A new world of Business for the Hospitality Industry
Big Infrastructure spends around destinations for tourism, pilgrimages, business and weddings open new vistas for hospitality industry in India, says Smriti Irani, while Puneet Chhatwal endorses happy days for the industry, with a small ask for better positioning. Central Minister Ms. Smriti Irani, in conversation with Puneet Chhatwal, MD and CEO, IHCL, moderated by Navika Kumar, Managing Editor, Times Now Group.
Navika Kumar: Hospitality is one of the biggest employment generators? What would you say in terms of your government? And it’s promise to increase employment and create opportunities for people.
Smriti Irani: So, I have an insider’s view, not only as somebody who represents or serves in the government, but also somebody who studied a good half of her secondary and higher education, courtesy a scholarship, because my mother was a housekeeper at Taj Mansingh.
I think that there are two aspects to your question from my perspective, if I may be allowed to answer it so. There is a huge focus and impetus the Honourable Prime Minister is giving, not only to tourism, but infrastructure around tourism. This budget, which was an interim one, announced 11 lakh crore rupee infrastructural view of what we hope we build in the country. But apart from that, I think the footfall, when you look at the spiritual tourism point of view, has a huge benefit for future investments and how we possibly would like to design future investments. 8 crore people coming for ‘darshan’ at the Kashi Corridor, 5 crore people who turned up for ‘darshan’ at Maha Kaal Corridor. Even now, if you look at the numbers of Ram Mandir, close to 20 lakh darshanatis who have already come, yesterday’s number was that there were 5 lakh Ram ‘bhakts’ already at Ayodhya. So, in so far as spiritual tourism goes, we all, who, and I’m saying this, we, because I’ve looked at the hotel industry, like I said, from an insider’s view.
What is the surety that international investors look at? They look at continuation of policy and policy makers. Now you are assured of 5 years more of Narendra Modi service to the country as the Pradhan Sevak. And that is a surety and the guarantee that investors look at. If this is the kind of policy making, which is progressive, which is continuous, and which listens to people with regards to everyday challenges that come forth, do you have somebody at the helm of affairs who will then respond respectfully and within a timeframe knowing that investors don’t like the time lag?
So, from a destination perspective, now, when Prime Minister Modi says, not only Make in India, but also Wed in India, that’s another new chapter with regards to the hotel business. So, there has been, I think from many points of view, new opportunities, one from spiritualism, second from the weddings business, and the whole regalia that goes around our festivals and how families would like to come together. Third, the infrastructure spend. And fourth, if I look at another perspective, GCC, the Global Compatibility Centres in India now are going to tier 2 and tier 3 cities, which means that when you have MNCs from across the globe coming to India to service their service needs or the technology needs, we have 1.6 million Indians who now are a part of the GCC in India, servicing global company corporate needs. And most of them are coming to tier 2 and tier 3 cities because of ‘Udaan’, which means the international high paying population in the corporate sector is now also coming only to do business in India.
So that’s another segment in which I presume that you will see a lot of growth in, where if you have a Taj, and I’m sorry because I’m from that faculty, I can give you kind of a comparative. What is the tier 3 typology of service that you can give? So now the hotel business, I mean, it’s a win-win knowing that there are not just a few centres which become investment destinations in your country. There are other destinations which are now opening up from a travel perspective, be it travel for leisure, or be travel for business.
Navika Kumar: Very well said. And she used the word infrastructure, which is music to your ears, Puneet Chhatwal, but hotel industry being in the infrastructure sector a demand which hasn’t yet fortified. But when you have the Prime Minister, who himself actually becomes the poster boy of something like selling tourism in Lakshadweep as a destination, then you know that you are in the hands of a government that understands the business, that understands destinations and understands where the competition is and where to pull in the crowds from! In the middle of all this, Puneet, what still remain as challenges for the hotel industry?
Puneet Chhatwal: Actually, you know, firstly I have to say that everything that was just now said is already endorsed throughout the day in our speeches and in our interactions with the people. Of course, the whole spent on infrastructure where the trains, roads, doubling of airports that has a direct correlation with the growth of the sector, the spiritual destinations, the way Ayodhya was launched across the globe. It’s unbelievable that something like this could be done so well. So I think all that is really positive. Generally, the sector is very positive, and as our distinguished guest has spent time in her growing up years at the Taj, she understands that as challenging as the sector is, it is also very fascinating. So generally, we, people don’t complain and we did not complain throughout the day.
So, we generally thank the government, we thanked for everything. There are two simple things which the government can do at a centre level and a state level. One is granting this sector, the infrastructure status, which would be aligned with their own strategy of developing infrastructure, because you can build all these destinations. They also require investments coming in hotels. Hotels being capital intensive and labour intensive, needs 3, 4, 5 years of help, which you get by getting cheaper loans or loan moratorium. The second is industry status at a state level, because tourism also till now is a state subject. So that helps in it not being the highest taxed. I mean, how can a sector flourish or thrive when it is the most capital intensive? When it’s most labour intensive, it’s the highest taxed, thank God, in the recent times, the 28% GST came down to 18%.
