Hilton Eyes India Market, Doubling its Portfolio in 3 Years

Navin Berry: Tell me now that you are here as Head of Hilton, what does it feel? Is this a meteoric career rise already? In all humility, would you consider it meteoric? Because at 45 you are the head of, though not the largest brand in India, but one of the big iconic hotel brands globally; one of the largest companies globally. It is iconic. Hilton is Hilton. So, what does it mean to be here for you personally?

Zubin Saxena: I believe this is an incredible opportunity. It’s a once-in-a-lifetime chance to grow a globally respected and iconic brand like Hilton in one of the world’s fastest-growing markets. India is a high potential market poised to become the third-largest lodging market in the world. The demand supply ratio in the hospitality sector also signals a huge opportunity with respect to our population. The lucrative domestic travel market offers an immense platform for us to deliver exceptional experiences. I am both humbled and excited by this opportunity to contribute towards Hilton’s growth in such a vibrant market. I see it as an incredible chance to build a lasting legacy for the future.

Navin Berry: You said it’s one of the fastest going markets globally, India at the moment. There’s a great opportunity, you see. What are some of those fundamentals, because one thing is to say great growth opportunity. Where do you see it going for Hilton or rather for India?

Zubin Saxena: In my view, the infrastructure and growth India has experienced over the last 20 years, and especially over the last decade, are driving real and sustainable demand consumption patterns. The Digital India movement is a prime example, where even street vendors have gone digital, energizing the economy at a basic level and increasing trackable demand. India’s digital economy is projected to reach $1 trillion by 2025, driven by increased internet penetration and digital adoption. Over the last 10 years, the number of listed consumers in India have significantly increased.

India’s middle class is expected to grow from 250 million in 2018 to 550 million by 2025, significantly increasing disposable income and consumer spending. This growth provides visibility into the behaviour of India’s 1.4 billion people—how they think, react, respond to new lifestyles and patterns, and what and how they buy. With this data development, hospitality and other sectors have a great vantage point to predict future demand consumption. India’s growth will be especially significant in the mid-market and above, which is the sunrise story for the nation. India’s Travel & Tourism market is expected to generate $23.72 billion in revenue in 2024. With a projected annual growth rate (CAGR) of 9.62% from 2024 to 2028, the market volume is anticipated to reach $34.25 billion by 2028.

The highest restaurant home delivery sales, priced within the range of 1,000 to 2,500 rupees, are occurring in tier 2-3 markets. This indicates that audience ready for more upscale services, including hospitality. If people are willing to spend on multiple meals at this price point each week, it shows there is consumption for good hospitality experiences.

Navin Berry: You said a vantage point for you to be now heading Hilton. Where are you seeing yourself placed currently as Hilton Hotels? Your numbers are modest presently compared to some of the other foreign brands. Marriott opened its 150th hotel couple of days ago at Katra and RHG where you were till recently, has another 150-170 hotels. So, with your current portfolio, you have a long way to go.

Zubin Saxena: We are committed to doubling our portfolio over the next three years. This ambitious expansion plan is driven by our confidence in the market’s potential and our dedication to meeting the growing demand for high-quality hospitality services. By strategically increasing our presence, we aim to enhance our brand’s footprint, cater to a wider audience, and deliver exceptional experiences across a diverse range of locations.

Navin Berry: So how do you intend to double up? That’s my question. So, how and across which brands?

Zubin Saxena: So our strategic vision entails tripling our estate by 2027. Currently we have 26 trading and 21 pipeline hotels. The number stacks look good for us. In 2024, we signed or opened one hotel each month. And we actually hope to surpass this goal as we expand into every logical hotel market across the country. Presently, we’re extending our focus beyond the top 10 markets, strategically positioning our luxury offerings in state capitals, Tier I, II, III, IV cities, pilgrimage sites, and popular holiday destinations. This encompasses over 175 potential markets for expansive growth.

