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)

Brookfield-owned The Leela Group is front-runner to manage Sukhani Group’s erstwhile JW Marriott Jaipur Resort & Spa

A handful of international and Indian hospitality chains are said to be vying for a management contract of the erstwhile JW Marriott Jaipur Resort and Spa. While names of international brands are still under the wraps, speculation is rife that the two luxury hotel operators viz. The Leela Palaces, Hotels & Resorts and The Indian Hotels Co Ltd (IHCL) are among the homegrown brands pursuing the property.

In fact, industry sources are certain that The Leela Group, now owned by Canada-based Brookfield Asset Management Inc, may have already succeeded in bagging the management contract from spa resort asset owner viz. Tulsi Palace Resort Pvt Ltd, a part of Sukhani Group of Hotels.

The possibility of The Leela Group branding and managing the spa resort in Jaipur is high considering it doesn’t have a flag in that market yet. Its only presence is a little over 400 kilometers away in the form of The Leela Palace Udaipur. Located on the banks of the majestic Lake Pichola, this 80 rooms five-star palatial hotel offers stunning views of the lake, City Palace and the Aravalli mountains.

UPDATE on September 28, 2020.

In a statement issued on September 28, 2020, The Leela Palaces, Hotels and Resorts said that the hotel chain is expanding its portfolio and has signed an agreement with Tulsi Palace Resorts Group, owners of the erstwhile JW Marriott Jaipur Resort & Spa, to manage the 200-rooms property in Rajasthan’s capital city. The resort spa which is currently not operational is set to undergo enhancements over the coming months and will be branded upon completion of the renovation by early 2021.

Establishing a presence in the Pink City would definitely rank very high for The Leela Group management and that probably explains why the hotel chain is understood to be pursuing it very aggressively. Queries emailed to Anuraag Bhatnagar, chief operating officer, The Leela Group remained unanswered.

As for IHCL, the Tata Group’s hospitality business vertical already has four operational hotels viz. Jai Mahal Palace, Rambagh Palace, The Gateway Hotel Ramgarh Lodge and Devi Ratn - IHCL Selections in the Jaipur hospitality market.

Last year in May, IHCL had signed new management contract (its seventh hotel in Jaipur) for a Vivanta hotel in Jawahar Circle, Jaipur. This 200-guestrooms greenfield hotel asset is being developed by Kalpsagar Pvt Ltd and slated to open sometime in 2023. The Indian hospitality chain added another management contract in February 2020 with Kanha Hotels & Spa Pvt Ltd's brownfield development featuring 250-rooms. The Taj branded hotel is also expected to open sometime in 2023.

IHCL has pursued a multi-property strategy across various markets in the country, and the hotel chain claims to have nine properties (operational and under development) across its brands in the Jaipur hospitality market. It thus remains to be seen if the Taj Group management would want to make further additions in its approach to replicate this strategy in the capital city of Rajasthan.

An IHCL spokesperson said in an email response, “We do not respond to market speculation, we will not be participating in this story.”

The luxurious JW Marriott Jaipur Resort & Spa featuring 200 guest rooms, owned by the Sukhani Group of Hotels, was launched amidst massive fanfare back in March 2018. Earlier this month, the partnership between Sukhani Group's Tulsi Palace Resort and the Indian subsidiary of Marriott International Inc was called-off and Marriott vacated the spa resort effective July 7, 2020.

This long-term relationship between the American hospitality giant and the Jaipur-based hotel asset owning entity was to last for 30 years. However, the short lived alliance ended within a little over two years of being together.

Both Marriott International and Sukhani Group are yet to issue an official communication about their breakup. Marriott International has however removed JW Marriott Jaipur Resort & Spa from its list of properties on www.marriott.com. In fact, this spa resort was showing up on Marriott’s network till a week or 10 days ago. And now only four hotels viz. ITC Rajputana, a Luxury Collection Hotel, Jaipur; Four Points by Sheraton Jaipur, City Square; Jaipur Marriott Hotel and Le Méridien Jaipur Resort & Spa feature in the property search results. This is pretty much an indication that the Jaipur resort and spa is out of Marriott's hotels network.

