Taj perspective on trying times and future targets

Thursday, 11 October 2012 00:16 -     - {{hitsCtrl.values.hits}}

By Cheranka Mendis

Gateway Hotels Chief Operating Officer Mohan Kumar during a short visit to the island recently met up with Daily FT to discuss the growth of the new brand ‘Gateway,’ a year since its launch in Sri Lanka and to express sentiments from a foreign hotelier’s perspective as to where Sri Lanka tourism is headed. Kumar, who was in charge of Taj Group in Sri Lanka during the war, is known as a key figure in bringing down Indian tourists to the country during trying times. Following are excerpts from the interview:

Q: What brings you to Sri Lanka?

A: My heart brings me to Sri Lanka. I am among those expats who completely sold their body, mind and soul to the island. You need to actually love the destination before you start doing business, it is very important. I am also here to explore opportunities for business. We have the Gateway brand here and its success is also a reason for my visit here.


Q: You were here when the war was going on so what do you think about the progress made in the country?

A: The country’s progress is very encouraging. However, a lot more can be done. I can see a lot of cleanliness in the city. It is a beautiful, quaint colonial city. I only pray that in the huge rush for development, that you do not lose the original character of Colombo.

That is something the highest authorities must preserve. There are beautiful old colonial buildings, parks and heritage sites which should be made national heritage sites and protected. No amount of commercial greed must take over building on these sites. It is a precious asset not many have.

I also see a new level of energy that is felt from the moment you board the plane to come to Sri Lanka. There is a new energy, new confidence, a sense of relief and a whole new generation of young people. I think in this euphoria of the sudden rebirth of the nation, there is opportunity for the country to not go along the developmental path that other countries have taken.


 Q: What paths should the country avoid in its journey of growth?

A: You need to bring in environmental concerns and understand that overbuilding capacity will not help. Ask yourself if it is really needed and if it is scientifically required. In this rush to build capacity, if there is no corresponding growth, then it would be a national waste creating a line of nonperforming assets. There is a limitation to which you can promote and demand – you cannot go beyond that.

My post war message is to redefine the whole philosophy of the destination. Positioning the destination is important. How do you want to position it? Intellectuals, hospitality professionals and economists must come together and form a nation consensus to determine what should be the positioning of Sri Lanka as a destination, whether it is for investment, tourism, business or nation building activities.


Q: What made Taj stay during trying times?

A: In the ‘80s, Sri Lanka was one of the most prosperous economies in Asia. That is what prompted us to come here. The average room rate at that time was US$ 80 which was among the highest in Asia, higher than Singapore. Whatever that happened in Sri Lanka after that has set the country back in years.

Taj came to Sri Lanka way back in the ‘80s and it stayed on. This is perhaps the only overseas hospitality brand that decided to stay on and in fact built a new hotel – Taj Exotica – during the worst times here. We had great faith and confidence in the destination. I am very happy that we stayed on.

There is great potential for this island. Nature has gifted it with a beautiful topography and I believe Sri Lanka has what it takes to become a world class destination. What is important is that we should believe in it. Those who are here should believe in it and those who are supporting the destination must also believe in it.

Every nation goes through a history of strife and domestic conflicts. You need to come down to the ground level and understand the reality. The reality of Sri Lanka even during the war was that Colombo was largely unaffected. You need to look at it from an optimistic angle. It is not empty faith because Sri Lanka has what it takes to become a world class destination.


Q: What made you bring the Gateway brand to Sri Lanka?

A: We did a lot of research and homework before we brought this brand to Sri Lanka. The brand itself was created based on research in the market which revealed that there is a need to bring in brands to fill the vacuum that existed between luxury and unbranded accommodation.

With the kind of middle class coming up here, there was a need for creating business brands – affordable, price point brands that deliver value for money. Customer, product and brand research pointed this out.

It became a success in India since its launch in 2008. When we looked at the Sri Lankan market, we saw that a similar gap existed here so we came to Sri Lanka and rebranded the Airport Garden Colombo. After being launched as a Gateway hotel, it has performed even better.


Q: Is Airport Garden Colombo the first international property for the brand?

