In conversation with Raj Rana, CEO, South Asia, Carlson Rezidor Hotel Group, who talks about the trends in the hospitality business and how franchise model can be a lucrative step to take.
Carlson Rezidor Hotel Group has seen strong growth in India which is a key market for the group globally. It has 85 operating hotels in the country across Radisson Blu, Radisson, Park Inn, Park Plaza and Country Inns & Suites by CarlsonSM brands. We spoke to Raj Rana, CEO, South Asia, Carlson Rezidor Hotel Group about his views on franchise model and how is hotel industry accepting the change after GST and much more.. Read on.
How do you work via Franchise model in India and other countries? What great opportunities do you have for Investors/partners in India now?
At Carlson Rezidor Hotel Group, we have a vast global footprint spanning 115 countries and territories with 1,440 hotels in operation and under development. We have a healthy mix of franchised and managed hotels in our portfolio comprising seven global brands. We are a one-stop-shop for hotels and start engaging with them from the pre-opening stage to determine market understanding and feasibility. Thereafter, we support them by ensuring that the hotel is built to brand specifications and once launched in the market, we focus on driving business results and supporting the hotel to realise its full potential.
In South Asia, our portfolio comprises 140 hotels in operation and under development across six brands: Radisson Blu®, Radisson®, Radisson RED, Park Plaza®, Park Inn® by Radisson and Country Inns & Suites By CarlsonSM. Nearly 55 % of our portfolio is via managed contracts. However, we are also open to selective franchising as we find many owners who have vast experience, qualifications and necessary acumen to self-manage and run efficient hotel operations especially in the mid-scale segment. One of our marquee franchised hotel is Radisson Blu Plaza Delhi Airport, which was the first Radisson Blu hotel in India and has remained a goodwill ambassador for the brand ever since. At times, we also offer a hybrid model to investors where they can benefit from our expertise and operations for fixed number of years, and eventually run the hotel as a franchised operation. Another important model is the conversion model wherein contracts due for renewal present opportunities for various brands to pitch. The conversion model is very quick to market, as brands do not have to wait for a hotel to be built.
Is the hotel industry happy with GST? How are you taking the change after GST?
The revised GST slabs have provided some relief to the hotel industry and reflect the ground realities better. Tier II and III cities in India have been largely protected under GST, which is where a lot of domestic travel takes place. However, the tax rate is still higher than most neighbouring countries which does put India in a disadvantageous position vis-à-vis global tourism. At Carlson Rezidor Hotel Group, we are upbeat on the mid-scale segment in the country and continue to invest in it through our brands Country Inns & Suites by CarlsonSM and Park Inn by Radisson.
What do you think is the best business model for hotel brands who wish to expand fast in India?
At Carlson Rezidor Hotel Group, South Asia, we believe that our ability to drive top line by leveraging our vast network of global resources and technology platforms is an important driver of our success. Our core business model is managing hotels but we are humble enough to realise that business dynamics are changing and today there are many owners who have developed expertise to successfully manage mid-scale hotel brands where operations are far less-complex than brands like Radisson Blu that demand specialised support. In India, where business is very relationship-based, the key to success lies in developing mutual trust and value for all stakeholders vis-à-vis our owners, customers and employees. In this, management model provides closer adherence to values and brand standards and brings about higher professionalism in running a hotel.
What is the latest trend in the hotel industry?
Customer behaviour and expectations continue to change continuously with shift in socio-economic values in the society. However, what remains constant in the hospitality industry is the value and impact created by a smile or handshake while meeting a guest. Nothing can replace the value of human warmth and courtesy which lies at the core of the business of hospitality. Technology has become a critical part of our business. On a broader level, competition is not just with the hotel next door but also with OTAs and disruptive models in the market. At Carlson Rezidor, all our distribution channels are real-time, be it our branded website, global distribution system (GDS) or global OTAs. Our mobile apps are GPS enabled that allow users to review hotels in their proximity or choose any other destination. Further our mobile apps like iConcierge are geared to track performance through personalized analytics and can deliver improved communication and response to guest requests.
The role of social media in generating business in today’s landscape cannot be undermined. We are focused on social media to create brand awareness, drive business, foster loyalty and manage customer relationships. We have deployed platforms like Revinate and Engagor to track customer complaints and gauge sentiment on an ongoing basis. We realize that the guests’ stay experience is drastically elevated with high speed Wi-Fi service. This is therefore still a focus area for us even though the technology has evolved from being a luxury to necessity. Keeping in mind the ever-changing needs of digital age and millennial guests, we are also introducing Radisson RED in India soon, which will resonate with customers through its lifestyle oriented aspects like art, music and fashion.
Further, to enhance guest experience, we have equipped our hotels like Radisson Blu Bangalore and Radisson Blu Paschim Vihar with guest room management system which enables efficient control of lighting, heating/cooling and guest services through intuitive touch panel interfaces. RFID door locks are provided in across our hotel rooms which are more efficient and hassle-free vis-à-vis swipe cards.
What are your plans for this year? Any focus cities as such?
Carlson Rezidor Hotel Group has seen strong growth in India which is a key market for the group globally. We have 85 operating hotels in the country across Radisson Blu, Radisson, Park Inn, Park Plaza and Country Inns & Suites by CarlsonSM brands. Keeping in mind the ever-changing needs of digital age and millennial guests, we are also introducing Radisson RED in India soon, which will resonate with customers through its lifestyle oriented aspects like art, music and fashion. We have a target of 170 hotels in operations and under development by 2020 from the current number of 140 hotels in operation and under development. We expect strong growth in the mid-scale segment of the industry in tier II and III cities buoyed by an infrastructural boost and higher propensity for spending amongst the middle class. Therefore, we are focusing heavily on our brands Country Inns &Suites by CarlsonSM and Park Inn by Radisson to tap the potential of this segment. Our brand Country Inns & Suites by CarlsonSM is already an established leader in the upper midscale hotel segment in the country as well as globally. It currently constitutes 27% of our brand portfolio and is operational across all major tier II and III cities, pilgrimage destinations, leisure cities etc.