Margins will improve as we have shed fat to become leaner: Prabhat S Verma & Deepa Misra Harris

Interview with COO, Gateway Hotels and senior vice-president (sales & marketing) at Indian Hotels

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Tata Group's upmarket full-service hotel brand Gateway made its foray in the City of Joy with a 197-key property. Prabhat S Verma, chief operating officer, Gateway Hotels, and Deepa Misra Harris, senior vice-president (sales & marketing) at Indian Hotels Company, tell Digbijay Mishra that Gateway is expected to be an over Rs 400-crore brand this financial year. Edited excerpts:

The past few years have been rough on the hospitality industry. Do you think the worst is over for the industry?

Verma: It cannot get worse than this, so my mantra is it can only go up now.

A recent survey says tariffs in Delhi and Mumbai fell by around 15 per cent, which is second to London (20 per cent). Will there be an upward trend now?

Harris: In the last four-five years, the industry has been a bit depressed, so we have not had those premiums of the past. We see an uplift in average room rates (ARR).

We have to improve our products and re-invent them. Of course, margins have become thinner but the demand and supply situation will settle down.

How do you expect the margins to improve?

Verma: We have suffered and only larger players could have sustained. We did because of our brand. But it prompted us to shed fat as we wanted to become leaner and be sure that everything was considered from the cost angle.

Has MICE (meetings, incentives, conferencing, exhibitions) traffic grown and will it be your focus?

Verma: MICE traffic for Gateway has grown by about five per cent over last year as we do not have large banquet halls etc. But the new Gateways will see large banquets halls and the segment would grow as there is a market for weddings and corporate events.

Most of your new properties are planned in tier-II and tier-III cities. Have the metro markets saturated?

Verma: The metro markets are crowded and we are already there. The question is whether we can reach the tier-II and -III segments before the others do or not. We need to be have the first-mover advantage.

Multinational hospitality groups are coming in with different sub-brands. Is the market mature enough to host all of them?

Verma: The market is maturing fast. Gone are the days when one would go and stay at a relative's place for weddings, pilgrimage or conference trips. Today neither you nor the host is comfortable. So, we need the availability of different price-points in hotels. That is where different sub-brands come into play.Gateway may not be opulent but it is contemporary.

The Taj is known for it but would you want to bolster food and beverage options for your brand too?

Verma: It is the right way to look at it. In fact, we are planning one more restaurant at the Kolkata property, probably based on South Indian cuisine. Look at the habits of people. There is always an opportunity to celebrate. But at the same time, we need to be careful with what we offer as diners have become more discerning.

Has average occupancy improved?

Harris: The industry occupancy is around 58 per cent, down from 65 per cent. Taj will be 10 per cent higher.

Verma: What has happened is we have not lost ARR and have made occupancy grow and that has helped the brand.