Our brand strategy encompasses tapping into a diverse range of markets. For smaller cities, we hope to tap into our scale brands like Hamptons or Hilton Garden Inn. In larger markets such as state capitals and tier two cities, DoubleTree will thrive. In each state capital and significant market, we aim to establish the renowned Hilton brand. For the top 10 markets, we anticipate the introduction of luxury offerings such as Waldorf and Conrad. Additionally, we foresee significant growth in lifestyle segments, with brands like Curio Collection and Tapestry Collection catering to the preferences of today’s young consumers. Canopy by Hilton, our upscale lifestyle brand, will also make its mark, along with LXR in the luxury space.

The opening of Waldorf Astoria and Conrad in Jaipur by 2027 would mark a noteworthy milestone in the global expansion of Waldorf Astoria Hotels & Resorts and Conrad Hotels & Resorts. This launch aligns seamlessly with our endeavor to enhance our luxury portfolio in prime destinations like Jaipur.

Navin Berry: So, when you look at this wide spectrum of brands and 175 destinations, the larger play is going to be greenfield or conversions?

Zubin Saxena: We’re looking at both greenfield and advanced brownfield properties for our expansion. While greenfield hotels offer potential, particularly in a market like India, they typically require a longer timeframe to develop. That said, we’re keeping our options open and are very receptive to the idea of converting existing high-quality hotels to our brands. Additionally, we’re exploring advanced brownfield properties as part of our expansion strategy.

Moreover, we’re not limiting ourselves to management contracts alone, although that’s our preferred route. We’re also open to selective franchising partnerships with reputable and experienced hospitality operators. If a potential partner meets our standards and demonstrates expertise in the industry, we’re open to franchising some of our brands to them. For strategic arrangements, we’re actively seeking attractive terms that benefit all parties involved.

Navin Berry: If you take a very major destination, like Goa. Your presence is there but limited. Marriott has almost six – eight hotels. Does it serve your purpose to also focus on Goa and have all your brands there?

Zubin Saxena: Absolutely. In Goa, we’re highly open to the idea of increasing presence of our luxury brands like Waldorf Astoria or Conrad complementing the existing Hilton presence of three properties (two DoubleTree hotels and one Hilton). Furthermore, we’re enthusiastic about the prospect of introducing lifestyle brands to cater to the diverse preferences of visitors. Given Goa’s vibrant tourism scene, characterized by a rich cultural tapestry and diverse visitor demographics, there’s ample opportunity for high-quality hotels to thrive.

Navin Berry: There are some very good hotels there, which could withstand your test to get converted also.

Zubin Saxena: We maintain an open-minded approach towards conversions, particularly at a strategic level. However, the key to our success in India lies in our India-centric approach at Hilton. We understand the significance of relationships and the value of our partnerships. We aim to nurture these relationships with high-value partners, prioritizing trust and mutual growth.

On one hand, we’re expanding our portfolio across brands, markets, and development platforms, opening doors to various growth opportunities. On the other hand, we recognize that building trust is paramount. It’s about fostering strong relationships based on trust and mutual respect, ensuring the foundation for sustainable growth in the Indian market.

Navin Berry: When you said an India centric approach, does it also boil-down somewhere to a striking little more ‘Indianness’ in the hotels? Or is it going to be international cut and paste from your global best practices?

Zubin Saxena: When discussing our India-centric approach, it’s crucial to understand that we’re not simply replicating international practices; we’re tailoring our strategy to resonate with Indian consumers while maintaining Hilton’s global standards of excellence. Our collaboration with Deepika Padukone is just one aspect of our multifaceted approach, which includes an extensive hyper-localized campaign across key cities and platforms in India.

We’re not just paying lip service to localization; we’re investing more than ever in branding and customer engagement. This strategic investment reflects our determination to establish Hilton as a leading hospitality brand in India, blending international expertise with a strong appreciation for local nuances and preferences.

Navin Berry: I must compliment you, you had a fabulous advertising campaign, but I would like to have seen more of it.

Zubin Saxena: Absolutely. There’s more on the horizon. Currently in the shooting phase, with exciting developments underway and more to come. It’s also about recognizing the practical challenges of hotel expansion in a country where obtaining licenses is no easy feat. That’s where a trusted brand partner comes in, navigating the complexities alongside owners for mutual success.

