| waiting for a low-frills sibling
Mumbai, June 23: Indian Hotels is gearing up to storm the world of low-budget hotels, a segment that has so far been overlooked by most big chains in business.
The first unique-value hotel, with low tariffs and decent amenities to cater to lower and middle management pros on official tours, will come up by the year-end.
The company has appointed Sheila Nair, director (business development), to pilot the ambitious project which, after its fruition, will see the owners of the Taj group straddling all segments of the hospitality industry. “It is a huge market. We should get these hotels rolling soon,” said R. K. Krishna Kumar, Indian Hotels vice-chairman and a member on the board of Tata Sons.
Kumar, detailing the new initiative at last week’s board meeting to review the annual performance, said the company was nudged into exploring low-budget hotels by management maven C. K. Prahlad, who felt this was an area that could bring big benefits to the Tatas.
Since a single room costs a five-star hotel chain like the Taj at least Rs 1.5 crore to set up, a middle-rung executive cannot stump up tariffs set at break-even levels.
The key a low-budget hotel is to reduce the costs of building it, and to offer business travellers a range of amenities. “It may not, for instance, boast of a swimming pool or several restaurants catering to different culinary preferences,” an analyst with a FII broking house said. A basic restaurant, good services and rooms middle-level executives can afford would suffice.
Nair, who is overseeing the plan, was not available for comment, but Indian Hotels’ senior vice-president (corporate affairs) Ravi Dubey hinted the project was some way off: “It is still at a design and experiment stage.”
Prahlad is the Taj group’s consultant. A business professor at the University of Michigan, he has been one of the loudest votaries of creating a market for the poor.
For the Taj group, the foray into budget hotels will mark a transition from being a premium chain to creating a new brand associated with its low-frills venture. “We will have several arms to fight the battle,” said Kumar.