Considering negotiations for the new management contract are at a very advanced stage, the asset owners (Sukhani Group of Hotels) along with the new hotel management company are likely to announce the relaunch under a new brand in the coming weeks.

What really went wrong with this hotel brand and asset owner partnership and who was at fault couldn’t be ascertained. In fact, an FIR filed by the asset owners against Marriott India and its hotel employees has been quashed already by the Jaipur Bench of the Rajasthan High Court.

As per an ANI report, Vikram Sukhani (on behalf of the asset owner of the luxury five-star property JW Marriott Jaipur Resort & Spa) had leveled various accusations against the hotel management company (Marriott India) and its employees.

The plea, according to the ANI report, stated that the criminal complaint initiated by Vikram Sukhani falsely and mischievously insinuated that certain employees of the hotel and Marriott India had allegedly conspired and cheated the complainant by misappropriating and siphoning-off monies belonging to the hotel. It was falsely alleged that the said employees conspired with Marriott India to unjustly award bonuses to themselves while at the same time denying statutory bonus payable to other employees of the hotel.

Emails seeking clarity on this issue did not elicit a response from Marriott International’s India office as well as the Sukhani Group of Hotels.

Hotel management contracts typically comprise clauses that are aimed at safeguarding the interest of the hospitality brand and the asset owners alike. Among various terms is one about a lock-in period that penalises the brand or the asset owner for calling-off the association within a specific time frame of property becoming operational.

The compensation to be paid to either party for breach of this specific clause is arrived at after taking into consideration the revenues clocked in by the hotel, the share (percentage) that goes to the hotel brand operator and the asset owning entity and, the number of years remaining in the contract period. 

In fact, the penalty amount could go into crores of rupees if the association between the hotel brand and asset owner gets called-off within the first few years.

The Indian hospitality market has seen quite a few short term associations in the past, the prominent ones being Swissotel Goa and Convention Hotels India Pvt Ltd that merely lasted six months. The other high profile break-up was between Shangri-la  Hotels & Resorts and Mumbai's Pallazzio Hotels & Leisure, a part of mixed-used developer The Phoenix Mills Ltd, that was called-off in nine months.

(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)

Accor's loss could be IHCL's gain: Erstwhile Swissôtel Kolkata likely to become a Taj hotel

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

 

IHCL already has a management contract in place for Ambuja-Neotia Group's luxury resort "Chia Kutir" in Makaibari Tea Estate in Kurseong, Darjeeling. There are strong rumours about a management contract in the works for another luxury resort "Guras Kutir" spread over eight acres at Pangthang in east Sikkim

The Indian Hotels Company Ltd (IHCL) and Ambuja-Neotia Group (ANG) are said to be in advanced stages of discussion for a management contract of the erstwhile Swissôtel Kolkata property. Located atop the City Centre Mall in Kolkata’s New Town area, this five-star business hotel was recently vacated by French hospitality major Accor after the completion of its 10-year management contract tenure.

According to multiple industry sources, if talks between IHCL and ANG materialise, the Tata Group’s listed hospitality company will operate this hotel under its Taj brand.

The reason IHCL is likely to bag the management contract, industry sources said, is that it already has an existing association with ANG for a luxury resort “Chia Kutir” at Makaibari Tea Estate in Kurseong, Darjeeling. In fact, ANG had planned another luxury resort spread over eight acres at Pangthang in east Sikkim. Christened Guras Kutir, luxury resort and spa was to be built in three phases comprising boutique cottages, villas and a premium five-star hotel with a casino. There are strong rumours that IHCL and ANG have already or are in the process of finalising a management contract for this property as well. 

When contacted, an IHCL spokesperson did not respond to a query about their discussions for a multi-property management contract including the erstwhile Swissôtel Kolkata. Over a dozen-odd queries emailed earlier to Puneet Chhatwal, managing director and chief executive officer, IHCL, remained unanswered. The hotel company spokesperson chose to comment on just one query about ‘whether IHCL has bagged the management contract for the erstwhile Swissôtel Kolkata property’ saying, “This is incorrect.”