Navin Berry: One kind of a partner or a hotel owner is somebody who’s coming new to the business. Another is who has already tasted hospitality. So, one who has tasted hospitality, and if he is, I mean, for your kind of hotels, these must be people with deep pockets. I mean, these must be well-funded people. They must be having their own connections, so to say, in their own respective cities in which they want to operate. So, I think they must be bringing some value there already.

Zubin Saxena: The landscape of hotel ownership in India evolving rapidly. There is a notable influx of institutional players alongside longstanding family-owned establishments. Moreover, there is a palpable interest among institutional investors in establishing hospitality as a widespread platform across the nation. Over the years, I’ve observed a significant shift in owner mindset, transitioning from emotionally driven decisions to a more ROI-focused approach. Today, achieving a favourable return on investment is paramount for many hotel investors, this reflects the maturation of the industry.

Navin Berry: In the past, Hilton did one or two big block deals, and I think they were unusual in the history of Indian hospitality. But you did a block deal with The Oberoi and then you did one with the Suris. Is that also a possibility?

Zubin Saxena: If there are partners eager to join us and expand their involvement across a development platform, we’re fully receptive to exploring such opportunities.

Navin Berry: Are you also willing to invest as Hilton? No. What is the typical pattern of Hilton?

Zubin Saxena: As an asset-light company, we prefer not to tie up our capital in owning physical assets. Instead, we focus on flexibility and agility by leveraging partnerships and agreements to drive growth.

Navin Berry: Did you take any equity anywhere?

Zubin Saxena: No, in India, our growth strategy mainly revolves around management agreements and selective licensing. While we may consider strategic deals, we prefer not to invest directly. If needed, we’ll explore implementing the right incentive mechanisms to facilitate such deals, but our primary focus remains on leveraging management agreements and licensing opportunities for expansion.

Navin Berry: There is Waldorf Astoria coming to India?

Zubin Saxena: Absolutely. So, yes, Jaipur is on the radar, in 2027. Another vital aspect of establishing a sustainable business is sticking to the basics. It’s not just about expansion; it’s about nurturing our existing partnerships. Ideally, we aim for about 40 to 50% of our growth to come from our current partners. Take the Embassy Group in the South, for instance. We’re already collaborating on three hotels with them, and there’s more in the pipeline. The real test of success lies in consistently delivering returns on investment to our partners.

To achieve this, Hilton places great emphasis on operational and commercial excellence. Our loyalty program, Hilton Honors, is widely utilised in India, driving impressive occupancy rates.

Our commercial engines are robust, injecting revenue into our hotels and giving us a competitive edge in the market. Additionally, our operating metrics, particularly Gross Operating Profits (GOPs), consistently surpass industry standards, demonstrating our commitment to excellence.

While our focus remains on expanding our business and platform for the long term, we’re well aware of the significant opportunity ahead. Despite Hilton’s current limited portfolio in India, we see immense potential to establish one of the world’s premier hotel brands in this vast market, shaping its growth according to our vision. Looking ahead, our current position will pale in comparison to the strides we’ll make in realising this vision over the next 20 years.

Navin Berry: Are you strengthening your development team?

Zubin Saxena: Yes, indeed. We’re expanding our resources across the board. We’re bolstering our development and growth functions, enhancing our capabilities in commercial operations, and refining our operational processes. As we speak, we’re actively hiring to support these efforts. Our focus is on strengthening the fundamentals of our business, with a clear emphasis on long-term growth rather than short-term gains.

We believe that we’re positioned perfectly for success, with the right timing, intent, plan, and resources in place.

Navin Berry: Any predictions on which of your brands are likely to grow more?

Zubin Saxena: In our top 10 markets, we’re prioritizing the expansion of our luxury segment, spearheaded by the Waldorf Astoria and Conrad brands. Additionally, the Hilton and DoubleTree brands will serve as significant growth catalysts. I foresee a Hilton property gracing each of the top 10 markets and every state capital, offering comprehensive full-service hospitality. The DoubleTree brand, with its upscale allure and strong foothold in India, presents an enticing opportunity for expansion. Furthermore, Hilton Garden Inn is also poised for significant growth in India, with its distinctive brand identity.

