Menon is optimistic about the future of the hotel business

This has been, by common consent, the worst two-year period in the history of the hotel industry. 

Now that some sense of normalcy has returned, hoteliers are beginning to wonder if they should finally heave a sigh of relief. Or should they worry about a new Covid variant that may be on its way?

 

By and large, however, hoteliers seem to have decided that it is time to stop worrying. Far better to assess the lessons of the pandemic and plan for the future. Opinions will vary about what these lessons are so I spoke to a person who is best placed to take a strategic view of the industry.

 

   Rajiv ‘Raj’ Menon is the most successful Indian hotel industry professional in the world.  He heads Asia-Pacific for Marriott International which means that he is in charge of 468 hotels in several countries (basically all of Asia, excluding China, but including Australia). Marriott is also the largest operator of starred hotels in India (over 120; the Tatas are larger only if you include both the branded Taj properties and the low-cost Ginger hotels) and plans to open many more all over the country in the coming months.

 

   I spoke to Menon in Bangalore where Marriott has just opened a 300-room resort built around a golf course. Because Marriott is the world’s largest hotel chain, Menon has access to information from every international market and retains a global perspective.

 

   Menon’s view is that hoteliering will change in the next decade. Some of the changes were already on their way when the pandemic struck. But the experience of the Pandemic has re-affirmed many of the conclusions that hoteliers had reached in the years that preceded it.

 

   One learning is that the old definitions are being re-examined. The traditional concept of luxury no longer holds.  Once upon a time we associated luxury with a certain formality and perhaps, a sense of occasion. That is no longer true. Most luxury now is far more informal than it used to be. People no longer feel the urge to dress up when they go to a luxury hotel.

 

   Instead, luxury now has many other components. And one sector where things may change the most is resorts. In the old days, luxury resorts were often designed with couples in mind. In India, top end hoteliers assumed that the highest rates would come from wealthy foreigners or from honeymooners ready to splash out for a once-in-a-lifetime experience.

 

   This assumption is being re-examined. Partly as a consequence of the Pandemic, the hotel industry has recognised how important it is to concentrate on leisure for all grades of travellers, not just foreign tourists or honeymooners. Business travel will survive (more about that later) but the great growth area is leisure.

 

   During the pandemic, leisure hotels that were near urban centres (Jaipur and Agra drew guests from Delhi; Udaipur from Ahmedabad) benefitted because more and more people are driving to their vacations. They don’t want to brave airport crowds or spend money on air-fares --- they would rather spend that money at the destination.

 

   For instance, the JW Marriott Golfshire resort near Bangalore (about an hour and a half from the city centre) where I spoke to Menon, hopes to draw many of its guests from Bangalore just as the ITC Grand Bharat was the surprise success story of the pandemic because it attracted well-heeled guests from Delhi who drove there.

 

   The obvious opportunity is in Mumbai because Goa, the city’s favourite holiday destination, is too far to drive to and the hill stations of the Western Ghats have no good hotels. Menon gave the example of Mussoorie which was not considered a top-class destination when Marriott opened the JW Marriott Walnut Grove (owned by Raj Chopra) there and built it to international standards. To everyone’s astonishment, the hotel has been a huge success since the day it opened. It is possible to repeat that formula in the hill stations of the Western Ghats, which are actually nearer Mumbai than Mussoorie is to Delhi.

 

"Demographics will also force hotels to alter their attitudes to such issues as sustainability and community service."

   There are many other examples to substantiate this view, the most obvious of which is the Oberoi Wildflower Hall in Mashobra which is often booked out months ahead. At one stage during the pandemic, it was even regarded as the new Maldives! All of this success was based on people who drove there, there is no airport in the near vicinity.

 

   The resorts themselves will have to change, Menon suggested. Very few of them were designed with families in mind. But increasingly, people want to go on holiday with their children. So perhaps hotels will have to build family rooms, or rooms that are larger than usual (one and half bays in hotel-speak) and have room for extra beds, bunks even. Moreover, every resort will have to think of creative activities for kids. It will no longer be enough to have a kiddie centre and video games room for older children.

 

   The demographic factor, Menon said, was becoming more and more important. Hotels still treat wifi as something business travellers need in city hotels. But kids are so used to using apps on their devices for a variety of purposes that all of them need high-speed internet at resorts. Whereas older people may post a few photos on social media, their children will create professional looking videos of their vacations with all kinds of effects. For them, high speed internet is not a luxury. It is a necessity.

 

   Demographics will also force hotels to alter their attitudes to such issues as sustainability and community service. At present only ITC hotels focus or sustainability and while other large hotels talk about it, the environment or the community are hardly ever at the centre of their appeal. It is the smaller, owner-driven mini-chains like Sujan in Rajasthan and Soneva in the Maldives and Thailand that emphasise community service.

 

   Menon believes that every hotel company will have to do it. Young people today are far more conscious of the need to protect the environment than their parents and they will expect that the hotels they stay in are as committed to the idea. Younger people are also more aware of their privilege and regard it as necessary and desirable to help the community and those less privileged.

 

   Eventually, as they grow in years, these young people will be the ones who stay in hotels but even now they will pressure their parents to choose places that respect the environment and take care of the local community.

 

   While Menon is clear about the need to rethink our resorts it does not follow that he is giving up on city hotels. He rejects the idea that we have all got so used to zoom calls that nobody will want to travel on business. There is no substitute for personal meetings, he says, when it comes to customer acquisition, to serious negotiations, or to team-building. People will still travel, he says, because the very nature of business requires them too.

 

   Also, he argues, one effect of the Pandemic has been to encourage a new segment of guests at city hotels: the staycation segment. During the pandemic, when it was hard to travel, many people moved to local hotels for the weekend. That segment will remain, he believes. The key to making a staycation work is for the hotel to pamper the guests: spa treatments, bottles of bubbly in the room and a sense of being valued. Staycations will become an important part of filling up business hotels on weekends.

 

   The hotel business is divided on how important restaurants are to hotels. Once upon a time all the best restaurants were at hotels but as the standalone sector has grown, hotel restaurants have begun to seem dated, boring and overpriced. In some foreign cities (New York, for instance) hotels no longer bother too much with restaurants because there are so many standalone options. On the other hand, in some cities, even though there are many Michelin star restaurants (Paris, for instance), top hotels still pride themselves on the quality of their restaurants.

 

   So which one will it be in India? Menon is convinced that restaurants are crucial to the success of a hotel. He knows of people, he says, who make decisions about which hotel to stay at based on the restaurants. A little before the pandemic, Marriott was focusing on its restaurants. But then Covid intervened and the plans were put on hold.

 

   The emphasis on food is back now, he says. Marriott will upgrade its food both through its own teams and, if necessary, by drawing on chefs from outside. So there will be residences by guest chefs, pop-ups by great chefs and hotel restaurants run in partnership with non-Marriott chefs.

 

   Is Menon optimistic about the future of the hotel business after the losses of Pandemic months? He is more than optimistic. During the pandemic, he signed 28 new agreements to open hotels in India.

 

   And more are being negotiated.

 

   The hotel business always needs to adapt to stay relevant, he says. But once it does that, the best is still ahead. The pandemic was a serious crisis for the industry. But the learnings of that phase will pave the way for the future.