“The discussions for a management contract between the two parties might still be work-in-progress hence, the denial from IHCL,” said one of the industry sources requesting not to be quoted.

Executives from the Ambuja-Neotia Group could not be reached for a comment. Apparently, recent media reports quoted Harshavardhan Neotia, chairman of Ambuja-Neotia Group, saying that they were exploring possibilities including renewing the management contract with Accor or onboarding a new hotel management company for the erstwhile Swissôtel Kolkata property.

Multiple industry sources, familiar with the development, however, said that the Indian Hotels Company and Ambuja-Neotia Group have been in discussions for a multi-property hotel management contract. “The (former Swissôtel Kolkata) property is becoming a Taj hotel,” said another industry source. Validating it further, another top hotel industry executive said, “This is in addition to a few other (management contracts with IHCL for) Ambuja-Neotia Group’s (existing / under development) hotel projects.”

“Post completion of the 10-year contract with Accor, the (Swissôtel Kolkata) property will open as a Taj branded hotel,” said a top executive from a leading consultancy who is familiar with this development.

Sources added that the Kolkata hotel is non-operational owing to the lockdown situation and is currently undergoing renovation/ refurbishment. “This is likely being done to conform with the Taj brand standards,” said one of the sources.

It is understood that since the management contract tenure with Accor was nearing completion, the Ambuja-Neotia Group had sought a brand other than Swissôtel for the Kolkata property. “I believe the asset owners wanted a Sofitel flag but Accor wasn’t open to this idea. This difference of opinion eventually led to the non-renewal of the management contract with Accor,” said one of the sources.

Debuting in the Indian hospitality market back in July 2010, the Swissôtel brand hasn’t been very successful in the country. In fact, the second Swissôtel property, owned by Convention Hotels India Pvt Ltd, in Goa turned out to be the shortest owner-operator alliance. Swissôtel Hotels & Resorts, a part of FRHI Hotels & Resorts with brands like Fairmont, Raffles and Swissôtel, had pulled out of this five-star deluxe resort at Calangute within six months of launching the property in March 2013. In December 2015, this 135-room resort debuted as the Hard Rock Hotel Goa. 

Later in July 2016, Accor acquired FRHI Hotels & Resorts. However, this development didn’t bring any drastic change for the Swissôtel brand in the Indian hospitality market. Another management contract for a 300-rooms five-star boutique property Swissôtel Grand Mumbai was signed with Ashok Mittal’s Litolier Group in April 2012. However, the hotel hasn’t seen the light of the day as yet.

Non-renewal of the 10-year management contract between Accor and the Ambuja-Neotia Group has resulted in the Swissôtel brand being wiped out from the Indian hospitality market. Also, with no newer signings anywhere in sight, it is going to be a tough road ahead for the Swissôtel brand to make inroads in the country all over again.

(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)

Samsung chants ‘Made in India’ with new edition of smartwatches

Company has now started manufacturing entire range of 18 smartwatches in India

Samsung Electronics, the South Korean multinational conglomerate, said that its new edition of smartwatches are the first ones to be “Made in India”. The smartphone maker introduced an aluminium edition of its Galaxy Watch Active2 4G smartwatch and now claims to have the largest and most diverse 4G watch portfolio in the country.

Mohandeep Singh, senior vice president - mobile business, Samsung India, said, "The aluminium edition is our most affordable 4G watch now. It's also the first smartwatch to be made in India. With Galaxy Watch Active2 4G, we have also started manufacturing our entire range of 18 smartwatches in India as part of 'Make for India' programme.”

With the launch of Galaxy Watch Active2 4G Aluminium edition, Samsung’s 4G smartwatch range now comprises nine distinct colour finishes, three sizes (42mm, 44mm and 46mm) and two unique design templates - elegant classic of the Watch 4G and modern minimalistic of the Watch Active2.

