Ginger eyes turnaround to capture budget space

Roots Corporation getting its act together as one of first branded budget hotels of country

A town hall meeting, a fairly new concept for the budget hotel brand, is in progress at the corporate office of Ginger Hotel. The primary agenda is to exchange ideas as the company’s managing director P K Mohankumar briefs the staff on customer feedback.

“There is a new generation of executives and employees. We are de-layering all hierarchy, bringing in world class work culture.” Mohankumar told Business Standard recently.

Roots Corporation, a subsidiary of Indian Hotels Company, which operates Ginger is getting its act together as one of the first branded budget hotels of the country. With 28 hotels in its portfolio, the company is calling 2013 its “turnaround year.”

That means the expansion plans can wait, but the laggard hotels must be brought up to the quality of the best. The company is also working on a prototype for Ginger, something that all hotels under the brand can model themselves on.

Addressing concerns around quality and standards of the hotel is the prime reason why Mohankumar said he was brought to Roots Corp from the flagship Indian Hotels. This is also a sign that resources are now being made available to Ginger to go and capture the market in a big way.

Around eight to nine Ginger hotels including the ones in Mangalore, Agartala, Tripura, Indore, Surat and Pantnagar have been renovated and repaired. The company has spent around 15% of its sales towards this exercise. Besides, upgrading items like showerhead, desktop, lighting fixtures, television sets, one of the main focus areas has been operational efficiency of the staff.

“Even though it’s a budget hotel, customer expectation is more or less the same. A guest is a guest is a guest. We concentrate a lot on people. Our staff has to bring in certain amount of emotional quotient to the otherwise cookie cutter offering,” Mohankumar added.

Its latest addition in Jaipur is one of the few properties the company plans to add this year towards achieving 70 hotels presence in the next three to four years. Industry experts have lauded its innovative approach of acquiring, leasing land, making hotels on top of buildings etc.

Ginger’s strategy has also been to go and park itself in a catchment area like industrial zones in Manesar or Pantnagar where it had set up a hotel on government’s invitation. Besides that, the company wants to have a hotel in every major metro town.

“We are looking at ways to populate the metros though investment costs is a lot higher. Wherever there is a major railway station or airport, we want to go,” he said. And it works. For example, Yatri Niwas near Delhi railway station, now known as Ginger, has given the hotel a 120% occupancy level this year.

Although, the average rates for Ginger have remained almost static at around Rs 1700, its focus anyway is to drive up the volumes and thereby the revenues in a slow economy.

“There is tremendous potential for brands like Ginger, currently the largest player in the economy segment. There are several other brands also entering this space and there will be significant competition going forward. For Ginger to compete effectively, it will need to ensure its product is in line with the other brands," said Kaushik Vardharajan, managing director, HVS India.

Ginger's contemporaries like Formule1, Hampton, Holiday Inn Express have not built as strong a presence. However, the competition is more from the unbranded segment, that thrives in the budget space. “You can’t go beyond a certain price in the budget segment. The biggest challenge is the unbranded family run hotel business. They manage the environment, keep the costs down,” Mohankumar said.

With the company making a loss of Rs 1.38 crore for year ending March 2013, a turnaround is what it really needs.