'The market share of budget hotels is expected to grow'

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In June 2004, the Indian Hotels Company Ltd unveiled an innovative, first-of-its-kind category of Smart Basics hotels called Ginger. Today, it has 14 hotels in the country and has created a new category in the domestic hospitality market. Recently, Ginger opened Ginger Rail Yatri Niwas, which is its first property in New Delhi, in collaboration with Indian Railway Catering and Tourism Corporation (IRCTC). The hotel was renovated in less than a year with an investment of Rs 10.5 crore.

Prabhat Pani, chief executive officer of Roots Corporation Ltd, a wholly-owned subsidiary of IHCL, outlines the company’s growth strategy, public-private partnership model and expansion plans in an interview with fe’s Saikat Neogi. Excerpts:

Are you looking at new public-private partnership (PPP) deals to set up more budget hotels in the country?

We are certainly keen in doing so but we have not signed any new contract as of now. We are hoping that Ginger Rail Yatri Niwas will be a showcase model of our PPP initiative. We won the contract for renovating and running Rail Yatri Niwas on a 15-year-lease in January 2007. As part of the deal with IRCTC, RCL renovated, redesigned and added all the features distinctive of Ginger ‘Smart Basics’ concept in the last 14 months. The hotel will now be run and managed under the Ginger Hotel brand.

Is it a diversion from your original plan?

Our original model was to buy land and build hotels on it. From that we have moved to leasing and mixed development like setting up hotels in malls. We are also partnering with government under the PPP model. The Rail Yatri Niwas in Delhi is an example. An existing property, it needed to be redeveloped. It’s a part of our evolution and is done keeping in mind the original model of providing extreme value for money to our guests. There have been challenges like the rising real estate prices. There has been some softening of real estate prices in the last couple of months, though.

Seeing the downturn in real estate prices, do you plan to add up more properties?

The answer is definitely yes. But it has not moved to that stage where the difference is very palpable. It is there mostly in the media and people talk about it, but by and large developers are still holding on. I see things changing in the next three to six months.