The Galaxy Watch Active2 Aluminium edition, according to Samsung India, is meant to complement the needs of ‘on the go’ consumers, enabling them to keep a track of their fitness goals and stay connected with the world, even without their phone at hand. Priced at Rs 28,490/- the smartwatch will start retailing from July 11, 2020 across retail stores, Samsung Opera House, Samsung.com and leading online portals.

(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)

COVID-19 impact: Accor pulls the plug on Swissôtel Kolkata

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

 

No clarity on the operational status of 300-rooms five-star boutique hotel Swissôtel Grand Mumbai in association with the Litolier Group

Accor, the French multinational hospitality company, has discontinued its association with hotel asset owner Ambuja-Neotia Group for Swissôtel Kolkata effective July 1, 2020. The management contract tenure for this five-star business hotel, according to Accor India, had ended and hence the decision to move on.

Responding to queries, Accor spokesperson confirmed the development saying, “Effective July 1, 2020, following the conclusion of our management contract with Ambuja-Neotia, Swissôtel Kolkata will no longer be a part of the Accor network in India. We are thankful for our decade-long partnership and to the hotel team for their support.” There is no clarity about whether hotel employees are being reassigned to some other property (as and when the market opens up) or laid off post this development.

The Accor spokesperson also did not share any updates on their association with Ashok Mittal’s Litolier Group for a 300-rooms five-star boutique hotel Swissôtel Grand Mumbai that was to come up close to the Mumbai International Airport. This property was announced way back in April 2012 however, a search on Accor’s website showed up no results on the operational status of this hotel. This could possibly also mean that Accor doesn’t have a single Swissôtel flag up and running in the Indian hospitality market anymore.

Swissôtel as a hotel brand has not had a great run in the Indian hospitality market. For instance, the Swissôtel Goa property (owned by Bangalore-based Convention Hotels India Pvt Ltd) launched amidst great fanfare in March 2013 was, in most likelihood, the shortest owner-operator alliance the Indian hospitality market has seen thus far. Swissôtel Hotels & Resorts had pulled out of this five-star deluxe resort at Calangute in Goa within six months of launching the property. This 135-room resort was relaunched as Hard Rock Hotel Goa in December 2015 and it continues to be operated under the same banner.

Coming back to the topic of management contracts, it appears hotel asset owner Ambuja Neotia Group is the first casualty of the COVID-19 pandemic situation that’s creating havoc in the Indian hospitality industry. Accor did not respond to queries seeking clarity on whether the ongoing COVID-19 situation was instrumental in not renewing the Swissôtel Kolkata management contract. The spokesperson also did not respond to queries on the status of other management contracts for its other brands in India that are likely to come up for renewal and whether Accor will let them expire as well.

This development has also brought to light the fact that COVID-19 is not only impacting business for industry players but also souring relationships between the hotel brands and asset owners. The situation raises concerns on the future of hotel management contracts that are up for renewal over the next six to 12 months.

In fact, taking into account the fate of Swissôtel Kolkata, the current market scenario poses a major risk to hotel asset owners as the business impact due to COVID-19 pandemic may result in a lot of the management contracts not getting renewed at all. While some may say there is a brighter side to it because some other hospitality brand/ chain will pick up the property and sign a new management contract. That’s a possibility for sure, but given the prevalent and near future market conditions, it looks unlikely that a new brand would take up the stress when there is hardly any business in the market.

Industry experts are of the view that there is significant churn in the market and contractual relationships are being re-looked and re-discussed across the hospitality industry. “Generally speaking, every association between hotel brand(s) and asset owner(s) be it management contracts, franchise agreements or lease arrangements is being reconsidered or getting restructured. Seeking safer avenues hotel asset owners are demanding income/ revenue guarantees, capping of operational costs and downside protection from the hotel brand operator,” said Abhijeet Umathe, chief executive officer, Eco Hotels India Pvt Ltd.

