Despite the slowdown in the economy, Marriott International Inc is on a major expansion spree in India. The international hospitality player already operates six properties in India?JW Marriott, Mumbai (launched in 2002), The Renaissance Mumbai Hotel & Convention Centre (2001), Courtyard by Marriott in Chennai (2006), Marriott Executive Apartments, Mumbai (2000), Goa Marriott Resort (1999) and Hyderabad Marriott Hotel and Convention Centre (2006). Into its tenth year, it is set to launch six more?Courtyard by Marriott Pune (153 rooms), Courtyard by Marriott, Gurgaon (199), Courtyard by Marriott, Ahmedabad (164), Courtyard by Marriott, Hyderabad (193), Courtyard by Marriott, Mumbai (299), and Marriott Hotels and Resorts, Pune (426)?by the year-end. The 82-year-old brand owns 3,000 properties in the United States and 67 other countries, including India. The products, both self-owned and franchisee hotels, are well-differentiated under various sub-brands, namely, the Marriott, JW Marriott, The Ritz-Carlton, Renaissance, Residence Inn, Courtyard, TownePlace Suites, Fairfield Inn, SpringHill Suites and Bulgari brand names. It also develops and operates timeshare resorts under the Marriott Vacation Club, Horizons by Marriott Vacation Club, The Ritz-Carlton Club and Grand Residences by Marriott brands, besides Marriott Executive Apartments. It also operates a separate division of furnished corporate housing through Marriott ExecuStay. Rajeev Menon, area vice-president, India, Pakistan, the Maldives and Malaysia, Marriott International Inc, spoke to FE?s Radhika Sachdev on the group?s expansion strategy and other plans for the sub-continent.
•Given the general market slowdown, is this the right time to launch new properties? Are you sure your developers will deliver on time?
You are right. They may not have delivered on time, had these projects been decided in the recent past, say the last couple of years. However, these projects have been in the pipeline for several years now and are now on the verge of completion. So there is no possibility of a recall, even if someone wanted to. For such projects, as you would be aware, the gestation period is three to five years and fortunately, we enjoy a good and solid relationship with our developers in north and south India. So we don?t really see a hiccup there.
•The hospitality industry has been reeling under severe occupancy decline over the past year-and-a-half, especially, after the Mumbai terror attacks. Did Marriott also suffer in this scenario?
We did. JW Marriott is a well known brand in Mumbai, yet immediately after the attacks, our occupancy fell from high 80% to mid-50%, resulting in a steep 20%-25% fall in profits. Since February, however, there is evidence of some sort of a bounce back. We are likely to post 10% less profit in 2008-09 compared to the previous financial year (2007-08). That said, there are a few corporate segments, where we are less affected. Globally, we are a $6.5 billion company, while in India we transacted about $10 million last year and those are not bad numbers.
•What strategies did you adopt to counter the occupany fall and how are you coping with the current recession?
For starters, we are celebrating our tenth anniversary in India this year and have planned a slew of promotions around it. For instance, we are offering straight Rs 3,000 cash back on two nights stay at any Marriott hotel with a rider that it has to be spent at one of our properties. We have also announced a slew of specially-designed honeymoon packages.
•You have a big timeshare business abroad. No plans of launching timeshare or fractional ownership products in India?
Not immediately, but when and if we do see an opportunity in that market, we will certainly tap it.
•JW Marriott is heavily patronised by the Bollywood fraternity. Is there no scope of differentiating your other properties on a similar pattern that is targeting a niche segment?
JW Marriott, as a full-service luxury hotel, does enjoy a special relationship with the Bollywood fraternity. However, our other properties are also well differentiated in terms of branding and positioning.
Marriott, JW Marriott and The Ritz-Carlton, are also full-service luxury hotels, while Renaissance and Courtyard by Marriott are four-star brands that are doing extremely well in India. Therefore, in a manner, our branding of all these properties is clearly defined.
•A Group RCI-Cushman and Wakefield Hospitality report of 2008 mentioned that while there are several budget class players in India, there is an acute paucity of premium properties. Marriott also has several four-star properties, but very few luxury or boutique (example, no Bulgari in India) hotels. How do you explain that?
We feel that we need to first build capacity at the four-star level and then in the premier and super premier levels. Do you know that the 1,00,000-odd four-star properties that we have in India is the number that a top US city like Manhattan alone would have? That?s where we stand at the moment.
That said, the opportunity in India is no doubt huge but in our view, the India growth story will take another 10 more years to unfold fully. The challenge at the moment for hospitality players is to keep changing with time and keep the new stock ready.
•Any rollback in your marketing budget?
We are cost-focused at the moment but there is not going to be any rollback, as we have to create hype around our new hotel launches.
•What?s your media mix?
Primarily print and trade journals since we are a luxury brand. Our web portal brings us a lot of business through direct bookings. In terms of net-based transactions http://www.marriott.com would probably rank as the third or the fourth e-commerce site in the world and that?s what we want for http://www.marriottindia.com as well.
