In a candid chat with Franchise India, Sanjay Sethi talks about market planning, operational restructuring, expansions and technology in hotels.
How did you formulate market planning, operational restructuring, business model innovation and performance transformation in your business?
As a company we are almost seven years old, but our actual business operation is three and half year old. We started with a sound foundation and deep understanding of the Indian market and business. So, the team we have brought to the board are very energetic and hospitable industry team and they have brought a world of knowledge with them. We made a diligent business plan to meet with and within the limit of our knowledge; we went to the customers across the country. To begin with we have a huge amount of customers in development and design. So once we were on board we built the communication network and human resource teams to start operating the hotel. What we do on a regular basis is that we access market, we access customer, we access business situation and align ourselves closely to that. We constantly listen to our customers and the market and adjust where-ever required. However at this point of time we are being conscious with the tight market conditions.
What happens when expansion extends beyond the original geographic market area? Do you keep the stores consistent and the location similar?
We have always worked on a planned geographic area; we have a clear cut plan. We are working on a Pan Indian plan and we have not gone beyond that. We focused on India and therefore we are straight in control. We decided to be the international player so we built the backbone of the business which was distribution network, offices etc. to manage a pan India network.
How are the trends in economics, consumer demographics, labour-force composition and technology shaping the future of food service markets and their suppliers?
Currently the economic trend is challenging. Everyone is looking at maintaining and grow market shares. Therefore it becomes competitive for suppliers, for the labour force and technology is the clean shade between the successful and unsuccessful businesses. So, we continue to invest in technology and as a hotel currently we believe in cutting-edge technology. So, these trends do affect us and we need to be alert and act with equality to the changing trends but basically at this point of time we need to begin again and make sure we go organically with the business.
Tell us something about the expansion of hotels in India.
It takes a long time to build a hotel. It took four to five years from buying a land to opening a hotel. So, most of the hotels which have opened today actually started their construction work between 2007 and 2009. At that point of time the market was very good and several people started investing in hotel business and those are the hotels that are opening now. So, what has happened is that there is a surge of hotels that are opening in the market and the demand is not going at a very rapid force. So, as a result, the supply is going fast.
How has been the growth from 2006 till now?
We are very aggressively growing company and we started in the late 2006. But the first year was spent on buying lands and beginning the construction activities. The oldest hotel is three-an-half year old so the actual operation started in 2009. And if we look from 2009 till today, we are putting hotels under operation and opening six more in the next six months. This is a very rapid growth for us and we will be 20 hotels by the end of this financial year and 41 hotels by the end of 2016 with over 30 and 34 hotels under development.
What made you partner with Berggruen holdings? How has been the journey?
Berggruen holdings were looking to invest in the hospitality wing in India and, at that time, I was working at a senior position with the Taj group of hotels. They connected with me and I thought that to be a great opportunity to turn entrepreneur. As the market for the hospitality was going very strong in 2007, I decided jump into the business and become an entrepreneur. Talking on the financial side, Berrgruen is a great investment house and they have stood firm behind the business that they have partnered.
The journey has been extremely healthy and exciting. In coming years we expect great financial results.
Tell us something about the current F&B trends in India.
The overall F&B is a great business to be in India. More and more people are eating out and more and are ready to spend on food and beverages. Indians, by nature, love to experiment new foods. With new cuisines coming to India, F&B industry is going to be successful.
What is the hiring policy at the Key hotels?
The hiring policy is very simple. We look for young people with the right attitude. We are ready to give them training and time but the attitude is something that has to come as part and parcel of what we have. We believe in making our entire employee our partners because we actually share service charge with them. Our hotels appoint 0.7 employees to a room whereas the industry standards are 1.1 to a room. We are able to do that by hiring the right people and by keeping them motivated enough to perform better with their other pairs in other companies.
What are you actually doing to handle the attrition rates at your hotel?
There are two three things that we do. We have partnership relationship with our employee and have an open work culture where everyone is respected. We make everyone feel as a part of larger team. At present when the industry is having 20 percent attrition rates, we have only 12-13 percent attrition.
Do you think that Indian hospitality service is different from those of other like Egypt, Maldives, UAE, Srilanka and many more?
Every country has its unique quality of hospitality. In India we are known for high level hospitality as we are a part of a family and that transfers to better quality of hospitality. ‘Atithi Devo Bhava’ is a part of our culture and India knows how to deliver it well. Indian hotels have high levels of service especially in comparison with the western countries. South Asian countries are also good but Indian hospitality service is top in the world.
You have almost 26 years of experience in the hospitality industry. What would you comment on the current growth of hotels and restaurants in India?
I think the growth is fairly good despite the bad economic condition. The supply that is coming has hit the business hard but that has become stable in the next two years. Growth seems to be positive fairly by domestic demand which means it is the domestic traveller which beat the industry most and that is where the focus has to be. We are very much excited in what we are doing. We are growing very fast and rapidly and I think we have one of the best hotel management teams in the country today.