Players in the Indian hospitality market have been bleeding financially ever since the lockdown began in March 2020. Almost negligible business and zero visibility on revenues in the near or even distant future for that matter is forcing hospitality chains and hotel asset owners to reassess their business continuity plans. While branded hospitality chains managing the hotel asset(s) have to option to move on, that’s definitely not the case with the asset owner(s) who are stuck with the property and possibly no takers for their hotels in the market.
(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)

Louvre Hotels-owned Sarovar to take over management contracts of Golden Tulip’s portfolio in India

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

 

After acquiring a majority stake in India’s largest independent hotel chain Sarovar Hotels & Resorts back in 2016, one of Europe’s largest hospitality firms Louvre Hotels Group (LHG) is now looking to further consolidate its presence in the Indian hospitality market. This is being done by taking over the management contract portfolio of Golden Tulip Hotels & Resorts (GTHR) and bringing them under the management of Sarovar Hotels & Resorts.

Golden Tulip currently manages 24 hotels (as per https://www.goldentulip.com/en-us/hotels-india) under Royal Tulip, Tulip Inn and Golden Tulip brands across India. It is a separate hospitality firm in partnership between Louvre Hotels Group and veteran hotelier and restaurateur Vimal Singh who is managing director, Golden Tulip Hotels & Resorts, South Asia.

According to industry sources, as a result of this consolidation initiated by LHG, Sarovar Hotels is in the process of taking over the management contract of properties that are currently being operated by Golden Tulip Hotels in India.

“In fact, the management contract of Golden Tulip Hotel in Lucknow is already with Sarovar since a while now. It’s work-in-progress though for hotels in Jaipur and Navi Mumbai as we speak. Over the coming months, Sarovar will take over management contracts of a majority of hotels that are currently under Golden Tulip Hotels & Resorts in India,” said a source requesting not to be quoted.

The possibilities of properties in Golden Tulip Hotels & Resorts network in India coming under a single entity were being contemplated ever since Louvre Hotels Group acquired majority stake in Sarovar Hotels & Resorts. However, Saurabh Chawla, global chief development officer, LHG, during an earlier interaction back in September 2018, had said that Vimal Singh is a partner and that LHG was never looking at acquiring his stake in the company.

”He still is a partner. The commercial arrangements in the scope of the partnership, there is no intention to acquire his stake. I think the idea is to find synergies between the two entities because we are a shareholder in the two and that makes sense and that’s what we are evaluating at this point in time,” Chawla had said then.

The overall hotel industry scenario was considerably better back then and provided no compelling reason for a possible take over of the Golden Tulip portfolio. However, that’s not true anymore. The COVID-19 pandemic has completely devastated the hospitality business scenario globally and more so in India.

The Indian hospitality industry has been under lockdown since March 2020. As a result, owners and managers of hotels, resorts, restaurants across categories are struggling for survival. Furthermore, in the absence of any support, in terms of a financial relief package from the government, most business owners are contemplating shutting shop in the near future.

Continuous fixed costs coupled with no visibility on revenues whatsoever are adding to the challenges of business continuity. Hotel companies with strong balance sheet could probably weather the storm however, a large majority will succumb owing to the after effects of the corona virus outbreak. While efforts are being made to contain the spread of this deadly virus, the overall situation with numbers increasing significantly on a daily basis isn’t looking very encouraging.

An industry poised for growth is now staring at a bleak future. All the planned milestones and projected revenue and profitability targets have gone awry. These not so encouraging signs, industry sources said, would have possibly led to a rethink by Vimal Singh and Louvre Hotels Group resulting in a decision to hand over the management of hotels in the Golden Tulip portfolio to Sarovar Hotels.

“I believe the Golden Tulip partnership between Vimal Singh and Louvre Hotels Group will also complete its tenure over the next couple of years. In a growing business scenario waiting it out would have given a higher payout to the exiting partner. However, with uncertainty looming over the Indian hospitality industry, I think it’s best to move out if one has managed to negotiate a good deal,” said a hotelier on conditions of anonymity. Financials pertaining to this deal could not be ascertained.

In September 2018, LHG had partnered Indian firm Orange Tiger Hospitality (OTH) to introduce its new brand 'Kyriad' in the Indian hospitality market. As part of the master franchise agreement, OTH would operate and manage Kyriad branded hotels in India and the Indian sub-continent i.e. Nepal, Sri Lanka, Bangladesh, Bhutan, Maldives, Pakistan and Mauritius. 

