Vikram Madhok, Managing Director, Abercrombie & Kent has been a witness and an important participant in India’s three decade long quest for finding a foothold in the international luxury travellers segment. In an extensive interview with TF, he outlined that India needed to focus its energies in tapping relevant markets with substantial investments. He advocated chasing quality instead of mass numbers to boost India’s luxury tourism. Excerpts of the interview follow:
“India was not known for luxury until the dawn of the new millennium. It was between the year 2000 and 2005, when people started to look up to India for a luxury experience,” recalled Vikram Madhok. Stating that in the 1980s and 90s, travellers came to India in search of a bygone era, the mystic of the period in time, history and culture, he described how India was positioned as a destination in the minds of western travellers. “Travelling in India was not easy, because we had a patchy airline and rail system”, he explained. “Our roads were terrible; there were no world-class hotels other than in the gateways. People still came to understand the country and what was getting it to tick,” he added.
Noting that India’s true rendezvous with luxury offerings came about in the mid-2000s, Vikram Modhok said that India had palaces and havelies before that, but they could not be classified as luxury hotels, as they were bereft of the comforts of an international luxury hotel. “The communications, guest relation systems and offerings were not at par with the best of the luxury offerings in the world,” he elaborated.
The milestone in luxury, to his understanding, came about when Oberoi Hotels set up Rajvilas around 1997-98 –which was then followed by opening up of similar properties. “Also during that time, price-point took another dimension. Prior to 2000s, a trip with relation to today’s value of currency in dollar was selling at 150 dollars per person per night,” he said, referring to the massive change in spending trends since the early 2000s.
“Today, the same trip sells for about 650-700 dollars per person per night. It includes costs pertaining to the hotel room, transfers, cost of travelling between different cities and sight-seeing. So, real luxury seeped into India when world-class hotel infrastructure was in place,” he added. Attributing The Oberoi’s venture for having induced a domino effect that made other hotels to up their game, Vikram Madhok said “it ended up creating the hotel infrastructure to cater to luxury travellers.”
Appetite for consumption
Noting that WTTC (World Travel and Tourism Council) came to India for setup in 2000, with its patron as PRS Oberoi, to address impediments in growing inbound tourism and taking India to the international arena, Vikram Madhok shared “we identified crucial eight or ten issues that we thought we would have liked to see being addressed. I recall that most important ones were open skies with change in the civil aviation policy, infrastructure and airports – our airports were in a mess – connectivity, rail and roads. In terms of hotel rooms, we were woefully under-bedded in the early 2000s.”
Supplementing that India had less than 65,000 rooms in all of star-category accommodation, he said “now we are double that. Today there is a definitive categorization with three-star deluxe, four-star and five star with a definitive price-point. Earlier, we used to operate only in budget or luxury space.”
Hospitality aside, the WTTC India council had mooted significant change in the erstwhile visa policy. “Visa-on-arrival, a key agenda, has been addressed. We had also listed out rationalization of taxation and recognition of hotel as an industry. These are the ones that are yet to be addressed,” detailed Vikram Madhok.
Having spent a good three decades in the luxury space, Vikram Madhok’s assertion that India was in the right direction begs to be taken seriously. “India is a slow moving elephant. We go on our own pace, but we are in the right direction, because we are not in denial that all is hunky-dory and people will come to India,” he said. Envisaging moving forward in a concerted effort through an all rounded effort, he pointed towards successful addressal of visa and airports issues. “Roads and rail are being addressed. What we would like to see now is to for us to go back to the market. We have been mission in action; we are simply not in the face of our customers. We need to go and identify big markets where we believe the big fish swim and go after that,” he suggested.
Outlining his strategy, he said “if a big chuck of India’s business comes from a particular market like the USA, it will be astute to channel ones finances and efforts in that market. If the market is responding positively, I do not see a need for India to spend money in attracting tourists from Japan, China and Korea.”
Arguing that India did not need to get enamoured by numbers and scale, and hoping to tap into the lucrative Chinese market was not going to happen for us, he said “Chinese tourists do not perceive India to be a luxury destination. For them, we are at best a third-world country with broken-down infrastructure like theirs. So, India should rather focus on its primary and secondary markets.”
He noted that India’s primary market for luxury was always going to be the USA and the UK, because of their affinity towards India. “You have rich economies in Western Europe like Germany, France and Switzerland. Japan and Australia in certain numbers are also India’s important source markets,” Vikram Madhok added.
Arguing that it behooved India to spend its marketing and promotional money on areas that gave the opportunity to garner a larger share of that market, he said “we must spend money to attract tourists who have the propensity to spend the money. We are flanked by countries like Pakistan, Afghanistan, Nepal and Myanmar that are going to give us inexpensive pilgrimage or medical tourism, but not luxury tourism.”
He argued that India’s biggest saving grace was being a long-haul destination, where average length of stay generally hovered around 10-14 days. “Americans come for longer periods compared to Europeans,” he said.
Reflecting on latest trends, he informed that 2015 had been the best year for Abercrombie & Kent in India. However, markets had been on the slower side this year. “2015 was a stellar year because we had a lot of movement planned with ad-hoc groups etc. This year has been slow. The only market that is doing well for us this year is the USA. Our other key markets like the UK and Australia have been slow on account of one reason or the other, ranging from economy, currency or internal issues, he said.
Looking at the bigger picture, he suggested that most of India’s current international tourist footfalls was movement driven by business travellers. “They come here because they see an opportunity to do two-way business in India. Global businesses are viewing India as the land of opportunity. With the BJP government at the helm in the last two years, hotel occupancies have become stronger with constant influx of new inventory,” Vikram Madhok reflected. He, however, contested that they were not tourists as they did not travel through structural process like booking through tour operators and travel agents. Taking stock, he noted that one needed to examine international numbers in leisure destinations like Agra, Jaipur and Udaipur to get the true picture of nation’s tourism.