Physical makeovers include a vibrant logo designed by branding company DY Works, changes to hotel interiors include modern air conditioners (window air conditioners were used earlier), full-service bars in select locations such as Goa, Jaipur, Bhubaneswar, Mumbai, and Puducherry, a lobby lounge equipped with a jukebox, iPads in the lobby for orders, and menus with in-house catering.
The deeper change, she adds, is a structural shift to sticking to the operating lease model, which means no more self-owned properties. All older hotels will see renovation costs being borne by Roots Corporation, a 67 per cent subsidiary of Indian Hotels, and will run between Rs 600,000-800,000 a key. The new ones, whose room costs will be anywhere between Rs 3 million and Rs 4 million a key, will come from the partner owners in exchange for an agreement that includes Ginger paying anywhere between 20 per cent and 25 per cent of their turnover as lease rent.
The point of all this: pushing Ginger into the middle of the hospitality market above Oyo and guest houses, and in the same league or above the Lemon Trees and the Royal Orchids, says Rao.
Location, of course, remains, the more important metric. Sreedhar Prasad, partner with KPMG, says that to some degree it does not matter what you call the segment, but hotels in new business locations will prosper if land is acquired early enough. He cites religious tourism as an example. It is not just Tirupati, a traveller may visit Puri, Varanasi, and Shirdi as well. “When it comes to smaller business towns and cities, accommodation costs are usually borne by the company that is sending its workforce out. So, it is steady business for hotels,” he adds.
Ginger’s management missed an opportunity to cash in on food and beverages (F&B) revenue by keeping service no-frills, offering only F&B through on-site Café Coffee Days, but will augment that in the future. A new menu will include basic popular choices like pizzas, burgers, and club sandwiches and will be driven in-house, Chhatwal adds.
Partha Chatterjee, a former Taj employee, who was a part of the team that launched Ginger, says, “Ginger is moving out of the cocoon stage and may turn into a butterfly,” but cautions that competition is fiercer today than ever, with over 70 brands in the hotel space that charge Rs 4,000 or less for a room. Pride Hotels, Ibis, Royal Orchid, Sarovar, Accor, Hyatt Place, and Golden Tulip are just a few that have mushroomed over the years. There is also disruptive competition coming from Airbnb, online travel agencies as well as traditional outlets such as guest houses and service apartments.
This leads to further questions. Should Indian Hotels not just do what it does best — resorts, luxury palaces, and five-star business hotels instead of wagering on the other end of the pyramid? More importantly, why does Chhatwal think it will pay off? He answers: “The lease model makes a hotel commercially viable from Day One and can help the owner service debt, which is a paradigm shift. Besides, who does not want to be part of a potential new success story with high pay-offs?”
Growth has to come in many forms, he adds. “One cannot just bank on five or six hotels in major metros that generate Rs 3-4 billion each,” he says.