Navin Berry: Which is your resort brand?

Zubin Saxena: All of our top luxury brands have the potential to operate as resorts. Whether it’s a Waldorf Astroia, a Conrad or a LXR – these brands can seamlessly transition into resorts.

Navin Berry: We did touch upon this earlier, but I want to address it again. A regular charge against foreign companies in a section of our tourism discussions, centres around the cut and paste plan of international models and modules transported into the Indian market, with scant regard to Indian art, Indian heritage, or Indianness. Do you have any thoughts on that?

Zubin Saxena: At Hilton, we’ve always emphasized a meticulous approach to design and service delivery. Our philosophy revolves around seamlessly blending global standards with local sensibilities, ensuring that each property reflects the unique essence of its location. There are two key facets we adhere to: the brand standard, encompassing fundamental elements like room dimensions and bedding quality, and the design standard, which must reflect the distinctive character of its surroundings.

For us, it’s crucial that our hotels not only meet brand standards but also resonate with the local environment. This means incorporating elements that capture the essence of the location, whether subtly or significantly. Fortunately, we embrace this challenge with an open-minded approach, ensuring our properties harmonise seamlessly with their surroundings.

An excellent illustration of this philosophy is the upcoming Waldorf Astoria in Jaipur, which will draw deep inspiration from Indian architecture and local influences. Our aim is to create immersive experiences that celebrate the rich tapestry of Indian culture while maintaining Hilton’s global standards of excellence.

Navin Berry: Your current portfolio, let us say the two Conrads that you have, how are they performing in competition with their peers?

Zubin Saxena: Our performance is competitive and strong, driving growth alongside our owners. Hilton is not only a reputable brand but also one with significant growth potential. In fact, we’ve recently signed a Conrad in Jaipur, further solidifying our luxury offerings in the country.

Navin Berry: How many hotels signed as on date?

Zubin Saxena: Currently, we have 26 trading and 22 hotels in the pipeline, all of which are actively under development. Looking ahead, we anticipate a significant increase in both signing and opening pace. Our long-term goal is to triple our estate within the next decade, with the possibility of surpassing this target.

Navin Berry: Then there is the big change in F&B trending towards what you may call experiential. How are you at Hilton looking at Indians particularly changing in their food habits, et cetera, and how is Hilton going to cope with that?

Zubin Saxena: The evolving customer mindset, particularly with a younger demographic, is driving a shift towards more experimental and experiential dining experiences. This trend is compelling F&B outlets in the hospitality industry to embrace innovation and transformation. As the younger, more ‘Instagrammable’ generation emerges, there is a clear demand for vibrant restaurant concepts that resonate with current trends and provide memorable experiences. This presents an opportunity for hotel restaurants to adapt by incorporating high-energy, high-end dining options operated by world-class restaurant operators. By opening up their spaces to third-party restaurants, hotels can cater to the evolving preferences of their guests while staying ahead of industry trends.

Navin Berry: Do you see multi usage outlets also coming into play? Which has not been seen yet in India.

Zubin Saxena: Yes, this is an emerging trend that is gaining momentum. Many hotels are recognising the potential beyond just one restaurant outlet and are considering outsourcing additional restaurant outlets to high-end operators.

Navin Berry: In the previous design concept, so the big thing would be I need a Chinese restaurant, an Indian one, and an international one, is that trend going to last?

Zubin Saxena: Well, in high-traffic areas, having multiple traditional F&B options will always remain desirable. However, the key to success lies in the uniqueness of these outlets, which must attract customers. Therefore, the emergence of multiple outlets operated by standalone operators, contributing positively to the hotel’s overall ambience and offerings, is likely to become a trend.

Navin Berry: Would you be open to talking to some interested parties as we speak?

Zubin Saxena: We maintain an open-minded approach, always ready to seize the right opportunities. Currently, active discussions are underway, with final decisions and terms being determined at the unit level. The agreements reached will vary depending on factors such as location, choice of partner, and unit preferences.

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