Perspectives #8 with Ajay Bakaya, Managing Director, Sarovar Hotels and Resorts

As Executive Director of Sarovar Hotels for over 20 years, Ajay Bakaya has played an integral part in the magical growth story of Sarovar since its early inception. Stemming from a shared office and leadership of a single hotel, he has championed tremendous growth of a portfolio of 90 hotels in more than 50 destinations. Sarovar brands now include Sarovar Premiere, Sarovar Portico, Hometel, Golden Tulip, restaurant brands Geoffrey’s and Oriental Blossom, and a dozen of Radisson hotels that it manages.

He is a degree holder from IMHI Cornell-Essec Paris and the Oberoi School of Hotel Management. He has won several accolades and awards and has paved the path for mid-market hotels in India. I had the pleasure to host him and received valuable insights and knowledge on the Travel and Hospitality industry.

The Untapped Potential of 3-4 star Hotel Market

The hotel industry in India was a completely different landscape 25 years ago when Ajay joined Sarovar Hotels and Resorts. Now catering to the mid-market hotel demand, he began his illustrious career with a luxury hotel background. There existed a giant gap between luxury and budget hotel segments with minimal offerings. The timing worked favorably as very few players in the 3-4 star range operated in those times. His journey began in humble conditions when he worked alongside his team in an office space that he shared with others. What set him apart, even when his professional career was still quite young, was his reputation for integrity and performance. Hopping from Goa to Agra and then landing in the Marine Plaza in Mumbai, he was able to establish a broad base. With 68 suites to sell, he exceeded all expectations and over-delivered. Following shortly, Carlson Hotels had some software requirements, and that opened the door for the association with the Sarovar group. They came out with Sarovar Premier and Sarovar Portico in the early 2000s. Up until then, Ajay had excelled in handling other brands, however now he faced a new challenge of building a brand from the ground up. Today Sarovar group is all set to have 100 hotels under their belt by 2021.

The Underlying Belief of the Sarovar Brand

When starting a management company, it is critical to know that from where the funding will come and who would be the investors. The investors or owners are kings, but one must think and act like them to be successful. Fostering long term relationships and realizing that the concerns of the owner supersede everything else is crucial. The three pillars of support holding up the philosophy of the Sarovar brand are having a strong base of resources and an exceptional team, offering the owners what they cannot attract or retain, and having the independent ability to bring in customers.

Expansion into New Territories

Sarovar has around 30 properties at different stages of construction spanning temple and pilgrimage sites to more commercial areas as well. Approximately six projects will get delayed by 6-12 months, while the ones still at the infancy stage might get pushed further. Pilgrimage sites are becoming a critical part of the development circuit as Sarovar continues to explore this territory more.

Sarovar has also expanded successfully into the African continent and achieved a huge milestone in its growth journey. With firm roots in Nairobi and Lusaka, it reached the goal of replicating the Indian story in the African landscape. After a decade and a half in Africa, the Sarovar establishment in Lusaka has become the top all-suite hotel in Zambia, far ahead of its name-brand competitors. New projects are also extending to Ethiopia and Somalia. Their focus has been on the eastern, English speaking countries of Africa like Tanzania, Ethiopia, and Kenya.

A Match Made in Heaven

The recent partnership between Sarovar Hotels and Resorts and the Louvre Heritage has been like a match made in heaven. Though they own a majority share of the Sarovar brand, they recognize its brand value and strength. They have full independence while developing both the Indian and French brands in India and beyond.

The Roadway to Restoration

Sarovar Hotel and Resorts caters to three key segments in the hospitality industry. Sarovar Premiere addresses the upscale category, Sarovar Portico to the 3-4 star mid-market range segment, and the Hometel Hotels to the budget 3-star division. As far as the ARR is concerned, hotels across all three categories took a beating of anywhere between 20-50%. Luxury hotels will take longer to recover. It stems from the fact that their core market is primarily older travelers and those more established in life who are less likely to venture out just yet. Furthermore, the fixed costs of large luxury properties are higher, taking them longer to break even operationally. The younger traveler would be more open to taking chances and resuming with everyday life. Hence, the mid-market will respond faster.

Segment-wise Demand Creation

The business clientele of Sarovar Hotels constitutes 65% of their inflow, while leisure traveler makes up for the rest of 35%. Many pundits have hypothesized that leisure will pick up much faster than business. Opening up of the tourist hot spot Goa and its performance will ultimately prove or disprove this theory. For Sarovar, both fronts have been sluggish, but they are actively working towards bringing in demand. Eventually, normalcy will return as people cannot work from home forever, and hence, corporate demand will rise again.

As people opt-in for smaller weddings in the current scenarios, they are turning to hotels as they offer much lower overall costs. The government is actively requested to modify the crowd limit according to the area and size of venues. It shall bolster wedding demand even further.

The Sarovar group was also amongst the first to offer spaces to doctors and hospitals in need, and many businesses followed their footsteps.

Guidelines to Run the Food & Beverage Business for Total Revenue Management

Pricing and revenue management in the past has been very focussed towards room revenue, food and beverages, banqueting and how to optimize revenue within those offerings. In a time like this, where a lot of new ancillaries are opening up, food delivery is one such area that is a fresh territory for hotels above the 3-4 star segment.