A: Yes it is. The brand works well for Sri Lanka as it draws both the Asian model of warmth, courtesy, care and attention along with the Western model of crispness, efficiency and round the clock service because the kind of businessmen coming to this part of the world all work in different time zones. The model was redesigned.


Q: How were you able to establish a particular price point?

A: We have understood what our customers want and what they do not want so we are looking to match the perception of the customer and try and match their needs to what we deliver. We do a lot of rationalising and ensure that the product is enjoyed by the customer to the limit that they want – basically that they are not over paying but optimising their need and therefore the price point.


Q: What sort of investment did you initially make to rebrand the hotel?

A: It was already a 27-year-old hotel in operation so the investment made was only in terms of upgrading supplies. We changed the brand, the graphics, the look and feel and feel of the hotel, amenities, signage, uniforms, marketing, website, colours etc. It was more of a process and brand definition change as opposed to a product change.


Q: How much have you budgeted to invest in the future?

A: In Sri Lanka, we will be adding another 100 rooms to the Gateway Airport Garden Colombo and we are looking at further enhancing the product. We are coming up with a new restaurant, lobby, spa and health club. The cost is estimated to come close to a US$ 10 million.


Q: Are there any more hotels you plan to rebrand or manage in Sri Lanka?

A: Absolutely. We are looking at several locations. Gateway is a business brand essentially. There are resorts but we are fundamentally looking at city business hotels. So we are looking at Colombo, the Hill Station, a beach resort or even a wildlife resort. Two or three commercial towns that are coming up are also in our radar. I do not want to mention particular places but the brand is very upbeat about Sri Lanka.

We also do not bring in equity as it is a management contract brand. We are therefore looking at potential promoters from Sri Lanka who own land and have the capacity to build 100 room hotels and give it to us.


Q: Do you think Sri Lanka can achieve the 2.5 million tourist target?

A: It is nice to have a target and this is a highly aspirational one. Tourism in this country is the centre stage of economic activities. It is in many ways an employment denominator and a livelihood generator. In that respect, creating a target of 2.5 million is very ambitious. However the country must understand the cost at which the target is achieved.


Q: What are these costs the industry must take into account?

A: Primarily, cost should not be environmental degradation. You need to preserve the nation as eco fragile. You must ensure clearly that this is a 365-day destination so that the distribution is even.

There should be a strategy for the off season and when that is taken away, seasons should cater to different regions.

April-August is traditionally the off season for Sri Lanka in terms of attracting the Western audience, so you must look at the Asian countries and price point in a way that it is promoted to the right audience.

Maybe you should relook not just the 2.5 million but also how much of GDP can be earned through tourism, concentrating on value rather than numbers.


Q: What are the prospects for the country from a point of an investor?

A: The Sri Lanka we are talking about today has opened up the possibilities for brands to come into this country. There are two major markets – China and India – waiting to come to Sri Lanka, apart from the European traditional markets.

However, the country should concentrate on building capacity. The question one must ask about this destination is that should it become a mass market or a high-end end one? Where do we draw the line? I believe this market in the next ten years will attract mid-market and upscale segments.


 Q: But the aim is to attract the high spenders

A: The Asian market is going to be more of an upper-scale and upscale market, in fact that is the same trend anticipated all over the world. They may not be the excessively rich but they are an educated lot. They are the professionals. They are highly travelled and they come for a very specific reason – to discover the country.

They will be conscious about how much they spend and they will be extremely particular about the value they get for each dollar. Brands like Gateway, I believe, are tailor made for this clientele. Why? Because our whole design is made in a way that the investment cost is less.


Q: Having said that, what should the authorities keep an eye out for?

A: Today Sri Lanka has become a seller’s market. Colombo becomes a closed-off city for 60 days of the year now. From 1991-2002, when I was here maybe there was five days or maybe not even that. Authorities need to watch these macro figures.

To understand them better, they must create a consultative council of professionals to have a say with the tourism ministry. Define it in a way that it maximises on revenue than only in numbers. Minimum pricing is a good thing but sometimes should not outdo the market capacity to pay as well.

The industry should have a conference with the airlines bringing in tourists to the country and come up with the right schedules that are traveller friendly. You must have a constant dialogue with the various stakeholders that support the industry to take it to the next level.