So, there is a lot to thank for. There is a lot of gratitude of great things that have been done and are being done, but our ask has never been money. Our ask has been only the positioning, which would be in line with the aspirational India, eyeing to be the third largest economy. And it needs a lot of supply side catching up in all these destinations. And the capital usually goes into the sector, which provides, you know, if not the highest, at least very healthy returns and has less cyclicality. So if there is a certainty of return, and there is some kind of help, which comes through this positioning, it is good for India and it is good for the sector, and it is helping a sector that creates the maximum number of jobs through the multiplicator effect as well as it’s easy to scale ability.
So, we just opened a 32nd skilling centre as the company that I represent in Ekta Nagar, 10 days ago. And in 17 weeks, and in 14 weeks, we would have on the job and theory trainings to get ‘adivasis and people from rural population in that area to come and work in hotels in front office or in food and beverage. And in one of the things, it was a hundred percent ladies, so the very first class. So I think the opportunity is huge. So when we talk about our ask, it is never give us this relief, that relief, this is just position it in a way that the mechanism works. Having said that, we are extremely, extremely happy that 11 states in the interim gave us industry status. Now, the execution may not be seamless. Maybe there is some work to be done.
And I do feel that infrastructure status will also come. It’s not that it’s not qualified as infrastructure, but 12 years ago, or maybe 13 years ago, some caps were put, and the amount that you could apply for, I think the time has come, it was maybe okay for that time, maybe now the time has come to remove those caps and let it function like any other industry, because luxury is only 7% of the total supply of rooms and hotels in India, 93% is non-luxury. And a lot of hotel supply is needed at least in midscale and lower than midscale. And a lot of work needs to be done on that front. And as I said, it’ll be good. And that’s our only two-point demand.
Navika Kumar: Ms. Irani, opportunities for women to be employed are very great in the hospitality and the hotel segment. Having said that, having been a reporter travelling across the length and breadth of India during elections, one has found that there are some places where ‘netas’ live, there are constituencies where there are no hotels, so to speak. And as working women travelling to these areas you know, it is a bit of a problem. I remember, I won’t name the constituency because immediately it’ll be called a political point that I am making, but certainly in the centre of India, there is a large state where in one constituency, which belonged to a high-profile politician, there was no hotel. And I sat in almost a guest house kind of a place.
Smriti Irani: For the benefit of everybody who’s not politically possibly aware of the constituency, if you can name it, I’ll tell you how many hotels there are now after I became an MP.
Navika Kumar: I know you’ve taken over the job of media people, you’ve just interviewed the Rashtrapati and my job is in danger, but here I am asking the questions, you are only answering them. So I, I’ll stick by saying that there are no places that, you know, women can stay. They are scary and they’re not even clean, not even a clean bedsheet put in those places. So investments and the gender angle to it. What do you think about that?
Smriti Irani: I think that hotels have reimagined themselves, and I’ll take a point in case. It is not only how many rooms can be hired for people to stay. Now they’re also becoming an attractive place for families to spend, let’s say, their lunches or their dinners at or to service certain needs, which an aspiring class would like, for instance.
So apart from the hotels I think legend, they’re now creating niche services, where a spa comes in or a beauty salon comes in, or a place for people to dine at or celebrate a wedding at. Because when you say the word hotel, people presume it’s only for those who travel. So hotels themselves have become a social thriving organism within a city place. Insofar as my constituency Amethi goes, yes, when you came there five years ago, there was no hotel. Now we have two hotels there, though small, but I think that’s also something that needs great reflection on our hotels, only those investments which are large. Only those investments that come with a legend or also are we now democratizing how hotels are looked at and give equal space for those who are coming up with smaller investments, but coming up in emerging markets domestically.
So that is something I think which needs great reflection on, because if there is some kind of an exchange of scale of how to manage that hotel, you will have greater service opportunities and create more opportunities locally for people including women. So they may be people who are well heartened enough to invest, let’s say, have an investment size, which is possibly one fourth of the investment that a large hotel needs, but they’re servicing the region’s population there. So can you find an interface or a platform where you can exchange your strengths with those emerging names who may not compete with you, but at least in terms of service, they can become the hallmark of service in their locality. So that being said, yes, most definitely women do get a lot of opportunities because the attrition rate is lower. Second, their service is excellent.
They have, they have the feel for details. So that is why I see a lot of women now getting absorbed. It earlier also was the same, but now given the Labour Code, which defines more opportunities under the law for how women can work, irrespective of the shift, as long as institutions can guarantee them safe transport back home. So it provides new opportunity for women to engage. What I also like about the hotel industry, apart from the front office, the rest of the administration and opportunities in the hotel business for women is not defined by a particular age because there are many service industries which in fact, exempt women from opportunities when they reach a particular age. The hotel business is the only business where age is no bar, as you are functionally contributing very well to your organisation. So I think the fact that it defies those challenges of age is also something to be considered, especially for women, because if you’re not young, apparently you’re not suitable for many segments of the service sector. I believe what I learned at Taj then just as an employee’s daughter, is that hotels are in the business of serving and not in the business of asking.
