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Budget hotels: On the Ginger trail
Nayantara Rai in New Delhi | March 22, 2006
A hotel chain now emulates the Air Deccan example and provides rooms sans frills.
Downsize? Dumb down? For the Indian Hotels Company (that's the Taj group of hotels), going low-cost was a logical decision. The airlines had been doing it, true, but could a group associated exclusively with luxury do efficient, business hotels sans frills? Hotels that sold rooms for Rs 1,000 a night?
With IndiOne in Bangalore, launched in June 2004, the chain proved it could, but other promised hotels didn't follow through. Was the formula working, or had it run out of steam even before it had begun?
With the renaming of IndiOne (under the "Smart Basics hotel" banner) to Ginger, the Indian Hotels Company Limited and its subsidiary, Roots Corporation Limited, has proved it has been working on the concept. It has now revealed that Ginger hotels are set to roll out budget hotels across the country.
Priced between Rs 950 for a single room and Rs 1,175 for a double room, Ginger hotels have created a new category in the domestic hospitality landscape, said Raymond Bickson, managing director and chief executive officer, IHCL.
RCL's chief operating officer, Uday Narain, said Ginger hotels cater to the modern, experienced traveller who does not relate cheap with poor standards. For instance, these hotels include a cyber café, an ATM machine, 24-hour automatic check-in kiosk, wi-fi facilites all over the hotel, a basic gym, and a 17-inch television in every room.
The first Ginger hotel in the new rollout phase was launched in Haridwar Wednesday. Bickson added that a new Ginger hotel will be launched every six weeks on average. By the end of 2006, Ginger hotels will be operational in Bhubaneswar, Pune, Mysore, Thiruvanthapuram, Durgapur and Goa, while work will soon commence on hotels in Agartala, Tirupur, Pondicherry and Nashik.
Excluding land cost, the budget of each Ginger hotel is approximately Rs 10 crore, said Narain, the money to be raised from long term debt and equity. After an average of 85 per cent occupancy rate, the Bangalore hotel last year had a turnover of Rs 3 crore.
The hotels will employ skeletal staff; services such as facility management, maintenance, and food and beverage services will be outsourced.
Excerpts from a tete-a-tete with Ajoy K Misra, senior vice-president, sales and marketing, IHCL.
With increase in demand, will you raise room prices?
When every other hotel in Bangalore was charging up to Rs 10,000 a night, we were the only rooms at Rs 950. We were being asked if we would come up with deals for corporates, but we stuck to our guns.
Will you tie up with low-cost airlines or offer package deals?
We have no intention of offering any packages or deals. Neither will we introduce on-season or off-season prices. Our room prices are fixed.
Why did you decide on secondary and tertiary cities?
It was a mixture of demand and land cost, with the latter playing a more important role. With our operating costs, it is not feasible to open in places like New Delhi, or Gurgaon, where real estate prices are so high.
Are all your hotels going have 100 rooms?
No, we plan a 200-room model as well.
Are your rooms mainly for single business travellers?
It depends on the location. In Bangalore, it makes more sense to have single bedrooms while in Haridwar, most rooms will have twin beds.
What is your ad strategy?
It doesn't make economic sense to come up with national campaigns. We will have regional advertising, such as hoardings in places like railway stations, highways and airports, to catch clients.