Taking cues from big-ticket retailers like Future Group and Reliance Retail who have started hawking their private labels ? essentially in-house brands ? outside their stores, some star-category hotels too have taken a fancy to pushing their ?house? restaurant, spa and cuisine brands as standalone entities and franchises to rake in some additional moolah.
Inspired by the success of The Great Kabab Factory or TGKF, which moved out of the hotel, Radisson Hotel is now planning to market its spa, R the Spa, as a solo brand. ?We have seen how successful TGKF, which was started at this property, has been even after we took it out of the hotel. We want to work on a similar line for R the Spa,? says Javed Ali, VP and general manager, Radisson, Delhi. TGKF, which was franchised out around three years back, has 18 outlets today―12 in India and six abroad. The TGKF brand is owned by AB Hotels Ltd (owner of Radisson Delhi) and franchised by RHW Hotel Management Services.
Catching on, Claridges Hotels & Resorts is looking to franchise its popular in-house Indian restaurant, Dhaba, besides extending it to other Claridges properties. Says Peter Leitgeb, CEO & president, Claridges Hotel & Resorts: ?We are looking at premium stand-alone restaurants. It is a brand exercise to begin with, but that means additional profits.? Dhaba, located at The Claridges, New Delhi, contributes 15% of the total F&B revenue of the chain. Another outlet of Dhaba will be opened at the Claridges? Surajkund property in July. By August, the hotel group is looking at franchising it out in Mumbai, Bangalore and Delhi and even abroad.
Lemon Tree Hotels has a similar plan for its F&B products managed by its subsidiary Happy Shrimp Hospitality. The chain has two F&B brands spread across 12 operational properties―Republic of Noodles and Slounge, besides the soon-to-be-launched Kebab Theatre. While Republic of Noodles is a pan-Asian eatery, Slounge is a recreation bar. Says VP (operations) of Lemon Tree Hotels, Rahul Pandit, ?The idea is to develop a brand and then make it stand-alone too. But we won?t franchise it. A spin-off should be a natural extension of the core brand, which should help brand recall and add to the top line, which is our strategy.? F&B outlets contribute a fifth of the total revenue of Lemon Tree Hotels.
But not every venture can be successful, as ITC learned the hard way. In an effort to cash in on the popularity of its famous Bukhara restaurant, ITC?s hotel division opened a stand-alone restaurant in New York in the late 1980s. The restaurant ran into local and legal problems and had to be shut down. Later, ITC marketed ready-to-eat packaged Dal Bukhara. Now, Dal Bukhara and Dum Pukht cuisine are an integral part of ITC?s packaged food range, Kitchens of India.
Ernst & Young associate director Mona Chhabra is cautious. ?F&B has the potential to be be spun off and earn revenues, but it?s too early to say how strong this trend will be,? she says.
It?s not easy to take your brand out either. A senior official from ITC?s hotel division talks from experience: ?One has to be careful with a strong brand, as there are chances of it getting diluted once you take it out. It?s not easy.? That?s exactly why ITC is not looking at following this trend and wants to keep its services within the premises of its hotels. Adds Pandit: ?In India, realty rates can be a dampener, as it?s difficult to sustain a stand-alone outlet because of the high costs. Moreover, with brands inside a hotel, there is a guarantee of at least hotel residents patronising the restaurant or spa, but with a stand-alone there is no guarantee.? But for now, the hospitality sector is willing to take that chance.