Quality accommodation has always topped the priority list of any hotelier, especially in India. So traditionally, the food and beverage offerings have lagged significantly in Indian hotels. The last two decades have seen independent restaurateurs posing a threat to hoteliers prompting them to pull up their socks. Failing to provide the same level of innovation and presentation when it comes to food makes a lot of hotels lose out on big business.

For Sarovar Group, a large chunk of the revenue that is 20% comes from banqueting and an additional 20% from its restaurants. It has successfully built brands like Oriental Blossom and Geoffrey’s. Though they have no desire to franchise these or branch out into independent restaurants, their formula for renowned quality hotel restaurants has stood the test of time.

While everybody seems to have hopped on the delivery bandwagon, one should ensure that they are adapting to the audience they want to cater to. Changing the offering to suit the environment one is serving and catering to that local taste is critical to stay afloat in such uncertain times. Sarovar Group is continuously reimagining and reengineering its offerings to provide the best-suited experiences. One must take into consideration the location and income bracket to map out the feasibility of such services.

Handling Prices amid a Crisis

Traditionally, the conventional route to setting prices was through historical data using STR reports, demand compression and using competitive price intelligence for hotels. Now that a crisis has swept the globe, all these tools are of no help. Inventories are not under the control of hoteliers, so it is the market that will decide where to take the prices. It is all free play as the customer can choose from plenty of options. An aggressive approach is required. Maintaining isolated rates in the market will never pan out. One must adjust to the evolving situation at all times. As prices inevitably take a beating, hoteliers must stress upon reassurance of the guests.

The Distribution Amalgamation

The distribution channel management strategy and mix will change along with the changing world. 25% of the business of Sarovar Group continues to be serviced offline in 13 of its sales offices. Attempts to maintain this high percentage continue, as they keep their offices active and operations running. In time to come, an increasing amount of business will shift to online as every player in the distribution chain goes digital too. Direct sales are difficult and require strenuous efforts, but it does bestow the single substantial scope of growth potential. Sarovar has multiplied these numbers in the last few years. It is vigorously working towards growing the same.

Adherence to Healthy and Safety Protocols

Sarovar Hotels & Resorts have set in place intense online and offline training to prepare its employees for the Health and Safety protocols. Matting at the entrance, sanitizers accessible everywhere, regular cleaning of elevators, gloved and masked staff, touchless technology, and others are some measures that are adapted to allow for a safe experience for guests and employees alike.

As procedures go contactless, reception desks will soon become a thing of the past. Regular checking and follow-ups to ensure safety and hygiene standards are met and conducted. The steps to adhere to guidelines are in place, but more importantly, they should be clearly and precisely communicated to guests to gain their trust.

Boosting Employee Motivation

Furthermore, when a disastrous economic situation prevails in a country where there is already an absence of social security, there is a lot of fear and uncertainty. Keeping the employee morale up has to be of utmost importance in such trying times where salary cuts and layoffs are bound to happen. Individual engagement and inspirational communication are critical in keeping your team motivated.

Future of the Hospitality Industry

The players exiting an industry in a crisis induces a drop in the supply of quality assets. For 2020-2025 things are expected to slow down in the hospitality industry significantly. Projects early in their inception stage will be placed on the back burner. All ongoing projects will be delayed. Those already halfway through must focus on going positive as soon as possible, as loans will continue to loom over the industry. The next five years shall witness 85% committed supply come up.

Talks with hotel and travel associations have been underway. The priority demand has been of waiving off loans for the first year. It will lessen the burden significantly, especially for the up and coming entrepreneurs in the industry. Concerns were brought up in all states regarding the continual license fees, property tax, and others being charged to hoteliers when their businesses are closed. Utility bills must be calculated based on actual consumption and not on connected demand or minimum consumption. Though the varying degree of sensitivity towards the matter has emerged, many officials have been quite receptive and helpful.

These were excerpts from the leadership series called “Perspectives” hosted by RateGain as part of the #BetterTomorrow initiative to track the performance of the hospitality industry and assist in developing coping strategies during this time of crisis.

About the Author

Apurva Chamaria
Chief Revenue Officer
RateGain

Apurva Chamaria is the Chief Revenue Officer of RateGain, one of world’s leading SaaS company’s serving over 20,000+ customers in the travel and hospitality industry across 100+ Countries. In his role, he leads sales, marketing, alliances and customer success across the world. Prior to joining RateGain, Apurva was the Global Head of Corporate Marketing for HCL Technologies, an US$ 8 Billion global IT major.

He is a sought after speaker in the travel and hospitality technology space on the topics related to cognitive revenue management, smart distribution and guest experience. He has been a speaker at various industry recognized events such as NoVacancy, THINC, World Travel Market, and many more. He is also a contributor to publications like Phocuswire, Skift, HT Brand Studio, LinkedIn Conclaves and others.

He is a columnist for the Pitch and Digital Market Asia magazines. His book “You are the key – unlocking doors through Social Selling” (Bloomsbury) hit #2 in the Amazon India Best-Sellers list. For his contribution and excellence in the field of marketing he has been awarded the ‘Marketer of the Year’ by World Leadership Forum in 2016, ‘Digital Marketer of the Year’ by IAMAI and ‘B2B Marketer of the Year’ by Paul Writer. In 2018, he was feted as 40 under 40 by the Campaign Asia magazine.