The master franchise with OTH is for a 15-year tenure and the Indian partner had then committed to launch eight hotels under Kyriad. LHG had also said then that it plans to use a similar master franchise route to introduce its two other brands viz. Première Classè and Campanile in the Indian market over the coming years.

Owned by one of China's leading travel and tourism conglomerates, Jin Jiang International Co Ltd Louvre Hotels Group (LHG) is a major player in the global hospitality industry with over 1,500 hotels and in 54 countries. The hospitality firm operates in segments ranging from one-star to five-star with the its historic brands viz. Première Classe, Kyriad, Campanile, Tulip Inn, Golden Tulip, Royal Tulip), the five brands of the Sarovar Hotels network in India, the french Group Hôtels and Préférence and Chinese brand Metropolo.

(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)

Liquidity issues add to worries of cement dealers in Tier I and II centres across 13 Indian states

Trade channels, accounting for approximately 60% of annual cement sales, stare at around 30% demand contraction

With April and May becoming a total wash out months due to the COVID-19 pandemic, cement dealers in the country are headed into a vicious cycle. Delay in new construction activities, gloomy business outlook, fear of income loss, labour shortage and uncertainty with respect to resumption of normalcy were among some of the reasons cited.

In fact, a significant decline in cement sales followed by prolonged credit period and higher working capital requirements have already made life difficult for the fraternity thus adding to their survival challenges. The trade channels account for approximately 60% of annual cement sales.

According to Rahul Prithiani, director, CRISIL Research, the cycle of recovery of retailer dues is expected to extend by four to six weeks over and above the usual four weeks. “This will potentially increase the working capital requirement of dealers by 12-17%, even as they reduce credit exposure, infuse capital and curb non-essential expenditure,” said Prithiani.

Courtesy: CRISIL Research

A recent CRISIL Research survey with over 100 dealers across Tier 1 and 2 centres in 13 states, indicated a significant decline in volumes and an extended lockdown can only worsen the overall situation. A whopping 93% of the respondents said they expect volumes to shrink 10-30% in fiscal 2021 in the base case scenario, i.e. the lockdown easing in May.

The survey pointed that over 60% of dealers are holding low inventories (two to four days), but spoilage concerns persist. Dealers are hopeful of liquidating inventory by offering discounts as soon as the lockdown eases, to contain spoilage and get volumes going.

Additionally, payment delays from retailers appear inevitable considering these players are small and fragmented, and most likely to delay payments amid liquidity crunch, gloomy demand outlook and cement spoilage concerns. That, in turn, would stretch the receivables cycle and negatively impact cash flows of the dealers, as much as 95% of whom offer credit, CRISIL said in the report.

The elongated working capital cycle could last at least a couple of quarters, and the risk of retailers defaulting on payment dues would aggravate the financial pain. However, the collateral-free MSME loans announced by the government on Wednesday will come as a big relief, since it will help cement dealers access working capital debt.

Over 90% of the dealers surveyed are hopeful of manufacturers’ support in terms of better margins/ incentives, or liquidity support to weather the hard times. But chances of a swift revival post ease in lockdown remain bleak, with 58% of the respondents believing it will take over three weeks for operations to normalise, said the CRISIL report.

Guranchal Singh, associate director, CRISIL Research, said, “An intermittent rise in daily wages, freight cost, and construction material prices will deter restart of construction activity. Return of labour, freight disruption and dwindling consumer confidence will weigh on resumption of normalcy in the near term.”

Improvement is envisaged in the second half as demand picks up and receivable days gradually decline. But even here, recovery in urban areas may take longer due to extended lockdown, slowdown in real estate construction and higher dependence on migrant workforce.

A few dealers, though, are optimistic that the labourers, who have not been able to earn wages for nearly two months, would return quickly post-kharif sowing to capitalise on pent-up demand and halted construction activity.

Courtesy: CRISIL Research

(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)