Why do new hotels in India keep opening restaurants?

Should hotels run restaurants? Yes, of course, they should.

Guests who come to stay at hotels should be able to eat in-house without having to go out on the town looking for a place to eat dinner.

 

   But how many restaurants should each hotel run?

 

   That is the tough one.

 

   In the old days, European grand hotels had a single dining room and sometimes a lounge where you could get tea, sandwiches and a light meal. That was about it.

 

   All this changed in the 1950s with the spread of American hotel chains around the world: Intercontinental and Hilton and then others like Sheraton. This was a time when American businessmen were circling the world and American tourists had just begun to travel to countries that had previously seemed too far away. Intercontinental was owned by Pan Am and it opened hotels wherever the airline flew to.

 

   It had a second purpose too. As we now know, both Pan Am and Intercontinental worked closely with the US State department (like our foreign ministry) to advance America’s position in the world.

 

   In the case of Intercontinental, the connection was clear and explicit. The US Export-Import Bank would give loans at favourable terms to any company in any country that Pan Am flew to if the company agreed to pay for the building of a new Intercontinental Hotel. Local capital (with American loans) would finance the hotels but Intercontinental would manage them.

 

   We had some experience of this in India. The hotel we know today as The Oberoi New Delhi started to be constructed in the early 1960s till the Oberois ran out of money. They then approached Intercontinental which got them the funding they needed from the US Export-Import Bank and the hotel finally opened in 1965 as the Oberoi Intercontinental.

 

   Intercontinental was the first of the US chains to go international but it was soon followed by Hilton. In those days, Hilton was still run by its founder Conrad Hilton, who spoke of using his company to fight “the menace of Godless communism” and divided the world into white people, yellow people, and black people (yes, he actually used these terms in his speeches) . Conrad Hilton wanted to stop people of other colours embracing communism. Instead they had to be shown the virtues of the American way of life.

 

   The international hotels of that era (till the end of the 1970s, in fact) were built according to the same model: box-like structures with none of the design flourishes of European grand hotels. They had medium-sized rooms that were comfortable but characterless. There was clean drinking water in every room, and there were around four restaurants so that guests did not have to brave local conditions or get diseases from eating at local restaurants.

 

   The coffee shop, an integral part of the operation, would stay open for long hours and would serve a few dishes from the local cuisine. And if the country’s food was good enough, then there might even be an entire restaurant dedicated to the local cuisine. Otherwise it was hotel-style European dining (’Lobster Thermidor, Steak Diane’ etc.). One restaurant would often serve a completely bogus cuisine called ‘Polynesian’.

 

   This was invented by a man called Victor Bergeron who ran Trader Vic’s restaurants at Hilton hotels. And both Intercontinental and Sheraton also opened so-called Polynesian restaurants all over the world.

 

"It is hard to think of more than a handful of hotel restaurants that have opened in the last five years that are any good, let alone truly memorable."

   One reason why Indian hoteliers think they have to run four or five restaurants at every property is because they have been brought up on this model even if they don’t fully understand where it came from. Instead of Polynesian, they open Punjabi-Chinese restaurants which are as inauthentic. Their Indian restaurants are butter chicken and paneer-heavy, basic places. Their coffee shops have sandwiches and samosas jostling for space. And the so-called European restaurant has been replaced by a pizza and pasta place.

 

   The problem with this model is that it is mostly dead in the First World even though we slavishly follow it in India. For a start, Intercontinental, Hilton and Sheraton have changed owners so often that they no longer have the same objectives or style of functioning as they did when they first expanded out of America.

 

   Also there has been a fundamental change in many of the overseas markets where the American chains operate. Till about five years ago, for instance, you could argue that hotel restaurants served a purpose because the local standalone scene had not developed in such countries as India (or in Thailand or Bali or Singapore). That’s not true any longer. The best food in most Asian cities is to be found outside of hotels. In India, not only do most hotel restaurants range from bad to mediocre, they are also much more expensive than their stand-alone counterparts.

 

   So why do new hotels in India keep opening restaurants? Some of it is stupidity and Pavlovian conditioning. But, to be fair, hoteliers may also be misled by the examples of iconic hotels with great restaurant brands. There is no case for closing down say, Bukhara or House of Ming or 360. All of them do very well and have dedicated followings.

 

   But they are the exceptions. In India’s big cities, less than 25 per cent of hotel restaurants serve any purpose. The rest just take up space. It is hard to think of more than a handful of hotel restaurants that have opened in the last five years that are any good, let alone truly memorable. Many of them only show a profit because of creative accounting that does not take into account the true cost of the space utilised, air-conditioning etc. If you used the same principles as standalones do while measuring costs, many hotel restaurants would be huge loss-makers.

 

   Is there a way out? Well, yes. This is not an Indian-specific problem. Hotels all over the world have coped with the growth of the standalone sector in different ways.

 

   The most common (and usually successful) approach is to invite the standalone sector in. Around two decades ago, The Connaught in London handed over its food (including room service) to Gordon Ramsay. (Ramsay has since been replaced but the principle endures.) In Paris, most great hotels count on restaurants run by chefs like Alain Ducasse who built their reputations at standalones. Even in Dubai, following the success of the original Atlantis, every fancy new hotel invites a great chef (say, Heston Blumenthal) or a great brand (say, Nobu) to open a restaurant on the premises.

 

   Another solution is simply to reduce the number of restaurants. Turn them into banquet spaces instead: shaadi-crazy Indians will fill them up and, going forward banquet revenue will outpace restaurant revenue.

 

   Or simply reproduce your own successful restaurants at other properties as ITC has always done with Peshawari, Dum Pukth and the rest. The Taj is now trying the same approach with House of Ming and Loya.

 

   But we still have to shake off the Hilton-Intercontinental legacy and stop seeing hotels as places where visiting Americans can get clean drinking water and eat safely without ever having to step outside the property. Because that’s what we are still doing, whether we recognise it or not.

 

   Nor do we see the future when it is staring us in the face. Consider all the newer hotels. Isn’t it odd that Delhi’s Aerocity complex which has over a dozen hotels has only two hotel restaurants worth eating at? Or look at cities with booming restaurant scenes. I ate my way through Bangalore recently and the food was terrific. But easily the worst and most highly priced meal I had was at Le Cirque at the Leela Palace.

 

   Eventually the logic of economics will force hoteliers to re-examine their conditioning. But the smart ones are already rethinking the old restaurant-heavy five-star model.