So insofar as what can be done under the infrastructure norms, that is a good question for the finance minister to answer. But I can only say this as long as things make fiscal sense, judicial sense, you will always have my support.
Navika Kumar: And, and the fact that hotels actually encourage women to work in all segments, I think is a big thumbs up to the hotel industry and to gender empowerment, women empowerment. But Puneet I mean, I just can’t get rid of the political ‘bug’ in my mind. And Smiriti ji, just talked about the spiritual prospects that are growing in India. So, everything that the BJP does has a ‘mandir’ angle to it.
Smriti Irani: No, I think that would be extremely indifferent to the Prime Minister’s agenda in building infrastructure. The Atal Setu has no temple involved with it. Or if you build a bullet train, if you say that 40,000 boogies will be converted in the railways to ‘vande’ Bharat coaches, that is just servicing the needs of citizens at large and making it cost effective. So, for you to charge us by saying that infrastructure is only an area possibly, which has a ‘mandir’ inclination would be very unfair to the Prime Minister.
Navika Kumar: No, I didn’t mean it in that way. You said there are opportunities coming up because of the spiritual renaissance. And you mentioned Maha Kaal, you mentioned Kashi.
Smriti Irani: But why also exempt from the conversation, adventure sports. So where is the new opportunity, let’s say mushrooming in Arunachal Pradesh, in Uttarakhand, apart from the religious destination, you also now have adventure becoming a big catchment area for the hotel business. The issue, which still is something that is considered by tourists domestically, possibly this is subject to correction by specific tourists who can ask, is whether you can assure safety of the adventure sports that you offer. So if that is something that can be underwritten or assured, you will find more and more opportunities then coming up.
Navika Kumar: Does that open up a whole new catchment area for tourism and for the hotel industry?
Puneet Chhatwal: Absolutely, it does. I think we are just at the start of it, the next two decades will completely change the whole landscape of tourism hospitality. It has already changed even in the last two years, if you see. So I think we are just at the beginning, and there are positives and other consequences of becoming fifth largest and third largest economy, including increase in per capita income. I think more and more people will travel, whether they do it for spirituality, whether they do it for adventure, whether they do it for business, setting up new businesses in tier two, tier three cities, whatever may be the reason. We are just really at the beginning of this. And if all the pundits that have predicted our GDP growth figures that are expected, and geopolitically the role India is expected to play it should be very good.
Smriti Irani: To add to this, it’s also how India positioned the country and its prospects to the world during the G20 presidency. It could have very well been just two, three cities in which the G20 meetings were held. But the fact that the Prime Minister ensured that every state has an interaction with the G20 universe, the fact that infrastructure around those places where the hotels that hosted those meetings or where the dignitaries stayed, that too has in fact opened up. When we go, let’s say to a Davos, we hear of the hospitality and the services that those guests enjoyed, they tell us.
Secondly, the Prime Minister, from what I see in the interim budget and from his pronouncements and his engagements, is very keen to go beyond those tourist destinations, which are anyways globally highlighted. And that’s how you attract new attention to such spaces. Let’s say we are all talking about Ram Mandir and Ayodhya, but there’s also a history of Orchha. Now how many of us can celebrate that history or look at the hotel perspective or the opportunity there? So, there may be spaces like Hampi, how many of us actually on a national scale try and bring attention to the domestic tourist towards, let’s say Hampi. There is place in Arunachal called Zero, where if you trek for five kilometres from Zero in the village to the jungles, you will find one of the largest Shivlings you’ll ever see.
Navika Kumar: If you talk about opportunities, yes, there are many. Let me also add the fact that Ms. Smriti Irani at Davos, when you mentioned Davos actually set up a global alliance for global good gender equity and equality to push women’s empowerment this year at the World Economic Forum. I want to ask, this has been a first for India. It’s been a personal achievement for you. Where does this take us, in terms of the statement India has made? Where does this take us?
Smriti Irani: A global alliance, which is going to highlight India’s potential to investors, companies who come together to leverage India’s digital capacity or investment opportunities in India. If the hoteliers’ association wants to come and year mark, which are the women owned hotels or women owned or serviced only home stays in India, that is something that we are happy to offer to our global conglomerates who have joined this alliance so that when they come next, they know exactly how many women in the industry that they can support. Secondly, there is a buzz the world over about sustainability. Can we identify those hotels which are completely green and who can provide this unique destination then to those green warriors across the world who come to India from an investment point of view, but also see that aspect of the hotel business.
The alliance has been very strategically called the Alliance for Global Good, because it helps us deliver to the world what are the opportunities that we as Indians have to offer? What are the opportunities not only to attract footfall, not only to attract investments, but some of our best practices that we can share with the world. Through the alliance, if the Hotelier Association deems it fit, come together, tell those stories of upskilling and skilling so that if there are friends of ours in the global south who want to be encouraged by our contribution, we can connect you then to those friends in the global south who can take a leaf out of your efforts and possibly replicate it in their countries. So, the Alliance is a platform to engage not only from an investment perspective, but also from the best practices perspective. CII has already helped signed up 10,000 companies. We have close to 20 global conglomerates who are a part of it. Why not also the hotels of India?
